My List of Mental Models

January 9, 2016

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One of my favorite thinkers and investors, Charlie Munger, said this: "Worldly wisdom is mostly very, very simple. There are a relatively small number of disciplines and a relatively small num­ber of truly big ideas. And it's a lot of fun to figure it out. Even better, the fun never stops. Furthermore, there's a lot of money in it, as I can testify from my own personal experience. What I'm urging on you is not that hard to do. And the re­wards are awesome. It'll help you in business. It'll help you in law. It'll help you in life. And it'll help you in love… It makes you better able to serve others, it makes you better able to serve yourself, and it makes life more fun. I think it is undeniably true that the human brain must work in models. The trick is to have your brain work better than the other person’s brain because it understands the most fundamental models: ones that will do most work per unit. If you get into the mental habit of relating what you’re reading to the basic structure of the underlying ideas being demonstrated, you gradually accumulate some wisdom. You’ve got to have models in your head. And you’ve got to array your experience ‑ both vicarious and direct ‑ on this latticework of models. You may have noticed students who just try to remember and pound back what is remembered. Well, they fail in school and in life. You’ve got to hang experience on a latticework of models in your head.  The models have to come from multiple disciplines ‑ because all the wisdom of the world is not to be found in one little academic department. That’s why poetry professors, by and large, are so unwise in a worldly sense. They don’t have enough models in their heads. So you’ve got to have models across a fair array of disciplines. You may say, ‘My God, this is already getting way too tough.’ But, fortunately, it isn’t that tough ‑ because 80 or 90 important models will carry about 90% of the freight in making you a worldly ‑ wise person. And, of those, only a mere handful really carry very heavy freight.” You must know the big ideas in the big disciplines and use them routinely – all of them, not just a few. Most people are trained in one model, economics, for example - and try to solve all problems in one way. You know the old saying, 'To the man with a hammer, the world looks like a nail.'? This is a dumb way of handling problems." Taking Charlie's advice, for the last few months I've put together a list of mental models I've worked to ingrain into my thinking. When I see a problem, it's becoming more and more of a reflex to immediately open my mental toolkit of models (otherwise called frameworks) to both dissect, understand, and solve the problem. The list will update over time, but here are my favorites:  
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