SBF: Martyr, Fool, Addict, Hunger Artist?

On Going to Zero while Going to the Moon

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If you had a 99% chance of becoming a Trillionaire but a 1% chance of getting tortured to death and having your reputation ruined, would you take those odds? I would not.

One reason is that I value my life, my reputation, and my bodily wellbeing so much that I consider a 1% chance of ruin too much of a risk. Martyrs, like Rabbi Akiva, who supposedly died happy (praising God as he was ripped apart limb from limb) must either not consider the downside as terrible as me or must consider the upside worth the trade. In the case of Rabbi Akiva, the opportunity to fulfill a divine commandment (“loving God with all your heart, soul, and might”) and to understand the meaning of that commandment was so valued that it far outweighed the physical agony.

In Kafka’s tale, A Hunger Artist, the protagonist, a pseudo-martyr, admits that his ability to fast for long stretches of time was not because of any heroics on his part but because he lacked an appetite. The punch-line of Kafka’s darkly comic joke is that the apparent ascetic is, in fact, just a picky eater. This is the cynical view on martyrs: they have no BATNA. Walter Benjamin tragically killed himself while fleeing the Nazis, but we know from his writing that he struggled with melancholy and suicidal ideation. This makes his case more like the Hunger Artist’s than Rabbi Akiva’s.

In the case of genuine martyrs—true believers with deep conviction—the infinite upside is not just perceived to be a probable outcome, but a guaranteed one. I don’t know of any stories of martyrs who self-sacrifice as a result of Pascal’s wager. I don’t know of any martyrs who think explicitly in terms of risk-adjusted returns or hurdle rates or opportunity costs. They are all-in. There is no “margin of safety.” Martyrs are closer to the path of a Charlie Munger—who has placed one third of his net worth in a single stock: Costco—than the path of a stock indexer who simply bets that the market as a whole will go up. Martyrs are highly concentrated. They do not diversify. This is what makes them so admirable and so alienating. What do they know that we regular folk do not?

Thus, martyrs trade short term pain (physical suffering) for eternal gain (Paradise, or longitudinal impact). The math works. They are ostensibly rational actors. What separates them from others is their conviction.

The question raised by the case of SBF, the one-time crypto celebrity nerd who now stands trial on multiple counts of fraud—now psychologized in Michael Lewis’s Going Infinite—is whether he is a martyr. And if so, for what? He certainly cultivated the persona of someone who was forced to take certain bets simply because they were the correct bets. Now one wonders what broke. Was it the worship of the expected value framework, poor accounting, or something else?

Asked most provocatively, would SBF, knowing what he now knows, do it all over again? Would he take the same odds and role the dice again because the downside risk of going to jail and burning all his bridges is worth the potential upside? Would SBF be consoled in his cell knowing that in the multiverse, there are two other SBFs still out there enjoying piña coladas on a yacht with Steph Curry, Katy Perry, and Larry David? If so, I’d suggest he is a martyr. His consolation is not divine paradise, but simply the knowledge that he did the right thing. The math is on his side. He simply got unlucky.

Of course, we take risks all the time that don’t reflect our self-conscious risk-profile. That could be because we are not aware of how risky the risks are (we evaluate the 1/1000 chance of wipe-out as a 1/10,000 chance) or because we are self-deluded (we think we’re risk averse when in fact we are not).

SBF took a lot of risky bets, peaked for a time, and then went to—or is about to go to—zero. His abrupt rise and fall, combined with his self-consciously cultivated image as a quant nerd, raise the following questions: 1) Were his bets rational? 2) Even if they were rational, were they moral? 3) Is he an outlier or is the difference between SBF and the average successful trader, who thinks in terms of Expected Value a matter of degree (or luck)? 4) What is the correlation between his purported effective altruism and his ultimate outcome?

We’ll never get answers to these questions from reading Lewis’s book or from reading court documents, but they are nonetheless profound. SBF is a Rorschach test.

My own mental model is that SBF is likely an addict. The high he chases is the high of putting on a bet that is at once risky and apparently irresponsible and also somehow mathematically interesting. He’s an aesthete who is so committed to his art that he must submit to its requirements—nothing else can give him the utils he needs to feel the pleasure that most people get just from being outside or hanging with friends. There’s a working theory SBF must always go double or nothing because he experiences no diminishing marginal utility. Another dollar to him at a net worth of a billion is worth the same to him as at a net worth of 100 dollars—the reason, so it is claimed is that he plans to give it all away to the cause of “effective altruism.” This seems less likely than the following thesis: It takes him 1000 units of risk to achieve the happiness / high most people can get from one unit - he needs to take a lot of risk because he’s desensitized to most rewards — the Kelly bet concept is a distraction. His effective altruist persona is cover for outlier levels of egomania (though maybe the two correlate).

A person who experiences normal amounts of pleasure as a result of normal amounts of effort and decides to be an effective altruist may be said to engage in self-sacrifice. But a person who experiences almost no pleasure and thus is highly generous with their possessions is not really engaged in self-sacrifice. That person is more like Kafka’s Hunger Artist. Their bravado is not born of human pathos but of desensitization and inhumanity.

While we can’t pin the flaws of SBF on Effective Altruism any more than we can fault Marx’s writings for the sins of Lenin or Mao, it strikes me that applying Expected Value frameworks to all decisions, and especially to moral decisions, comes with significant moral hazard. One obvious reason is that we can’t universalize risk-reward profiles. Had SBF risked just his own fortune, he would have been entitled to be as risky as he wanted. But he risked other people’s money on terms to which they did not agree. There is a subjective, personality-driven (and stimulant-enhanced) dimension to risk. The combination of Expected Value thinking and Effective Altruism to produce moral calculus leads to a sense that risk is uniform. The mathematical elegance of SBF’s (moral) calculus ends up concealing the pluralism of different risk-reward profiles, with the result that it becomes tyrannical. Karl Popper warned that philosopher-kings are enemies of the Open Society. The mathematicization of ethics and the reduction or moral reasoning and decision making to probability theory should fall under his critique, as well. The antidote to the utopian and magical thinking of SBF’s “Going Infinite” is Voltaire’s modest advice at the end of Candide: “Cultivate your own Garden.”