The Startling Convexity of Expertise

  1. Work on interesting problems
  2. Find friends who are working on parallel problems and will challenge you
  3. Use the Convexity of Expertise to stay engaged and make faster progress

The Convexity of Expertise

Work and “Work”

Where to Start

  • Western standards of living will stagnate or decline during my lifetime. This is mostly due to a freer and fairer global market, which allows talented people from places with a low cost of living to compete with relatively rich and lazy Westerners like me.
  • Americans consume too much housing, healthcare, and formal education. In the case of housing and education, we lever up and treat consumption as an asset; in the case of healthcare, we’re uncomfortable facing tradeoffs and bad at aligning incentives.
  • The world is full of mispriced options. Endless dating means constantly overpaying for future opportunity; marriage means selling that overpriced option and collecting the attendant risk premium.
  • More broadly, many phenomena can be modeled quite well as options: any choice you make generally involves an upfront cost or benefit in exchange for a skewed bet on the future.
  • Mainstream politics are an intellectual dead end. Absolutely nothing of value will come from debates among NeverTrump Republicans or Obama Nostalgia Democrats. If you’re not losing friends over your completely insane views, don’t even bother.

Convexity has a Cost

  • Delta: I can take idiosyncratic risks but continuously hedge them in conventional ways (as long as the market is liquid).
  • Gamma: I can get overpaid to take pretty much any risk (although unless I’m exceptionally careful I’ll get wiped out).
  • Vega: I don’t even have to bet directionally; I can bet on the degree of uncertainty.

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I write about technology (more logos than techne) and economics. Newsletter: https://diff.substack.com/

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Byrne Hobart

Byrne Hobart

I write about technology (more logos than techne) and economics. Newsletter: https://diff.substack.com/

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