Review of ‘On the Edge’ by Nate Silver – The Art of Risk-Taking

Nothing is more interesting to poker players and less interesting to everyone else than a breathless recounting of who bet how much with a jack and six of clubs in some game years ago. This book has an awful lot of that kind of thing, celebrating poker players as exemplary citizens of a global intellectual community it calls “the River.” This community also includes venture capitalists, crypto traders, fashionable philosophers, and statisticians.

One such statistician, Nate Silver, is known for his data-driven analysis of political polls on FiveThirtyEight, which predicted US election results in 2008 and 2012 with seemingly uncanny accuracy. Before his political career, Silver was a poker player, making money in the nascent internet-casino business until Congress banned online poker in 2006. This ban was his political awakening.

People of the River—or “Riverians”—have a rational understanding of risk and know when to bet big or fold. They are often geeks and libertarians, distinct from inhabitants of a parallel world called “the Village,” where emotions and hunches drive politicians, regulators, academics, and media types who lean left politically.

The book meanders through the lives of Riverians, detailing their poker games and their bets in other casino games, sports, and startup ventures. The colorful descriptions cover the mad zoo of cryptocurrencies, worthless “shitcoins,” and expensive NFTs like digital pictures of cartoon apes. Silver dedicates several chapters to Sam Bankman-Fried, the imprisoned FTX crypto entrepreneur, concluding that Bankman-Fried had an irrational approach to risk. “He’s a smart guy,” Silver says, “but there are a lot of us smart guys.” Modesty is not a notable Riverian characteristic.

The book then veers into broader gambling-related topics. It briefly discusses philosophical utilitarianism, effective altruism, nuclear deterrence, and game theory. The claim that a nuclear war is more likely to kill humanity than a supervolcano is debatable since supervolcano eruptions, like the Toba eruption 74,000 years ago, have nearly wiped out humanity before.

Another potential existential risk is AI, with some people believing that pushing AI development is the biggest gamble in history, potentially risking human extinction for the chance to eliminate global poverty. Silver speaks to OpenAI’s CEO Sam Altman, who demands $7 trillion to train the next generation of models, as well as AI “doomers” who think AI should be shut down through force if necessary.

There is never any sense in the book that gambling might be, for some people, a wellspring of toxicity.

Silver’s book is skeptical of regulations and the law’s role in these matters, pointing out that lawsuits “destroyed Napster’s business” without acknowledging that Napster was based on theft. Current generative AI also faces legal challenges for scraping content without permission, like the New York Times’s lawsuit against OpenAI. Silver frames this as the Village warring with the River, which seems less thrilling given the renewed threat of political assassinations in the US. Interestingly, Silver admits in the acknowledgments that “ChatGPT was a significant help in writing this book.”

On the Edge focuses on the art of taking calculated risks without addressing gambling’s potential toxicity. It is alarming to see sports events bombarded with betting adverts. The book’s attitude toward probability is another foundational challenge. Probabilities are useful for repeated events like dice rolls but less so for complex one-off events. For instance, FiveThirtyEight’s 2016 prediction gave Trump only a 29% chance of winning, a forecast Silver defends by claiming it was better than other polls. However, as a prediction of what would happen, it was wrong.

The book is an exercise in self-justification but fails to justify the assumption that mathematics can predict human affairs. Silver criticizes Bankman-Fried’s claim of a 5% chance of becoming US president as deranged but overlooks that his own predictions are similarly flawed. Without a statistical model that predicts everyone’s mental processes and actions, such numbers only reflect our faith in uncertain outcomes. Silver describes himself as “someone who has been around plenty of smart nerds who didn’t know their own limitations.” One wonders if he has ever questioned if he’s one of them.

Politics is not just a game of cards.

On the Edge: The Art of Risking Everything by Nate Silver is published by Allen Lane (£30).

Source: The Guardian