10 mental models for your weekend
Reading 500+ mental models so you don't have to
This week, I went through (for maybe the 10th time) every single mental model on the Farnam Street, Poor Charlie’s Almanack, and Junto list of mental models.
Charlie Munger is famous for saying that one needs a “latticework of mental models” off of which one can hangs facts and experiences. Without the lattice, one cannot actually properly understand anything nor retain the facts. I’ve started using that “latticework” metaphor for exploring new spaces as well — I don’t dive deep into a space until I find a satisfactory set of mental models off which I can hang subsequent set of learnings. If one doesn’t exist, I try to make one and share it with others for evaluation, and potentially, if it’s correct, for future elucidation. The best one I’ve seen — clear for a novice, factual, and distilled instead of oversimplified — is this one, which
wrote for the climate crisis (around carbon emissions.)In order to get better at that process of building new mental models of industries, I wanted to restock my arsenal of “generic” models from Munger and company. As I read through the lists, it felt like there were at least 500 — Munger has 80 or so, Junto has 345, and Farnam Street has a three volume book (!). Some of them feel like nonsense, some feel irrelevant, and some feel like oversimplification. But there were a good number felt genuinely insightful. If I could know them in my bones, I’d reason better about the world.
One thing to remember about mental models (“one cool trick to not sound silly!”) is that you must understand them deeply. The name of the model is just the handle of the suitcase. From Ed Catmull of Pixar fame: Imagine an old, heavy suitcase whose well-worn handles are hanging by a few threads. The handle is “Trust the Process” or “Story Is King”—a pithy statement that seems, on the face of it, to stand for so much more. The suitcase represents all that has gone into the formation of the phrase: the experience, the deep wisdom, the truths that emerge from struggle. Too often, we grab the handle and—without realizing it—walk off without the suitcase. What’s more, we don’t even think about what we’ve left behind. After all, the handle is so much easier to carry around than the suitcase.
Here are my 10 favorite suitcase handles:
Hanlon’s Razor: The less famous…razor? It’s a similar to Occam’s Razor, except Robert J. Hanlon’s version says, “Never attribute to malice that which can be adequately explained by stupidity.” I am very inclined to believe the reverse and get angry — “this malicious action makes them my enemy!” This razor is a good reminder that people are more likely to be fallible than evil. The other, less good razor (you can call it Tara’s Razor) that is a riff on this one: first assume that it’s about them, and only after that you can assume it’s about you.
Second Order Thinking: I’m not sure how much this is a mental model versus just a classic exercise in product thinking, but it’s a big sign of thoughtfulness. In Howard Marks’ words: “First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in “The outlook for the company is favorable, meaning the stock will go up.” Second-level thinking is deep, complex and convoluted.”
Work Backwards: A classic, plainly said by Grandmaster chess player José Raúl Capablanca, “You must study the endgame before everything else.”
Winner’s Games and Loser’s Games: My dad taught me this one, when I was playing high school tennis: “Some games are winners’ games, where your skill matters. Some games are losers’ games, where you don’t have to be exceptionally skilled, just don’t make unforced errors. That is your tennis game!”
Vierordt’s Law: “In 1868, German physiologist Karl von Vierordt created this law stating that humans perceive time at different magnitudes over different durations. We underestimate long periods of time and overestimate short periods of time.” I think about this whenever I set goals for a day (very ambitious) versus the month or the year (very weak!) I should do the reverse!
Compounding: Not just limited to compound interest! I think about this as a corrective mechanism for myself quite often since I love novelty. Naval Ravikant has said (and is right…), “Play iterated games. All the returns in life, whether in wealth, relationships, or knowledge, come from compound interest.”
Chauffeur Knowledge: Charlie Munger: “I frequently tell the apocryphal story about how Max Planck, after he won the Nobel Prize, went around Germany giving the same standard lecture on the new quantum mechanics. Over time, his chauffeur memorized the lecture and said, “Would you mind, Professor Planck, because it’s so boring to stay in our routine. [What if] I gave the lecture in Munich and you just sat in front wearing my chauffeur’s hat?” Planck said, “Why not?” And the chauffeur got up and gave this long lecture on quantum mechanics. After which a physics professor stood up and asked a perfectly ghastly question. The speaker said, “Well I’m surprised that in an advanced city like Munich I get such an elementary question. I’m going to ask my chauffeur to reply. Planck knowledge has paid the dues and gained the aptitude. Chauffeur knowledge just learned the talk.”
Comparative advantage: The Scottish economist David Ricardo had an unusual and non-intuitive insight: Two individuals, firms, or countries could benefit from trading with one another even if one of them was better at everything. Comparative advantage is best seen as an applied opportunity cost: If it has the opportunity to trade, an entity gives up free gains in productivity by not focusing on what it does best. I think about this a lot in the context of doing everything by myself: I never quite got over the toddler instinct of wanting to do everything. It’s made me work much more on my weaknesses than I should. Another way of phrasing this as personal advice — mitigate weaknesses, but do the thing you’re best at.
Activity over progress: When I’m anxious, I feel an incredible need to do something, anything. I rarely think about whether it’s the right thing to do — action is sometimes the right move, regardless. Thinking about the directionality of my action to be sure that it is indeed progress, and not just activity, has been a big development area for me. It’s also a big development area for most Type-A conscientious people!
The Orangutan Effect: “If you sit down with an orangutan and carefully explain to it one of your cherished ideas, you may leave behind a puzzled primate, but will yourself exit thinking more clearly.” I love the excuse of teaching others as a way to force myself to learn.