*2nd order thinking* framework that'll change your life:
The smartest people use 2nd & 3rd order affects to make decisions.
Every action has a consequence, each consequence has another.
A thread on a framework used by billionaires to see into the future:
The smartest people use 2nd & 3rd order affects to make decisions.
Every action has a consequence, each consequence has another.
A thread on a framework used by billionaires to see into the future:
@howardmarks - Billionaire
Warren Buffet - Billionaire
@RayDalio - Billionaire
All credit 2nd and 3rd order affects with much of their success.
Warren Buffet - Billionaire
@RayDalio - Billionaire
All credit 2nd and 3rd order affects with much of their success.
What is it?
First order thinking you consider the intended and obvious implications of a business decision or policy change.
Second order thinking is tracing down and unraveling the implications of those first-order impacts.
Aka few do this...
First order thinking you consider the intended and obvious implications of a business decision or policy change.
Second order thinking is tracing down and unraveling the implications of those first-order impacts.
Aka few do this...
@howardmarks said,
"First-level thinking is simplistic & superficial, just about everyone can do it ( bad sign). All the first-level thinker needs is an opinion, “The outlook is favorable, ie the stock will go up.” Second-level thinking is deep, complex & convoluted."
"First-level thinking is simplistic & superficial, just about everyone can do it ( bad sign). All the first-level thinker needs is an opinion, “The outlook is favorable, ie the stock will go up.” Second-level thinking is deep, complex & convoluted."
Let's explain how to use 2nd order thinking (what smart people do) in a very non-PC lens:
- 3 decisions politicians made to take a rich state and turn it into a poor state bc they thought like 1st level thinkers.
aka "this seems nice, I think we should do it."
- 3 decisions politicians made to take a rich state and turn it into a poor state bc they thought like 1st level thinkers.
aka "this seems nice, I think we should do it."
DECISION #1:
San Francisco 1st order politicians: We don't want to have so many people in jail for petty crime.
Decision: Make stealing not worth punishing.... by raising limits for jailable offenses to $950 stolen.
Meh, seems reasonable?
San Francisco 1st order politicians: We don't want to have so many people in jail for petty crime.
Decision: Make stealing not worth punishing.... by raising limits for jailable offenses to $950 stolen.
Meh, seems reasonable?
Second-order affect:
Target stores now close 4 hours early in SF bc theft is too rampant.
Show me your incentives I'll show you your outcomes.
abc7news.com/target-hours-s…
Target stores now close 4 hours early in SF bc theft is too rampant.
Show me your incentives I'll show you your outcomes.
abc7news.com/target-hours-s…
Third-order affect:
Target shutters stores permanently in SF.
Biggest population hurt? The very ones they were originally trying to help.
kron4.com/news/bay-area/…
Target shutters stores permanently in SF.
Biggest population hurt? The very ones they were originally trying to help.
kron4.com/news/bay-area/…
2nd & 3rd order thinking would mean, they look to the cause, not the symptom.
Then you find a cure instead of a bandaid.
Then you find a cure instead of a bandaid.
DECISION #2
1st order politicians: We need more tax revenue, our state is in deficit and citizens are mad.
Decision: Let's tax the wealthy more, they can afford it.
I think taxes well spent are amazing, so they can do that but..
forbes.com/sites/robertwo…
1st order politicians: We need more tax revenue, our state is in deficit and citizens are mad.
Decision: Let's tax the wealthy more, they can afford it.
I think taxes well spent are amazing, so they can do that but..
forbes.com/sites/robertwo…
2nd order affects: 135,000 more people leave the state than came in.
Some of the largest companies *(and biggest tax revenues left the state).
cnbc.com/2021/01/23/why…
Some of the largest companies *(and biggest tax revenues left the state).
cnbc.com/2021/01/23/why…
DECISION #3:
1st order CA thinking: We have systemic racism and we need to create equality.
Decision: Mandate critical race theory in classes across California.
I don't like racism either, seems reasonable.
hoover.org/research/calif…
1st order CA thinking: We have systemic racism and we need to create equality.
Decision: Mandate critical race theory in classes across California.
I don't like racism either, seems reasonable.
hoover.org/research/calif…
2nd order affects: CA parents review curriculum that they feel is divisive on children. Home school applications triple.
Funding to schools down to lowest levels.
californiaglobe.com/section-2/home…
Funding to schools down to lowest levels.
californiaglobe.com/section-2/home…
How do we avoid these decisions?
Questions like: @farnamstreet poses:
- Ask yourself “then what?”
- Think through time — What do the consequences look like in 10 min? 10 months? 10 Years?
- Write down implications
- Who am I not considering?
- How could this go wrong?
Questions like: @farnamstreet poses:
- Ask yourself “then what?”
- Think through time — What do the consequences look like in 10 min? 10 months? 10 Years?
- Write down implications
- Who am I not considering?
- How could this go wrong?
OUR MAIN PROBLEM IN THE WORLD TODAY?
Too many people are 1st order thinkers.
Not enough look down the trail.
Don't be those people and watch what happens.
Too many people are 1st order thinkers.
Not enough look down the trail.
Don't be those people and watch what happens.
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