I thought I had said everything I had to say about logic bros on the internet misusing Bayesianism when I came across an episode of the If Books Could Kill podcast on Michael Lewis’s recent book, Going Infinite. It turns out there was one bro I hadn’t touched on, and that I really should have: Sam Bankman-Fried, better known as SBF, or at this point even better known as that FTX Guy who had a polycule in the Bahamas.
But let’s backtrack for a moment. At the moment I am a big fan of the If Books Could Kill Podcast. Run by the duo of former HuffPost reporter Michael Hobbes and notorious pseudonymous podcaster Peter Shamshiri. As the title sensationally implies, the podcast tackles bestselling books from different decades that made a splash in the zeitgeist but underneath harbor rather dubious if not entirely harmful messaging. Their first episode on Levitt and Dubner’s Freakonomics sealed the deal for me and I have been tuning in for every new episode since.
Anyway, the Going Infinite episode was released just six days ago on Spotify, and the number of times I had to guffaw in public while listening to it on my grocery run must have made many a Japanese neighbor uncomfortable. Published just last year, Michael Lewis’s book offers us on a tour of Sam Bankman-Fried’s mind, hoping to explain his rise and fall through the many and sophisticated gears that run the man’s thought processes. Based on both books’ reviews, it appears that Lewis might have suffered the same symptoms as Walter Isaacson on his own biography of Elon Musk: Lews holds up SBF to such a lofty image that he forgets to actually ask any real questions.
One portion of the book that Hobbes and Shamshiri touches on recounts how his team at FTX reported to SBF that they had somehow lost about US$4 Million Ripple (XRP) tokens from sister company Alameda Research’s accounts. The team discussed ways to break the information towards investors without throwing their own company under bad light. SBF, ever the storied math genius, allegedly estimated that there was an 80% chance that the stash would just turn up somewhere. Therefore, they can simply report that they have 80% of the stash.
Above is a prime example of an illness of the math snob that I’d like to refer to as PPFUYA, or Pulling Probabilities From Up Your Ass. Sure it makes sense in formula that because there was an 80% chance of finding the XRP, then in terms of expected value they have 80% of the XRP on hand. Where did the 80% number come from? I can’t just say there’s a 1% chance of me making a million dollars next year, so I can just tell everyone I already have 10,000 right now. It works, but not really.
If anything, the situation of the lost XRP stash is evidence that the FTX hoolabaloo was bound to happen at some point. If it hadn’t happened in 2023, it would have happened two, four years later. It’s ingrained in the man’s way of thinking: these aren’t the life savings and salaries of hardworking people, but random numbers in a game he can’t possibly lose. He’s so far up his own ass he’s seeing probabilities. And it’s weird to hear Lewis appear to be so enchanted with the guy, when he made a career criticizing the actions of the very same kind of men that caused a global financial crisis.
But this isn’t the highlight of the book that had me in pure disbelief, enough to get me out of a months-long slump ignoring my already very infrequent blogging. Apparently one thing to know about SBF is that he couldn’t stand to read books. If anything, he was simply too smart to read books. In his school days, SBF simply could not get himself to see the point of reading Shakespeare, and couldn’t see what all the fuss was about: he couldn’t have been that good. He makes the following case,
I could go on and on about the failings of Shakespeare and the constitution and Stradivarius violins, and at the bottom of this post I do*, but really I shouldn’t need to: the Bayesian priors are pretty damning. About half of the people born since 1600 have been born in the past 100 years, but it gets much worse than that. When Shakespeare wrote almost all of Europeans were busy farming, and very few people attended university; few people were even literate–probably as low as about ten million people. By contrast there are now upwards of a billion literate people in the Western sphere. What are the odds that the greatest writer would have been born in 1564? The Bayesian priors aren’t very favorable.
Someone ought to visit him when he goes to prison and haul a copy of The Black Swan into his cell. While most people online appear to have gotten into uproar with his sentiment for it being another case of STEM Bro Thinks Humanities Are Below Him, the statement got me into a twist because even as a purported Math genius, SBF’s Math doesn’t appear to Math that well.
See, the thing about Bayesian priors is that, eventually, you have to update them. Setting aside the very dubious application of population statistics, and the fact that he is once again committing PPFUYA, priors aren’t supposed to get you very far in the first place. Consider this: let’s say the chances that a billionaire born in 1992 will commit financial fraud on a massive scale is very low. Let’s do PPFUYA and say that it’s 0.01%. If you’re talking to one about a supposed stash worth US$4 Million that you lost, and they say eh, it’s probably lying around somewhere, that’s got to count for something. That ought to push your prior way, way up, and if it doesn’t then your likelihood function is in question too!
A final note about Shakespeare: sure, the chances are low that Shakespeare could have arisen from a very illiterate population as a remarkable genius of wit and storytelling, but that’s the point of remarkable talents. They’re a once in a lifetime, maybe once in a generation phenomenon, and that’s why we care. If Shakespeare had been born into a population that had already reached literacy and sophistication enough to pump out 10 Romeo and Juliets every week, a Macbeth every two months, and a King Lear every year or so, we wouldn’t be talking about him at all.
I guess the lesson here is if you never update your priors, you just might find your posterior in prison.
Dominic Dayta 
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