The Great Mental Models Vol. 1

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Book Notes:

This book is one in a series of a few volumes to be released on mental models. Our mental models help us anticipate things that will happen and provide an explanation for those things.


In collecting models and picking up more wisdom there’s inherent value.
Why? It reduces our “blind spots” meaning, we can think and interact with the world more effectively.  

Mental models are just things that show you how something works. Solving a problem requires understanding it. Mental models help you understand problems by making it easier for you to accurately assess a situation. 

You have to be open to other perspectives to understand what effect your actions have. 
Thus, there are three flaws to be aware of:

  1. Perspective
    You need to be open to different perspectives, so you better understand the results of your actions. You don’t have all the info. 
  2. Ego
    We’re afraid of what others will say so we don’t get criticism
  3. Distance
    When you’re not as invested in something i.e. more distant from something, the less likely you are to update your understanding and you won’t be as cognizant of your actions. 

Better models mean better thinking. You have to be able to update your models if you notice flaws in them. 

Variety is key. If you specialize too much, you miss out on the insights that could only be derived through a multidisciplinary lens. 

Different people in different occupations will have different default ways of approaching the world. If you can have a variety of models, you get a more comprehensive understanding of the world and how to approach problems.

Three Buckets of Knowledge:

  1. Inorganic Systems
    • Math, physics laws, the universe
  2. Organic Systems
    • Earth’s biosphere
  3. Human History

The three buckets represent the world and the world changes over time. The world as it is now is not how it always used to be. Thus, when you consider that everything is shifting it becomes clear. No individual perspective is “correct” or “incorrect.” A Multi-lens system allows for multifaceted understanding. 

Consider an elephant: 
If 7 people were blindfolded and told to guess what was in front of them based on touch, they would each come up with different answers depending on what part of the elephant they’ve touched. 


The Map is Not the Territory

Maps are just representations of things. They’re meant to be reductions of things. If they’re true to size, they’d stop being useful. They’re bookmarks of a place in time. They’re explanatory and predictive. 

A description of something is not the thing itself. 

Maps and models are just abstractions so if you want to use them, you have to understand their limits. 

How do you use a map accurately?

Use the 3 Considerations.

  1. Reality is the ultimate update
    1. Maps are built on feedback loops. Just because a map captures the depiction of the now, it won’t necessarily accurately capture what the reality of the territory is like in the future. 
    2. As time changes, as we get more information from the real world; we must adjust our maps accordingly. 
  2. Consider the cartographer
    1. Maps are not objective. The cartographer has certain values or perspectives that inform how the map looks. The physical boundaries of a map may not show the ethnic makeup of the area. 
  1. Maps can influence territories. Creating a model for something can influence how you interact with the real thing. You might try to change the reality to align with your model, which can cause problems.

Circles of Competence

Here’s a quick way to check your competence:

  • Have you worked on the problem for a few years?
  • Have you failed in this area a few times?

If you answered no to either of the above, you are not in the circle. 

How do we know we’re competent?

  • Whatever is in your circle of competence is everything you know and the shortcomings you are aware of. 
  • You can distinguish between where your expertise begins and where it ends. 

How do you build and maintain one?

  1. You need to be willing to learn from others and approach with a curious mindset. Be honest about your failures, learn from them.
  2. You must track your progress and prior works in the circle that you’re trying to be accomplished in.
    1. Keep a journal. It forces you to take a wide view and consider: what worked? What didn’t? How can I improve? You’ll find patterns you’ve never seen before. 
  1. You need good feedback from others.
    1. You need years of experience, tons of mistakes and deliberately searching for better methods. You need experts operating on a level that can observe you in your circle and offer relevant advice. 

Ego death is the game. You can’t reasonably take feedback in stride if you let your ego get in the way. How do you operate outside of one?

There are three parts to successfully operating outside a circle of competence.

  1. Get the basics down. Recognize that you only really know the basics.
  2. Talk to someone with a strong circle of competence and ask them actually deep and thoughtful questions. The idea is like you’re probing what the limits of their circles are. 
    • Someone with a strong circle of competence doesn’t mean they will be purely benevolent. People will act in ways that help themselves either directly or indirectly.
  3. Take the mental models you’ve picked up and use them to facilitate your understanding of that field.
    • That gets you the foundational points. It’s normal to have to act on things are outside your circle but you gotta do what you gotta do.

Nobody will have an all-inclusive circle of competence. Knowing their limits and your limits will help you become competent. Another thing to consider is the idea of falsifiability. Try to prove a theory wrong, and when you fail to do that, you make it stronger. 

Historicism: The idea that history has trends that lead to outcomes. There’s no way to test things like the idea that human technology will always be increasingly complex. It’s not a testifiable hypothesis. Trend is not destiny. 


Think From First Principles

Keep questioning to avoid relying on emotional connections. Get down to a falsifiable statement. When you build your knowledge around first principles you can make something new out of it. By removing assumptions, you hit upon the bedrock of understanding. 

How do you think from first principles? Follow the Socratic principles. See below:

Clarify thinking. 

  • Why do I think this? What exactly do I think?

Challenge assumptions. 

  • How do I know this is true? What if I thought the opposite?

Looking for evidence. 

  • How can I back this up? What are the sources?

Considering alternative perspectives. 

  • What might others think? How do I know I am correct? 

Examining consequences and implications. 

  • What if I am wrong? What are the consequences if I am?

Questioning the original questions. 

  • Why did I think that? Was I correct? 
  • What conclusions can I draw from the reasoning process?

Asking Why

  • Children are good at this by nature. They ask why so many times until you get to the point where you get stumped and say “I don’t know. It’s because it’s the way it is!”

If you reason from first principles, you can break away assumptions and see what’s really possible. From there, you can evaluate anything else built on top of those principles and uncover something new.


Thought Experiments

The Stanford Encyclopedia of Philosophy defines thought experiments as “devices of the imagination used to investigate the nature of things.” 

These are just as rigorous as a traditional experiment if you go about it correctly. How do you do that?

  • Ask a question
  • Conduct background research
  • Construct hypothesis
  • Test with (thought) experiments
  • Analyze outcomes and draw conclusions
  • Compare to hypothesis and adjust accordingly (new question, etc.)
  • “If I had all the money in the world” 

Thought experiments are supposed to help you understand the potential outcomes of any one decision. They help you intuit the non-intuitive. You can double-check your intuition through deliberate thought experiments. 

When you pose a thought experiment the greatest strength is that you can change a variable any number of times to see how your outcome. You’re like Doctor Strange-ing it. However, you have to be careful with these as small changes in any singular event could have largely different outcomes. 

Thought experiments allow you to consider many possibilities when making decisions. They allow you to think critically and better understand cause-effect relationships. 

Reduce the Role of Chance

  • Necessity is Different from Sufficiency. 
    • Just because something is necessary, doesn’t mean it’s enough. 
      • Bread is necessary to make a sandwich but that doesn’t necessarily mean that if you have two slices of bread you’ve got a full sandwich. The bread is necessary but insufficient for a sandwich. 

Ultimately there are a few things in life that happen due to chance and it’s not in your control. While you should lower the reliance of your things to chance, keep in mind there’s no guarantee. 

Another powerful principle is Second-Order Thinking

Second Order Thinking

  • Whenever you do something, there are some effects, big or small. Second-Order thinking looks at the “effects of the effects”
  • If you don’t think about the effects of the effects of your actions…it can be very bad. 
  • There’s a reason why we also call this the “Law of Unintended Consequences” 

There are two places where you can use second-order thinking:

  1. Prioritizing long-term interests over immediate gains
    • You can overlook any short term effects to identify what the long-term effects are. 
  2. Constructing effective arguments
    • You can anticipate challenges to address them ahead of time. If you can answer for second-order effects, your argument is more compelling. 

When using the second-order thinking model there’s one thing you have to be careful with:

The Slippery Slope Effect

  • Saying that making any one mistake will lead you down an irredeemable life is faulty reasoning. That’s the slippery slope: one action leads to another which leads to another, resulting in a downward spiral to hell. 
  • Remember that second-order thinking has limits. 

Thinking ahead can save you a lot of time later down the road.


Probabilistic Thinking 

  • This is when you weigh the likelihood of any specific event or outcome happening. This can be done through maths and logic. This helps you improve your accuracy when making decisions. 

There are 3 aspects of probability you should know.

  1. Bayesian Thinking (AKA Bayesian updating)
    1. The core of it is that as we come across new information, we should consider it in light of what we already know. You take the information as a sort of base on which you can use to frame future decision making. 
    2. For every new bit of knowledge you add, you aren’t treating it as either completely right *or* completely wrong. You are only considering the probability of it being true. This probability is referred to as the Bayes factor or the likelihood ratio. 
    3. Over time, you replace the most out-dated information in them because of your active validation of information. 
  2. Fat-tailed curves
    1. This relates to conditional probability. In a bell curve, like below which depicts the weights or heights of people, there is a normal distribution. The outliers are generally well-defined in this situation. You won’t usually meet someone who is ten times the size of an average person. In a fat tail curve situation, this gets flipped on its head. You might consistently bump into people who are 10, 20, 100 times wealthier than the average person. In life, you have to position yourself to plan and think ahead about a world you don’t fully understand. 
  3.  Asymmetries
    1. You need to understand “metaprobability” which is the probability your estimates are good or valid
    2. Sometimes people tend to overestimate confidence in estimates like “oh, we’re definitely going to beat the market and get a 20% return per annum.” 

You have to have a sense of the probabilities in a situation, verify your assumptions, and make decisions. You won’t be 100% correct but you will be more accurate and that will give you better outcomes. 


Anti-fragility

Anti-fragile things thrive in volatile contexts. How can you arm yourself with anti-fragility?

  • Upside Optionality:
    • Look for situations that promote serendipity. There’s no guarantee of anything happening if you attend a cocktail party with people you would like to know. Whether the interactions go well or not is ultimately irrelevant. You’ll never have the chance of a good meeting if you don’t attend the meeting in the first place. 
  • Fail properly
    • Never take a risk that will wipe you out completely.
    • Build your resilience to learn from failure and start over. 

Supporting Idea: Correlation vs. Causation

  • Just because you see two things happening at once doesn’t mean that one causes the other. 
  • Statisticians measure this likelihood of the factors being related as the correlation coefficient. Things that are expected to have no relation to each other like suicide rates and bottled water consumption will have a correlation coefficient value of 0. 

Correlation coefficient values

  • 0
    • No relationship 
  • 1 or -1
    • Strong positive correlation or negative correlation, respectively
  • Any other number between -1 and 1
    • Varying degrees of relationship between your two factors. 

Regression to the mean: “Whenever correlation is imperfect, extremes will soften over time.” The worse appears to get better and the best does the opposite. 

  • Example: Daniel Kahneman in Thinking Fast and Slow. His example is that giving depressed children an energy drink over 3 months significantly improves their condition. This is just an example of regression to the mean even if it’s a perfectly viable thing. 
    •  

Inversion

  • It’s easier to avoid stupidity than it is to be super intelligent. Inversion allows you to make use of this idea. 
  • Think backward and forwards. Proceed with this mentality: the thing you’re trying to prove is true. Now if that were true, what else would need to be true? That’s the purpose of inversion. You can think about what you want to “avoid” in your model and then check out what’s left.
  • Here’s the process: 
    • ID the problem. 
    • Define the objective.
    • ID what supports change towards your objective
    • ID what forces impede change towards your objective. 
      • Most of us stop after the third step. Inversion is the sub-step between 3 and 4. Don’t just think about how you can solve a problem. Think of how you could make it worse and then avoid doing that.

Occam’s Razor

  • A helpful way to consider things and frame them. It states that if two different things can explain something, the simplest one is likely the most optimal. We tend to overcomplexify (I made up this word) the world around us. This is not always ideal. Sure, things may not always be simple but it’s helpful to consider instances where it might be. 

Hanlon’s Razor

  • It’s more likely that something happens due to stupidity rather than bad intent. Don’t assume it’s intentional, assume it’s stupidity.