Skin in the game

In his book Skin in the Game, Nassim Taleb points out that most workers pay a price for their mistakes. For example, a bad barber quickly loses customers.


In contrast, there are some professions that profit while sticking someone else with the risk.




It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.

-Thomas Sowell


In any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representatives who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions.

-Jerry Pournelle


There are also those who shoulder risk for others because of personal values. Taleb says these people have “soul in the game”:


…when young people who “want to help mankind” come to me asking, “What should I do? I want to reduce poverty, save the world,” and similar noble aspirations at the macro-level, my suggestion is: 1) Never engage in virtue signaling; 2) Never engage in rent-seeking; 3) You must start a business. Put yourself on the line, start a business.

-Nassim Taleb


In your life, it can be useful to find those with skin (or soul) in the game:


If a statue is ever erected to honor the person who has done the most for American investors, the hands-down choice should be Jack Bogle. In his early years, Jack was frequently mocked by the investment management industry. Today, however, he has the satisfaction of knowing he helped millions of investors realize far better returns on their savings than they otherwise would have. He is a hero to them and me.

-Warren Buffett


The difference between the great and good societies and the regressing, deteriorating societies is largely in terms of the entrepreneurial opportunity and the number of such people in the society. I think everyone would agree that the most valuable 100 people to bring into a deteriorating society would be not 100 chemists, or politicians, or professors, or engineers, but rather 100 entrepreneurs.

-Abraham Maslow


Taleb NN. (2018). Skin in the game: Hidden asymmetries in daily life. Penguin Random House.


Subprime mortgage crisis. (2021, March 8). Wikipedia.


Donors. (2021, March 9). Khan Academy.


Huddleston T. (2020, August 19). How Warren Buffet spends his billions. CNBC.


Edwards J. (2019, June 22). Who are the owners of Vanguard Group? Investopedia.

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