Small is Beautiful

Take a look at Nassim’s Small is Beautiful: Risk, Scale and Concentration.


Chapter Summary 17: We extract the effect of size on the degradation of the expectation of a random variable, from nonlinear response. The method is general and allows to show the “small is beautiful” or “decentralized is effective” or “a diverse ecology is safer” effect from a response to a stochastic stressor and prove stochastic diseconomies of scale and concentration (with as example the Irish potato famine and GMOs). We apply the methodology to environmental harm using standard sigmoid dose-response to show the need to split sources of pollution across independent (nonsynergetic) pollutants.

Nassim Posts Document on Skepticism and How Uncertainty Should Actually Lead to More Conservationism

Nassim recently posted a document called “Skepticism” on Facebook.

He had this to say about it:

Something people don’t get: more skepticism about climate models should lead to more “green” ecological conservationist policies not more lax pro-pollution ones. Why? Simply, uncertainty about the models increases fragility (and thickens the left tail), no matter what the benefits can be in the right tail.
Added the section to the precautionary principle. Please discuss but stick to rigor and avoid buzzwords. (Also do not think that the idea is falling from the sky: it is a mere application of the fragility theorems).

Taleb Co-Founder and Co-Director of EXTREME RISK INITIATIVE

Nassim Taleb is starting the new academic year with a new role. Along with Charles Tapiero, Taleb will be co-director of the  EXTREME RISK INITIATIVE, which is expected to develop into an Extreme Risk Institute within the NYU School of Engineering. Here is the official description from his Facebook Page:

In spite of the importance of extreme/hidden risks, there has not been a rigorous methodology to deal with them; statistical or mathematical approaches have not been formally reconciled with real-world decision-making the way engineering has traditionally integrated mathematics and real world heuristics. Extreme risks require both more mathematical and more practical rigor.

The “Extreme Risks Initiative”, ERI, is an NYU-School of Engineering interdisciplinary open research agenda, based on research axes defined by its members and a global research collaborations. Its approaches are at the intersection of the technical and the practical, based on a rigorous merger of theory and practice across interdisciplinary lines. These may include financial and economic engineering, urban risk engineering, transportation-networks, bio-systems, as well as global and environmental problems. A selected series of research axes as well as publications drawing on members’ Initiatives are included in the ERI a working paper series as well as current research enterprises.