Notes and Takeaways from Mental Models 101

Source: YouTube

When I watched it: February 2021

Why I watched it: Since studying Charlie Munger’s 25 psychological tendencies, I’ve wanted to explore additional mental models. A mental model is an analogy or framework that helps you explain things. It's like a recipe for decision-making. I’ve enjoyed George MacGill’s recent Twitter threads, so I thought I’d give one of his podcast episodes a listen. Here are my notes.

Go to the YouTube listing for the recording or scroll down for my notes.

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My notes

What are mental models?

Mental models are like recipes for decision-making. If you can imagine your mind as an operating system, you can think of mental models as apps you plug in to aid your decision-making.

A mental model can also be an analogy that helps you explain things.

Charlie Munger refers to mental models as a latticework of theories from macro-disciplines like Physics, Economics, Biology, and Mathematics. You can grab the 10 percent that explains the 90 percent from each major discipline and work them together into broad models you can then use to explain most things.

Inversion

Inversion comes from mathematics. With inversion, you reverse a problem and solve its inverse instead of the original problem.

Here are a few examples of useful inversions.

Don’t try to be happy. Instead, focus on avoiding unhappiness. For example, consider how you would make a happy person depressed. You’d mess with their sleep, nutrition, and physical activity, and then you’d isolate them away from all social iteration. So to be happy, avoid poor sleep, nutrition, and physical activity, and seek regular social interaction.

Don’t try to be smart. Instead, avoid stupidity

Don’t try to have perfect relationships. Instead, avoid toxic ones.

Contrast

We’re hardwired to notice contrast and change, but the change has to cross a certain threshold before we become aware of it. Our surroundings seem pretty constant, but they’re always changing.

Contrast is relative; it’s not a precise measurement. Relying on contrast for precision can get you into trouble. For example, if you put your hand in cold water and then put it in warm water, the warm water will feel hot. But if you put your hand in hot water and then put it in warm water, the warm water will feel cold.

The low-contrast changes (i.e., small, gradual changes) can be the ones that harm us the most (or vice versa). Low-contrast environments are effectively feedbackless.

Two examples of situations where a lack of contrast can hurt you over time are relationships and overeating. In relationships, it’s easy for the relationship to get a bit worse every day without you noticing. Then, two years later, you hate each other. With overeating, it’s easy to eat just a little bit too much every day. Then, six months later, you’ve gained ten pounds.

First Principles

The concept of first principles comes from physics. With first principles, you break something down to its key ingredients and start from scratch. You deconstruct it so you can reconstruct it. This helps you avoid the limits of analogous thinking (i.e., “reasoning by analogy”).

Elon Musk used first principles thinking to design a more cost-effective battery for Tesla’s electric car. Because the core ingredients of a battery are one-tenth the cost of a battery, you can reduce the cost of a battery by putting the parts together in a more efficient way.

(For more on this concept, see my article on first principles thinking.)

Doublethink

With Doublethink, you force yourself to accept two contradictory beliefs as correct. It’s black-and-white thinking.

Black-and-white thinking is good, but you want to avoid gray areas. Gray areas are no man’s land.

In golfing, before you swing, you want to be full of self-doubt and focus on planning the right swing. But, during the swing, you want total self-confidence.

In fighting, while training, you want to believe you’re not good enough so as to push yourself to train harder. But during the fight, you want to believe you’re the best.

In debate, you want to know the opposing argument just as well as your own.

Identity

When you identify with something, it can be a superpower or a huge weakness.

For example, identifying as a nonsmoker can help you stop smoking.

Signal versus noise

Signal versus noise is a way of thinking about the difference between long-term truth (“signal”) and temporary information (“noise”). This way, you separate the information that actually matters from the information that doesn’t.

A good example of signal is Scott Adams’ article on how to become a better writer. It takes two minutes to read. (See “The day you can become a better writer”.)

The Lindy effect

The Lindy effect is a theory that says the future life expectancy of something is proportional to the thing’s current age. In other words, the longer something has been around, the longer you can expect it to survive in the future.

The Lindy effect can help you avoid recency bias. Newer does not always equal better.

A blog post written today is less likely to outlive the Bible.

A one-year-old startup is unlikely to beat Berkshire Hathaway.

Systems thinking

With systems thinking, you prioritize systems over goals. Goals are the outcomes you want to achieve. Systems are what you need to do to accomplish the goal.

When you focus on systems, you make progress which makes you happy. But with goals, you’re unhappy until you hit them.

Systems are what differentiate two people (or two companies) with identical goals.

High agency

The term “high agency” was coined by Eric Weinstein. It’s about finding a way to get what you want without waiting for permission or the perfect conditions.

A high agency person believes they can change their story; they are relentlessly resourceful.

A low agency person accepts the story that is given to them; they are helpless.

According to George Mack, high agency behavior is the most important personality trait for future success.

If the weather is bad, a high agency person will still go for a jog.

If everyone is doing this, a high agency person still questions whether it’s the right thing to do.

If there’s a ten-year goal, a high agency person might explore how to accomplish it in six months.

Asymmetries

Asymmetries refer to situations that lack symmetry. This concept comes from mathematics.

Asymmetrical risks are situations where the upside is low, and the downside is high. An example is drinking and driving.

Asymmetrical opportunities are situations where the upside is high, and the downside is low. An example is direct messaging people on social media who are doing things that you’re interested in.

Second-order and third-order thinking

This concept comes from chemistry.

You can make better long-term decisions by focusing on the second and third-order consequences instead of only considering the first-order consequences.

Making decisions based on first-order consequences often leads to negative second and third-order consequences. The converse is also true. F

For example, the first-order consequences of exercise are pain and time spent, which is undesirable. The second-order effects of exercise are better health and a more attractive appearance, which is desirable. The third-order effects of exercise are that you’re wiring your brain to delay gratification, which is a superpower.

Buffett-Franklin Superstack

With the Warren Buffett exercise, you look at your friends and consider who you would invest 10 percent in and who you would short 10 percent. Then you consider why? This works because you can see good/bad values in other people better than in yourself.

With the Ben Franklin exercise, you review your top 30 desired virtues at night and grade the day.

With the Buffett-Franklin Superstack, you combine the two by reviewing the virtues (and vices) you identify via the Buffett exercise during the Franklin exercise.

Inputs versus outputs

If you want different outputs, you have to change the inputs.

Normal inputs lead to normal outputs.

Extreme inputs lead to extreme outputs.

Maps versus terrain

Are you looking at a map or exploring the terrain?

A map is an artificial version of reality. Maps are easy.

The terrain is the actual version of reality. Terrain is hard.

Seek out terrains and avoid maps. The closer you can get to reality, the better.

For example, “Chauffeur” knowledge is not the same as “Planck” knowledge. Chauffeur knowledge is surface know-how. Planck knowledge is true expertise.

Lollapalooza effect

This is Charlie Munger’s term for describing situations in which multiple mental models come together to create even more powerful effects. For example, auctions bring together social proof bias, lack of contrast, and consistency bias all at once.