How you think and what you believe
Capital Thinking · Issue #1024 · View online
Ideas That Changed My Life
Morgan Housel | The Collaborative Fund Blog:
Brent Beshore recently listed the biggest ideas that changed his life.
A few of mine:
Everyone belongs to a tribe and underestimates how influential that tribe is on their thinking.
There is little correlation between climate change denial and scientific literacy. But there is a strong correlation between climate change denial and political affiliation.
That’s an extreme example, but everyone has views persuaded by identity over pure analysis. There’s four parts to this:
- Tribes are everywhere: Countries, states, parties, companies, industries, departments, investment styles, economic philosophies, religions, families, schools, majors, credentials, Twitter communities.
- People are drawn to tribes because there’s comfort in knowing others understand your background and goals.
- Tribes reduce the ability to challenge ideas or diversify your views because no one wants to lose support of the tribe.
- Tribes are as self-interested as people, encouraging ideas and narratives that promote their survival. But they’re exponentially more influential than any single person. So tribes are very effective at promoting views that aren’t analytical or rational, and people loyal to their tribes are very poor at realizing it.
Psychologist Geoffrey Cohen once showed Democratic voters supported Republican proposals when they were attributed to fellow Democrats more than they supported Democratic proposals attributed to Republicans (and the opposite for Republican voters). This kind of stuff happens everywhere, in every field, if you look for it.
Everything’s been done before. The scenes change but the behaviors and outcomes don’t.
Historian Niall Ferguson’s plug for his profession is that “The dead outnumber the living 14 to 1, and we ignore the accumulated experience of such a huge majority of mankind at our peril.”
The biggest lesson from the 100 billion people who are no longer alive is that they tried everything we’re trying today.
The details were different, but they tried to outwit entrenched competition. They swung from optimism to pessimism at the worst times. They battled unsuccessfully against reversion to the mean.
They learned that popular things seem safe because so many people are involved, but they’re most dangerous because they’re most competitive.
Same stuff that guides today, and will guide tomorrow.
History is abused when specific events are used as a guide to the future. It’s way more useful as a benchmark for how people react to risk and incentives, which is pretty stable over time.
Start with the assumption that everyone is innocently out of touch and you’ll be more likely to explore what’s going on through multiple points of view, instead of cramming what’s going on into the framework of your own experiences.
It’s hard to do. It’s uncomfortable when you do.
But it’s the only way to get closer to figuring out why people behave like they do.