Nassim Nicholas Taleb (; born 12 September 1960) is a Lebanese-American New York University professor, essayist, mathematical statistician, former option trader, risk analyst, and aphorist. His work concerns problems of randomness, probability, complexity, and uncertainty.
Taleb wrote Incerto, a five-volume work on the nature of uncertainty published between 2001 and 2018 which includes the notable volumes The Black Swan and Antifragile. He has taught at several universities, serving as a Distinguished Professor of Risk Engineering at the New York University Tandon School of Engineering since September 2008. He has also been a practitioner of mathematical finance and is currently an adviser at Universa Investments. The Sunday Times described his 2007 book The Black Swan as one of the 12 most influential books since World War II.
Taleb criticized risk management methods used by the finance industry and warned about financial crises, subsequently profiting from 1987's Black Monday, and later from the 2008 financial crisis. He advocates what he calls a "black swan robust" society, meaning a society that can withstand difficult-to-predict events. He proposes what he has termed "antifragility" in systems; that is, an ability to benefit and grow from a certain class of random events, errors, and volatility, as well as "convex tinkering" as a method of scientific discovery, by which he means that decentralized experimentation outperforms directed research.
Early life and family background
Taleb was born in Amioun, Lebanon, to Minerva Ghosn and Nagib Taleb, an oncologist and a researcher in anthropology. His rich and influential parents were Lebanese Greek Orthodox Christians, and had French citizenship. His maternal grandfather and great-grandfather were both deputy prime ministers of Lebanon in the 1940s through the 1970s, and his four-times great grandfather was one of the board of directors to the administrator of Mount Lebanon. His paternal grandfather Nassim Taleb was a supreme court judge. Taleb attended a French school in Beirut, the Grand Lycée Franco-Libanais. His family saw its political prominence and wealth reduced by the Lebanese Civil War, which began in 1975. He is a Greek Orthodox Christian.
Education Taleb received Bachelor and Master of Science degrees from the University of Paris. He holds an MBA from the Wharton School at the University of Pennsylvania (1983), and a PhD in management science from the University of Paris (Dauphine) (1998),BBK, 2015, "Our staff: Helyette Geman, PhD Students, Past Students," at Birkbeck, University of London, Dept of Economics, Mathematics and Statistics, see and , accessed 7 May 2015. under the direction of Hélyette Geman. His dissertation focused on the mathematics of derivatives pricing.
Career Finance Taleb has been a practitioner of mathematical finance as a hedge fund manager, and a derivatives trader. He has held the following positions:Nassim Nicholas Taleb's Curriculum Vitae "Official Academic Biography", at fooledbyrandomness.com accessed 9 May 2015. managing director and proprietary trader at UBS, currency trader at Credit Suisse First Boston, chief currency derivatives trader for Banque Indosuez, managing director and worldwide head of financial option arbitrage at CIBC Wood Gundy, derivatives arbitrage trader at Bankers Trust (now Deutsche Bank), proprietary trader at BNP Paribas, independent option market maker on the Chicago Mercantile Exchange and hedge fund manager for Empirica Capital.
Taleb reportedly became financially independent after the crash of 1987 from his hedged short Eurodollar position while working as a trader for First Boston. Next, Taleb pursued work toward his PhD in Paris, completing the degree program in 1998. He returned to New York City and founded Empirica Capital in 1999. During the market downturn in 2000, at the end of the dot com bubble and burst, Empirica's Empirica Kurtosis LLC fund was reported to have made a 56.86% return. Taleb's investing strategies continued to be highly successful during the Nasdaq dive in 2000. Several consecutive years of low market volatility and less spectacular returns followed, and Empirica closed in 2004. In 2007, Taleb joined his former Empirica partner, Mark Spitznagel, as an adviser to Universa Investments, an asset management company based on the "black swan" idea, owned and managed by Spitznagel in Miami, Florida.
Taleb attributed the 2008 financial crisis to the mismatch between reality and statistical distributions used in finance. Taleb's investing approach produced significant returns once again, with some Universa funds returning 65% to 115% in October 2008. In a 2007 Wall Street Journal article, Taleb claimed he retired from trading and would be a full-time author. He describes the nature of his involvement as "totally passive" from 2010 on. The Wall Street Journal journalist Scott Patterson wrote that "Taleb's involvement with Universa made him fabulously wealthy, the cash from the fund far outdistancing the substantial profits from his bestsellers".Scott Patterson, Chaos Kings: How Wall Street Traders Make Billions in the New Age of Crisis, Scribner, 2023, p. 16.
Taleb considers himself less a businessman than an epistemologist of randomness, and says that he used trading to attain independence and freedom from authority. He advocated for tail risk hedging, which is intended to mitigate investors' exposure to extreme market moves. Tail risk hedging safeguards investors by reaping rewards from rare events, thus Taleb's investment management career has included several jackpots followed by lengthy dry spells.
At the World Economic Forum annual meeting in Davos in 2009, Taleb had harsh words for bankers, suggesting that bankers' recklessness will not be repeated "if you have punishment".
Academia Taleb shifted his career emphasis to mathematical research in 2006. Since 2008, he has taught classes at New York University Tandon School of Engineering, as Distinguished Professor of Risk Engineering.John F. Kelly, 2008, Nassim Nicolas Taleb, Author of the National Bestseller, The Black Swan, Joins Polytechnic Institute of NYU , at NYU-Poly (press release), 3 October 2008, accessed 7 May 2014. and was a Distinguished Research Scholar at the Said Business School BT Center, University of Oxford from 2009 to 2013. Taleb also held positions at NYU's Courant Institute of Mathematical Sciences, the University of Massachusetts Amherst, and the London Business School.
Taleb has been Co-Editor in Chief of the academic journal Risk and Decision Analysis since September 2014,IOS Press, 2014, News: New Co-Editor-in-Chief Risk and Decision Analysis, at IOS Press (online), 19 September 2014, accessed 7 May 2014. jointly teaches regular courses with Paul Wilmott in London, and occasionally participates in teaching courses toward the Certificate in Quantitative Finance."Certificate in Quantitative Finance – Course Guide," at Wilmott, 2008 (online), see , accessed 9 May 2015. He is also a faculty member of the New England Complex Systems Institute.
Writing career Taleb's first non-technical book, Fooled by Randomness, about the underestimation of the role of randomness in life, published in 2001, was selected by Fortune as one of the smartest 75 books known.
His second non-technical book, The Black Swan, about unpredictable events, was published in 2007, selling close to three million copies, as of February 2011. It spent 36 weeks on the New York Times Bestseller list, 17 as hardcover and 19 weeks as paperback, and was translated into 50 languages. The book has been credited with predicting the 2008 financial crisis.
In a 2008 article in The Times, journalist Bryan Appleyard described Taleb as "the hottest thinker in the world". Daniel Kahneman proposed the inclusion of Taleb's name among the world's top intellectuals, saying "Taleb has changed the way many people think about uncertainty, particularly in the financial markets. His book, The Black Swan, is an original and audacious analysis of the ways in which humans try to make sense of unexpected events."
A book of aphorisms, The Bed of Procrustes: Philosophical and Practical Aphorisms, was released in December 2010.
Antifragile: Things That Gain from Disorder was published in November 2012 and Skin in the Game: Hidden Asymmetries in Daily Life was published in February 2018.
Taleb's five volume philosophical essay on uncertainty, titled Incerto, includes Fooled by Randomness (2001), The Black Swan (2007–2010), The Bed of Procrustes (2010), Antifragile (2012), and Skin in the Game (2018). It was originally published in November 2016 including only the first four books. The fifth book was added in August 2019.
Taleb's non-technical writing style has been described as mixing a narrative, often semi-autobiographical style with short philosophical tales and historical and scientific commentary. The sales of Taleb's first two books garnered an advance of $4 million, for a follow-up book on anti-fragility.
Ideas and theories
Taleb's book The Bed of Procrustes summarizes the central problem: "we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas". Taleb disagrees with Platonic (i.e., theoretical) approaches to reality to the extent that they lead people to have the wrong map of reality, rather than no map at all. He opposes most economic and grand social science theorizing, which in his view, suffers acutely from the problem of overuse of Plato's theory of forms.
He has also proposed that biological, economic, and other systems exhibit an ability to benefit and grow from volatility—including particular types of random errors and events—a characteristic of these systems that he terms antifragility. Relatedly, he also believes that universities are better at public relations and claiming credit than generating knowledge. He argues that knowledge and technology are usually generated by what he calls "stochastic tinkering" rather than by top-down directed research,Nassim Nicholas Taleb, 2001, The Birth of Stochastic Science , at Edge (online), 11 September 2001, accessed 7 May 2015.Ma'n Barāzī, 2009, Lebanon's rational fools: From the roots of the "economic qabaday" till the 2009 depression election... conflicting tale of paradigms and economic change, Beirut, Lebanon: Data & Investment Consult – Lebanon, p. 182, accessed 7 May 2015. and has proposed option-like experimentation as a way to outperform directed research as a method of scientific discovery, an approach he terms convex tinkering.Nassim Nicholas Taleb, 2012, Antifragile: Things That Gain from Disorder, Random House () and Penguin Books (), accessed 7 May 2015.
Taleb has called for discontinuation of the Nobel Prize in Economics, saying that the damage from economic theories can be devastating.Nassim Nicholas Taleb, 2007, "Opinion: The pseudo-science hurting markets," at Financial Times (online), 23 October 2007, see and , accessed 7 May 2014. He opposes top-down knowledge as an academic illusion. Together with Espen Gaarder Haug, Taleb asserts that option pricing is determined in a "heuristic way" by market participants, not by a model, and that models are "lecturing birds on how to fly". Teacher and author Pablo Triana has explored this topic with reference to Haug and Taleb.Triana, Pablo. Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets? Wiley Publishing (2009). Triana has stated that Taleb might be correct in recommending that retail banks be treated as utilities, i.e. forbidden to take potentially disastrous risks, whereas hedge funds and other less-regulated investment entities need not be subject to similar restrictions.