Insights about how people think - Morgan Housel

Morgal Housel points to 17 insights about how people generally think:

1. Everyone belongs to a tribe and underestimates how influential that tribe is on their thinking.

2. What people present to the world is a tiny fraction of what’s going on inside their head.

3. Prediction is about probability and putting the odds of success in your favor. But observers mostly judge you in binary terms, right or wrong.

4. We are extrapolating machines in a world where nothing too good or too bad lasts indefinitely.

Good times plant the seeds of their destruction through complacency and leverage, and bad times plant the seeds of their turnaround through opportunity and panic-driven problem-solving.

5. There are limits to our sanity. Optimism and pessimism always overshoot because the only way to know the boundaries of either is to go a little bit past them.

6. Ignoring that people who think about the world in unique ways you like also think about the world in unique ways you won’t like.

Paul Graham put it this way: “Half the distinguishing qualities of the eminent are actually disadvantages.” Andrew Wilkinson says: “Most successful people are just a walking anxiety disorder harnessed for productivity.”

7. We are pushed toward maximizing efficiency in a way that leaves no room for error, despite room for error being the most important factor of long-term success.

8. The best story wins.

Not the best idea. Not the right answer. Just whoever tells a story that catches people’s attention and gets them to nod their heads.

9. We are swayed by complexity when simplicity is the real mark of intelligence and understanding.

10. Your willingness to believe a prediction is influenced by how much you want or need that prediction to be true.

11. It’s hard to empathize with other people’s beliefs if they’ve experienced parts of the world you have not.

The gap between how you feel as an outsider vs. how you feel when you’re experiencing something firsthand can be a mile wide.

12. An innocent denial of your own flaws, caused by the ability to justify your mistakes in your own head in a way you can’t do for others.

The question, “Why don’t you agree with me?” can have infinite answers... But usually a better question is, “What have you experienced that I haven’t that would make you believe what you do? And would I think about the world like you do if I experienced what you have?”

13. An underappreciation for how small things compound into extraordinary things.

The time, not the little changes, is what moves the needle. Take minuscule changes and compound them by 3.8 billion years and you get results that are indistinguishable from magic.

14. The gap between knowing what to do and actually getting people to do it can be enormous.

So we live in a world where solutions to problems can be shockingly simple but getting people to follow simple advice can be astoundingly difficult. Issac Asimov said, “Science gathers knowledge faster than society gathers wisdom,” which sums up a lot of things quite well.

15. We’re bad at imagining how change will feel because there’s no context in dreams.

If you think of your future self living in a new mansion, you imagine basking in splendor and everything feeling great. What’s easy to forget is that people in mansions can get the flu, have psoriasis, become embroiled in lawsuits, bicker with their spouses, are wracked with insecurity and annoyed with politicians – which in any given moment can supersede any joy that comes from material success. Future fortunes are imagined in a vacuum, but reality is always lived with the good and bad taken together, competing for attention.

16. We are blind to how fragile the world is due to a poor understanding of rare events.

17. The inability to accept hassle, nonsense, and inefficiency frustrates people who can’t accept how the world works.

If you recognize that Bull Shit is ubiquitous, then the question is not “How can I avoid all of it?” but, “What is the optimal amount to put up with so I can still function in a messy and imperfect world?”

A grocery store could eliminate theft by strip-searching every customer leaving the store. But then no one would shop there. So the optimal level of theft is never zero. You accept a certain level as an inevitable cost of progress. A unique skill, an underrated skill, is identifying the optimal amount of hassle and nonsense you should put up with to get ahead while getting along.