#746 - Morgan Housel - 12 Unexpected Laws Of Human Psychology
Feb 17, 2024
01:51:22
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Explore the laws of human psychology with insights on optimism, tragedies vs miracles, lessons from wealthy divorces, dangers of perfectionism, and the fall of competitive advantages. Delve into historical innovation, gender attractiveness preferences, the power of artificial constraints, slow positive changes, and the price of success. Learn about the evolution of innovation, embracing long-term investing, airport security solutions, and the power of simplicity in personal finance.
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Quick takeaways
Rational optimism involves foreseeing a brighter future amidst obstacles.
Historical crises spark remarkable innovation and technological progress.
Creativity thrives with margin for error and unstructured time.
Success demands sacrifices, emphasizing the importance of paying the necessary price.
Incentives influence moral behavior, potentially justifying unethical actions.
Deep dives
The Power of Rational Optimism
Rational optimism means believing the future will be better while recognizing the challenges along the way.
The Productive Benefits of Stress
High-stress periods in history have often resulted in significant innovation and technological advancements.
The Importance of Room for Error
Having room for error and unstructured time is crucial for creativity and problem-solving.
The Cost of Success
Success often comes with sacrifices, and the willingness to pay the necessary cost is essential for achievement.
Success Requires Hard Work and Sacrifice
In the podcast episode, the speaker tells a story about fraternity pledges whining about their tasks and emphasizes the importance of understanding that success and fulfillment come with a cost. The speaker highlights that many highly successful individuals, such as entrepreneurs, generals, and athletes, have a compulsion and drive to pursue their goals, often leading to a level of sacrifice and tortured mentality. The speaker also mentions how success is stratified, with some people born with a natural drive while others struggle to maintain the same level of passion.
Avoid Shortcut Mentality and Embrace Deserving Success
The podcast episode references the story of the Donner Party, a group of wealthy individuals who attempted to take a shortcut on their journey west and ultimately resorted to cannibalism. This serves as a reminder to avoid cutting corners and instead focus on deserving success. The speaker shares insights from various sources, conveying the importance of earning success through hard work, rather than expecting it to come easily. This principle applies to various aspects of life, including relationships, career, and wealth.
The Power of Simplicity and Behavioral Approach
The podcast episode explores the concept of how simplicity is often undervalued, while complexity is mistakenly associated with expertise. The speaker highlights how simplicity can be highly effective in fields like investing and relationships, emphasizing that overcomplicating things is unnecessary. They give examples of successful companies like Zappos and Amazon that utilize simplicity by managing expectations and behavioral approaches to enhance customer experiences. The speaker also discusses the allure of complexity and the need to recognize its limited value in certain areas of life.
The Influence of Incentives on Behavior
Incentives play a powerful role in shaping people's behavior and can often lead individuals to justify and defend actions that they may have previously considered morally wrong. This phenomenon is seen in various contexts, such as the financial crisis of 2008, where individuals who were incentivized to engage in risky behavior did so despite the potential consequences. Examples like the admiration for the drug lord El Chapo and the experiences of German civilians in Nazi Germany demonstrate how incentives can override individuals' moral compass and lead them to embrace or overlook questionable behavior.
The Difficulty of Predicting Our Own Behavior
People often underestimate the impact of personal experiences and circumstances on their own behavior. Whether it's soldiers on the front lines who struggle to pull the trigger, investors who change their views during market downturns, or individuals who find it challenging to stick to long-term plans, our responses to situations can be unpredictable until we have firsthand experience. Nature, nurture, and individual differences influence our perspectives and actions, making it crucial to recognize that we each have unique scars and biases that shape how we perceive and respond to events.
Morgan Housel is a partner at The Collaborative Fund, an investor and an author.
The world continues to change, but the hairless apes that inhabit it stay the same. So there must be some laws of human psychology which remain true, no matter what time and place you're in, and today we get to go through some of the most fascinating ones.
Expect to learn what reasonable optimism looks like, the difference between overnight tragedies and long term miracles, what we can learn by the divorces of the richest men on the planet, how people become victims of perfection, why most competitive advantages eventually die and much more...
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