Modern Wisdom #746 - Morgan Housel - 12 Unexpected Laws Of Human Psychology
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Feb 17, 2024 
Morgan Housel, a partner at The Collaborative Fund and a notable author on behavioral economics, shares intriguing insights into human psychology. He discusses the balance of rational optimism in navigating setbacks and how crises can drive innovation. Housel highlights the evolving nature of beauty standards influenced by economics and explores the interplay of resilience and optimism in leadership. He stresses the value of reading and the unseen costs of success, while examining the complexities of incentives that shape human behavior.
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Rational Optimism
- Rational optimism means believing in a better future while expecting a difficult path.
- It acknowledges setbacks like recessions and pandemics as the price of long-term rewards.
Innovation Through Adversity
- The Great Depression and WWII, despite their devastation, fostered immense innovation.
- Driven by necessity, advancements like supermarkets and penicillin emerged from these crises.
The Power of Downside Incentives
- Downside incentives, like the threat of failure or death, drive innovation more than potential riches.
- This explains why progress often occurs during crises.
