To most people, Nate Silver is synonymous with the election forecast model FiveThirtyEight. He first appeared broadly on the public’s radar during the 2008 election, and for a decade and a half he has dominated the market for statistical-political fortune-telling — a self-prescribed expert in psephology.
What fewer people know is that he’s also a successful poker player and the author of 2015 The Signal and the Noise, a popular book on statistics (…and the backdrop to my first-ever article for AIER). Having left FiveThirtyEight — now run by ABC News — he spent the last few years writing the Substack “Silver Bulletin,” now supplemented by a 500-page heavyweight of a book.
In On the Edge: The Art of Risking Everything, Silver has distilled even deeper meaning from thinking about the world through the lens of statistics and gambling. While the book is overwhelmingly about games, with the first two hundred pages exclusively dealing with poker, sports betting, the Vegas gambling scene, and the many colorful characters inhibiting these worlds, it’s fundamentally about a major fault line in American society.
In one corner, we have Silver’s own analytical and cognitive team, the River — a “sprawling ecosystem of like-minded people…a way of thinking and a mode of life.” A Riverian is characteristically independent-minded, risk-tolerant, combative and competitive, skeptical and often hyperrational. Riverians care about principles and abstract thinking, and Silver mostly sees them in the tech world of Silicon Valley, in the hallowed gambling halls of Las Vegas, or the hedge funds on Wall Street.
In the other corner, we have the Village — Silver’s term for high academia, most of the media, politics, and Washington, DC think tanks: “it’s basically the liberal establishment,” he writes in a Substack post introducing the book.
“Villagers,” writes Silver, “see themselves as being clearly right on the most important big-picture questions, from climate change to gay and trans rights” — so arguing over the principles or abstractions involved, as skeptical Riverians are wont to do, is somewhere between time-wasting and politically dangerous. Villagers think very lowly of the Riverians’ faux desire for competition since they so often see games being rigged in their favor, and not actually risking that much; Riverians benefit from existing social hierarchies and are too blind to their own privileges.
In counter-salvo, the Riverians think Villagers are captured by social and political fads, their “claims to academic, scientific, and journalistic expertise are becoming increasingly hard to separate from Democratic political partisanship.”
The distinction between the tribes isn’t primarily about educational credentials, and doesn’t entirely map onto the red-blue divide so all-encompassing in American life; still, college degrees are largely the admission fee to the Village, which tends to be about as left-leaning as Riverian thought tends to be rich and white.
The major difference in how Villagers and Riverians think comes down to (de)coupling, abstract logical thinking, and “the ability to block out context”: it’s about cognitive discipline and ability to keep two thoughts in your head at once — to decouple pieces of information that are independent. On the left in America, says Silver, “the tendency is to add context rather than remove it based on the identity of the speaker, the historical provenance of the idea.”
The collapsing trust in American institutions isn’t some moral failure on the part of a bigoted, unpatriotic underclass, but a “reasonable reaction” given what the Villagers have been up to recently — everything from identitarian politics to the COVID debacle. Still, Silver comes out fairly optimistic: he opens his final chapter by saying that “ever since 1776, we risk-takers have been winning.”
Silver, a Democrat himself but an avid Riverian, thinks he’s in a good position to speak to both worlds, explain the virtues of one to skeptical members of the other since he spent the last decade-plus passing between those worlds. Still, he opens the book by confessing, “I still feel more at home in a casino than at a political convention,” and he often reminds the reader of how much of a Riverian he is.
The guiding principle underlying this book’s investigation is the very Riverian concept of expected value (EV) — a probabilistic calculation familiar to any student of economics. The EV of an uncertain gamble is the payoffs multiplied by its various probabilities; a coin flip that pays you $100 for heads and -$20 for tails has an expected value of $40: (100*50%)+(-20*50%).
This, affectionately termed +EV or “edge”, is what everyone in the River live for — from poker players inching out an edge over their opponents to sports betters getting the better of betting sites, to venture capital investors riding the 100x returns of successes to pay for their many duds.
With the Village-River map in mind and EV as a guiding light, Silver takes us on a journey from the strategies of poker to the ins and outs of the gambling industry, to moral philosophy, the venture capital scene, and survivorship bias in finance and poker alike. We get a fair intro to Bitcoin, but mostly as a setup to Sam Bankman-Fried and the collapse of the cryptocurrency exchange he ran.
We’re treated to a lengthy summary of x-risk debates (short for existential risks to humanity, ranging from conventional ones like nuclear war to newer concerns like climate change and runaway AI) and effective altruism — the philosophical movement that Bankman-Fried brought to widespread attention and simultaneously did so much to harm.
What feels strange is what all of this has to do with poker or sports betting. Fair enough, everyone obsessed with a game tends to see its workings replicated elsewhere. Christians see God everywhere, from Bitcoin to engineering. As an avid chess player, I often tend to see chess dynamics in life and economic affairs. Nate Silver, an on-and-off professional poker player, sees complicated philosophical arguments or behaviors in politics and technology through the lens of poker hands, relevant because it’s about “calculated risk-taking” and making calibrated predictions about future events.
As economists, we have little room to object; John von Neumann observed already in Theory of Games and Economic Behavior from 1944, the book that laid the foundations for the economics subfield game theory, that human interactions can be thought of as games — full of moves, countermoves, bluffs, risk, psychology, and the assessment of variable payoffs.
One controversial conclusion that Silver takes away from his investigation is that society needs more risk, not less: “Society would be generally better off — I’ll confidently contend — if people understood the nature of expected value and specifically the importance of low-probability, high-impact events.” Whether poker hands, public policy, or how to estimate the risk of runaway AI, On the Edge is about how to think well about a problem. That’s a worthy exercise for all of us.
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