In 'On the Edge,' Nate Silver analyzes professional risk-takers

[Music] hey it's 's book of the day I'm Andrew limbong talk to Nate silver the now famous elections forecaster and in his view there is a shared personality type among those who excel at poker playing sports betting VC investing and blue chip art collecting and he writes about this type of guy and yeah it's usually a guy in his new book on the edge the art of risking everything and in this interview with here and now Scott Tong he raised is one dichotomy the risk taker versus the risk averse but then he also mentions a related but slightly different dichotomy the individual versus the collective find out how all of these opposing forces play off of each other after the break this message comes from NPR sponsor Sony Pictures Classics presenting between the temples a new comedy starring Jason schwarzman as a caner losing his voice and his faith when his grade school music teacher becomes his new bot Mitzvah student now playing only in theaters this message comes from Progressive and it's Name Your Price tool say how much you want to pay for car insurance and they'll show coverage options within your budget visit progressive.com Progressive Casualty Insurance company and Affiliates price and coverage match limited by state law remember the movie Moneyball where this contrarian geek working for the Oakland A's baseball team clashes with the traditional Scouts who go with you know their eyes their feel well the new book seeks to understand these two camps on a much broader scale and it concludes that the data nerds the quants who take big risks are winning in American society and the author is a bit of a Quant himself Nate silver you know the name he's an election modeler and his new book is on the edge the art of risking everything and Nate silver joins me now welcome hey how are you I'm well you know you argue there's this group of Elites in society who belong to what you call the river describe these people so the river are people who take calculative risks for a living mostly in quantitative types of risks so involving Finance or or poker is kind of like the UR part of the river um and they combine two traits one of which is that very money ballish analytical approach but also being extremely competitive these are people who want to win to the point of sometimes being independent minded to the point of contrarian where they think they're different than the rest of society and are trying to Arbitrage that for their advantage yeah well your book goes into you know many inhabitants of the river Elon Musk s bankman freed so yes contrari and yes controversial but I want to ask you about the scientist who helped develop the MRNA vaccine Dr Cataline kerico how is she an example of the river so she's an extremely courageous person she fled communist Hungary with a couple hundred British pounds stuffed into a teddy bear to immigrate to the United States she kind of toiled in obscurity in Academia for many years was demoted was threatened with deportation um because mRNA was kind of too much of a highrisk high upside bet when I spoke with her she thought that it wouldn't be completed in her lifetime that she would lay the groundwork for future scientists to pursue mRNA but that she would never see the benefits of it oh wow so highrisk super long payout maybe Beyond a lifetime yeah I mean and she's older she's you know she uh achieved all this notoriety and the Nobel Prize and the Breakthrough prize in her late 60s but a remarkable person who says yeah I don't kind of I really don't care what everyone else thinks about me I'm a scientist and and you know if I if I am ostracized or whatever else it just gives me more time to go to my lab and work on vaccines Nate you contrast the river people with what you call the Village and the villagers include professors and journalists and you argue that they are risk averse I wonder if you have an example I think there are a couple of prominent cases recently one is you know moving away from offending people or moving away from Free Speech you know some of the things that you might call cancel culture or wokeness is also a sign I think of of risk aversion where in the village the the community is important and not the individual and you don't want to offend people and you don't want to have the wrong people saying the wrong things whereas these Silicon Valley guys are are Brash say whatever on their mind that might extend sometimes into things that aren't that accurate or are offensive but individual versus kind of collective is a big axis of conflict yeah one interesting thing I've heard you talk about when comparing the the risk-taking kind of members of the river versus The Village is betting markets which is you know the province of the river types and the betting markets have more money betting that the origin of covid-19 was a lab leak and we know there there seem to be few academics arguing this not a whole lot of coverage what does that betting Market you think tell us the lab L is politically inconvenient in certain ways it would impact us China relations it might make scientists look better but in the river we don't care about that stuff we just care about getting the answer right and I think we use a process called basian reasoning from B theorem where you think okay so this is the one place in the world that's doing this type of Corona virus research and yeah it' be a pretty big coincidence if this virus happened to First emerge in the city that's the most prominent place on Earth for this type of research now you can counter that by saying well it's also also a pretty big coincidence that it first emerges at least apparently in a wet Market where you have lots of animals species and you might have a zunos origin so different people have different views about which one of these two unlikely coincidences is more unlikely but that's why people tend to have an open mind about it you argue in this book Nate silver that the people in the river right these often contrarian database Risk Takers are in your words winning in society winning an influence what do you mean well economically finance and Tech are kind of the two signature industry and they keep growing as as fractions of the US economy and also things like everything from like baseball to the way Uber or door Dash does pricing it's all algorithmic they are capturing more producer Surplus and not consumer surplus probably contributes on some level to to inflation actually they understand how to like make me you know click the button for the extra fries in my McDonald's order or whatever um so yeah there you know the capitalist economy and you know I'm Pro free market for the most part um but it's very good at capturing profit from potential inefficiencies and as more and more people graduate with data science degrees and we get more and more information more data then they tend to use that to their financial advantage yeah the river uh as you write is it's about economic growth which is kind of just how we live right I mean growth overtime over the centuries has delivered electricity Refrigeration vaccines internet computer Compu in our pockets all those things and you write and talk about life being so much better you know since say the 18th century industrialization you I was based in China for several years saw this Improvement in real time people pulled out of poverty by mostly these Market forces are you suggesting you know that people in the village tend to miss this maybe Focus too much on the distribution of the pie rather than how much it's growing for sure yeah look I think a lot of people don't know the economic history of how until roughly the late 18th century around 1776 ironically when we have the American Revolution you know world GDP was not growing it was just I mean progress was considered kind of a a foreign concept and then all of a sudden you have the on the one hand the Industrial Revolution on the other hand the emergence of liberal democracy this is an important part of that you know liberalism implies it's not used the way that sometimes it's used as SYM for left or Progressive it means Concepts like the free market and the rule of law it means also though typically it's not totally libertarian it means you have a a welfare state and when you protect people's downside and this is the ideal version of it not always followed but protect people's downside and give people rights to compete and the dignity to compete and then the winners win a lot and then they share some of the profits with the losers so to speak um that's been a kind of miraculous system for the past couple centuries now you do have more wealth inequality at least in industrialized countries although relative to the world it's a little bit more complicated with places like China and India doing much better than they once did and the newer Technologies so things like social media I think has deeply ambiguous effects on is it n good for the world or crypto for example or AI the people who are developing AI will say we think the good outweigh is the bad but also it might kill all of us if it gets un aligned from Human values so yeah technology has a very good track record but I think people have to you know I hope two groups of Elites because they are Elites um are able to see more eye to eye I do think things like AI will require careful and smart regulation yeah what is the best critique of the river there are a few critiques I think you know one good critique is that these guys are kind of they are mostly men that's also another critique is that it's you know it's very white Andor Asian and male um but that these guys can be jerks sometimes that they don't know their own limitations that they trespass into areas maybe like politics where they don't have a lot of expertise I mean I think that that there's a lot to be said for that I think also the fact that like it's kind of become a self-fulfilling prophecy where if you're a top VC firm then literally in Silicon Valley you get the best Founders the best talent from like all over the world if you do that and you kind of get your pick of the litter and then you are able to make a diversified set of bets any one company that you're founding is pretty risky but if you can invest in 20 in a new fund every year and have 10 funds simultaneously so you have 200 companies you're investing in it's almost inevitable that if you're picking the best ones that you're going to have a lot of winning bets as well as some where singles and doubles where you keep your batting average fairly high too yeah we've been talking to Nate silver election forecaster author of the new book on the edge the art of risking everything congratulations Nate on getting this book out and appreciate you're taking the time of course talk to you soon and just a reminder that signing up for Book of the day plus is a great way to support NPR's book coverage and public media and 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