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Achieving Your Childhood Dreams

Reading Time: 6 minutes

The “last lecture” is common with a lot of professors on college campuses. Professors are asked to consider what matters most to them. If you’ve ever sat in the audience for one of these lectures you can’t help but wonder what wisdom you’d want to impart to the world if it was your last chance?

Randy Pausch, a computer science professor at Carnegie Mellon, gave such a lecture. Only he didn’t have to imagine it was his last act because he had recently been diagnosed with terminal cancer.

“That is what it is. We can’t change it. We just have to decide how we’ll respond. We cannot change the cards we are dealt, just how we play the hand.”

The Last Lecture is a summary of all Pausch had learned and all he wanted to pass along to his children. The lecture, entitled “Really Achieving Your Childhood Dreams,” wasn’t about dying rather just the opposite. It was about dreams, moments and overcoming obstacles because “time is all you have…and you may find one day that you have less than you think.”

I was trying to put myself in a bottle that would one day wash up on the beach for my children. If I were a painter, I would have painted for them. If I were a musician, I would have composed music. But I am a lecturer. So I lectured.

I lectured about the joy of life, about how much I appreciated life, even with so little of my own left. I talked about honesty, integrity, gratitude, and other things I hold dear. And I tried very hard not to be boring.

On his childhood:if you have a question then find the answer.

[M]y dad had this infectious inquisitiveness about current events, history, our lives.

In fact, growing up, I thought there were two types of families:

1) Those who need a dictionary to get through dinner.
2) Those who don’t.

We were No. 1. Most every night, we’d end up consulting the dictionary, which we kept on a shelf just six steps from the table. “If you have a question,” my folks would say, “then find the answer.”

The instinct in our house was never to sit around like slobs and wonder. We knew a better way: Open the encyclopedia. Open the dictionary. Open your mind.

On his father’s advice:

My dad gave me advice on how to negotiate my way through life. He’d say things like: “Never make a decision until you have to.” He’d also warn me that even if I was in a position of strength, whether at work or in relationships, I had to play fair. “Just because you’re in the driver’s seat,” he’d say, “doesn’t mean you have to run people over.”

Echoing one of the Five Habits of Effective Thinking, Pausch writes:

As a college professor, I’ve seen this as one lesson so many kids ignore, always to their detriment: You’ve got to get the fundamentals down, because otherwise the fancy stuff is not going to work.

“Experience is what you get when you didn’t get what you wanted.”

That’s an expression I learned when I took a sabbatical at Electronic Arts, the video-game maker. It just stuck with me, and I’ve ended up repeating it again and again to students. It’s a phrase worth considering at every brick wall we encounter, and at every disappointment. It’s also a reminder that failure is not just acceptable, it’s often essential.

On encountering obstacles:

The brick walls are there for a reason. They’re not there to keep us out. The brick walls are there to give us a chance to show how badly we want something.

Complaining doesn’t work.

Complaining does not work as a strategy. We all have finite time and energy. Any time we spend whining is unlikely to help us achieve our goals. And it won’t make us happier.

We’re all aware that time is finite but few of us live our lives as if we know this simple truth. Pausch put a lot of effort into managing his time well and because of that he was able to pack a whole lot of life in. Here is what he says about time management:

Time must be explicitly managed, like money. My students would sometimes roll their eyes at what they called “Pauschisms,” but I stand by them. Urging students not to invest time on irrelevant details, I’d tell them: “It doesn’t matter how well you polish the underside of the banister.”

You can always change your plan, but only if you have one. I’m a big believer in to-do lists. It helps us break life into small steps. I once put “get tenure” on my to-do list. That was naïve. The most useful to-do list breaks tasks into small steps. It’s like when I encourage Logan to clean his room by picking up one thing at a time.

Ask yourself: Are you spending your time on the right things? You may have causes, goals, interests. Are they even worth pursuing? I’ve long held on to a clipping from a newspaper in Roanoke, Virginia. It featured a photo of a pregnant woman who had lodged a protest against a local construction site. She worried that the sound of jackhammers was injuring her unborn child. But get this: In the photo, the woman is holding a cigarette. If she cared about her unborn child, the time she spent railing against jackhammers would have been better spent putting out that cigarette.

Develop a good filing system. When I told Jai I wanted to have a place in the house where we could file everything in alphabetical order, she said I sounded way too compulsive for her tastes. I told her: “Filing in alphabetical order is better than running around and saying, ‘I know it was blue and I know I was eating something when I had it.’”

Rethink the telephone. I live in a culture where I spend a lot of time on hold, listening to “Your call is very important to us.” Yeah, right. That’s like a guy slapping a girl in the face on a first date and saying, “I actually do love you.” Yet that’s how modern customer service works. And I reject that. I make sure I am never on hold with a phone against my ear. I always use a speaker phone, so my hands are free to do something else.

…

Delegate. As a professor, I learned early on that I could trust bright, nineteen-year-old students with the keys to my kingdom, and most of the time, they were responsible and impressive. It’s never too early to delegate. My daughter, Chloe, is just eighteen months old, but two of my favorite photos are of her in my arms. In the first, I’m giving her a bottle. In the second, I’ve delegated the task to her. She looks satisfied. Me, too.

Take a time out. It’s not a real vacation if you’re reading email or calling in for messages. When Jai and I went on our honeymoon, we wanted to be left alone. My boss, however, felt I needed to provide a way for people to contact me. So I came up with the perfect phone message:

“Hi, this is Randy. I waited until I was thirty-nine to get married, so my wife and I are going away for a month. I hope you don’t have a problem with that, but my boss does. Apparently, I have to be reachable.” I then gave the names of Jai’s parents and the city where they live. “If you call directory assistance, you can get their number. And then, if you can convince my new in-laws that your emergency merits interrupting their only daughter’s honeymoon, they have our number.”

We didn’t get any calls.

In the end, “time is all you have,” writes Pausch. “And you may find one day that you have less than you think.”

The Last Lecture is a wonderful and heartfelt book, and one that you’ll want to revisit regularly.

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Bill Gates — The Seven Best Books I Read in 2013

Reading Time: 3 minutes

Bill Gates presents his 7 top reads in 2013.

Commenting on the lack of novels on the list, Gates writes:

It’s not that I don’t enjoy fiction. I’ve read The Catcher in the Rye a bunch of times—it’s one of my favorite books ever (and I enjoyed Salinger, the documentary that came out this year). I did read Gary Shteyngart’s Super Sad True Love Story, which was entertaining though it didn’t have as much science fiction as I expected.

But I read mostly nonfiction because I always want to learn more about how the world works. And reading is how I learn best.

That’s an interesting statement coming from Gates, especially in light of recent posts on using literature to study decision making under ignorance.

With that said, Gates is an excellent source of reading material for me. His top reads of 2012 led me to order Behind the Beautiful Forevers, a book I added to my antilibrary. And his summer reading list, along with the recommendations of readers, encouraged me to read The Box, a surprisingly enjoyable read on the history of the shipping container. This book shows up again on the end of year list of his top reads.

Here are his picks, in no particular order:

The Box, by Marc Levinson

“You might think you don’t want to read a whole book about shipping containers… But he makes a good case that the move to containerized shipping had an enormous impact on the global economy and changed the way the world does business. And he turns it into a very readable narrative. I won’t look at a cargo ship in quite the same way again.”

The Most Powerful Idea in the World, by William Rosen

“A bit like The Box, except it’s about steam engines… I’d wanted to know more about steam engines since the summer of 2009, when my son and I spent a lot of time hanging out at the Science Museum in London.”

Harvesting the Biosphere, by Vaclav Smil

“Here he gives as clear and as numeric a picture as is possible of how humans have altered the biosphere. The book is a bit dry and I had to look up a number of terms that were unfamiliar to me, but it tells a critical story if you care about the impact we’re having on the planet.”

The World Until Yesterday, by Jared Diamond

“Diamond finds fascinating anecdotes about what life is like for hunter-gatherers and asks which ones might apply to our modern lifestyles. He doesn’t make some grand pronouncement or romanticize tribal life. He just wants to find the best practices and share them.”

Poor Numbers, by Morten Jerven

“Jerven, an economist, spent four years digging into how African nations get their statistics and the challenges they face in turning them into GDP estimates. He makes a strong case that a lot of GDP measurements we thought were accurate are far from it.”

Why Does College Cost So Much?, by Robert B. Archibald and David H. Feldman

“The authors are good about not pointing fingers but instead talking about how America’s labor market affects the cost of college. My view is that as long as there’s a scarcity of college graduates, a college degree will be quite valuable. So people will pay more to get one. And if they will pay more, then colleges and universities — whose labor is provided mostly by people who paid a lot for their own degrees — can ask for more. Until you get an excess supply of graduates, then you don’t really get any price competition.”

The Bet, by Paul Sabin

“Sabin chronicles the public debate about whether the world is headed for an environmental catastrophe. He centers the story on Paul Ehrlich and Julian Simon, who wagered $1,000 on whether human welfare would improve or get worse over time. Without ridiculing either proponent, Sabin shows how their extreme views contributed to the polarized debate over climate change and other issues that continues today.”

Gates’ list is a happy addition to the 2013 collection of reading lists.

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Scarcity: Why Having Too Little Means So Much

Reading Time: 5 minutes

scarcity

“The biggest mistake we make about scarcity is we view it as a physical phenomenon. It’s not.”

We’re busier than ever. The typical inbox is perpetually swelling with messages awaiting attention. Meetings need to be rescheduled because something came up. Our relationships suffer. We don’t spend as much time as we should with those who mean something to us. We have little time for new people; potential friends eventually get the hint and stop proposing ideas for things to do together. Falling behind turns into a vicious cycle.

Does this sound anything like your life?

You have something in common with people who fall behind on their bills, argue Harvard economist Sendhil Mullainathan and Princeton psychologist Eldar Shafir in their book Scarcity: Why Having Too Little Means So Much. The resemblance, they write, is clear.

Missed deadlines are a lot like over-due bills. Double-booked meetings (committing time you do not have) are a lot like bounced checks (spending money you do not have). The busier you are, the greater the need to say no. The more indebted you are, the greater the need to not buy. Plans to escape sound reasonable but prove hard to implement. They require constant vigilance—about what to buy or what to agree to do. When vigilance flags—the slightest temptation in time or in money—you sink deeper.

Some people end up sinking further into debt. Others with more commitments. The resemblance is striking.

We normally think of time management and money management as distinct problems. The consequences of failing are different: bad time management leads to embarrassment or poor job performance; bad money management leads to fees or eviction. The cultural contexts are different: falling behind and missing a deadline means one thing to a busy professional; falling behind and missing a debt payment means something else to an urban low-wage worker.

What’s common between these situations? Scarcity. “By scarcity,” they write, “we mean having less than you feel you need.”

And what happens when we feel a sense of scarcity? To show us Mullainathan and Shafir bring us back to the past. Near the end of World War II, the Allies realized they would need to feed a lot of Europeans on the edge of starvation. The question wasn’t where to get the food but, rather, something more technical. What is the best way to start feeding them? Should you begin with normal meals or small quantities that gradually increase? Researchers at the University of Minnesota undertook an experiment with healthy male volunteers in a controlled environment “where their calories were reduced until they were subsisting on just enough food so as not to permanently harm themselves.” The most surprising findings were psychological. The men became completely focused on food in unexpected ways:

Obsessions developed around cookbooks and menus from local restaurants. Some men could spend hours comparing the prices of fruits and vegetables from one newspaper to the next. Some planned now to go into agriculture. They dreamed of new careers as restaurant owners…. When they went to the movies, only the scenes with food held their interest.

“Scarcity captures the mind,” Mullainathan and Shafir write. Starving people have food on their mind to the point of irrationality. But we all act this way when we experience scarcity. “The mind,” they write, “orients automatically, powerfully, toward unfulfilled needs.”

Scarcity is like oxygen. When you don’t need it, you don’t notice it. When you do need it, however, it’s all you notice.

For the hungry, that need is food. For the busy it might be a project that needs to be finished. For the cash-strapped it might be this month’s rent payment; for the lonely, a lack of companionship. Scarcity is more than just the displeasure of having very little. It changes how we think. It imposes itself on our minds.

And when scarcity is taking up your mental cycles and putting your attention on what you lack, you can’t attend to other things. How, for instance, can you learn?

(There was) a school in New Haven that was located next to a noisy railroad line. To measure the impact of this noise on academic performance, two researchers noted that only one side of the school faced the tracks, so the students in classrooms on that side were particularly exposed to the noise but were otherwise similar to their fellow students. They found a striking difference between the two sides of the school. Sixth graders on the train side were a full year behind their counterparts on the quieter side. Further evidence came when the city, prompted by this study, installed noise pads. The researchers found this erased the difference: now students on both sides of the building performed at the same level.

Cognitive load matters. Mullainathan and Shafir believe that scarcity imposes a similar mental tax, impairing our ability to perform well and exercise self control.

We are all susceptible to “the planning fallacy,” which means that we’re too optimistic about how long it will take to complete a project. Busy people, however, are more vulnerable to this fallacy. Because they are focused on everything they must currently do, they are “more distracted and overwhelmed—a surefire way to misplan.” “The underlying problem,” writes Cass Sunstein in his review for the New York Review of Books, “is that when people tunnel, they focus on their immediate problem; ‘knowing you will be hungry next month does not capture your attention the same way that being hungry today does.’ A behavioral consequence of scarcity is “juggling,” which prevents long-term planning.”

When we have abundance we don’t have as much depletion. Wealthy people can weather a shock without turning their lives upside-down. The mental energy needed to prevail may be substantial but it will not create a feeling of scarcity.

Imagine a day at work where your calendar is sprinkled with a few meetings and your to-do list is manageable. You spend the unscheduled time by lingering at lunch or at a meeting or calling a colleague to catch up. Now, imagine another day at work where your calendar is chock-full of meetings. What little free time you have must be sunk into a project that is overdue. In both cases time was physically scarce. You had the same number of hours at work and you had more than enough activities to fill them. Yet in one case you were acutely aware of scarcity, of the finiteness of time; in the other it was a distant reality, if you felt it at all. The feeling of scarcity is distinct from its physical reality.

Mullainathan and Shafir sum up their argument:

In a way, our argument in this book is quite simple. Scarcity captures our attention, and this provides a narrow benefit: we do a better job of managing pressing needs. But more broadly, it costs us: we neglect other concerns, and we become less effective in the rest of life. This argument not only helps explain how scarcity shapes our behaviors; it also produces some surprising results and sheds new light on how we might go about managing our scarcity.

In a way this explains why diets never work.

Scarcity: Why Having Too Little Means So Much goes on to discuss some of the possible way to mitigate scarcity using defaults and reminders.

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Forbes Interview

Reading Time: 3 minutes

I was recently interviewed in Forbes.

Shane Parrish is on a mission to make you think, and think better. With over 30,000 subscribers — and that number growing quickly — Shane runs Farnam Street, an intellectual hub of curated “interestingness” that covers topics like human misjudgment, decision making, strategy, and philosophy. He exposes his readers to big ideas from multiple disciplines, adding tools to their problem-solving toolbox that improve decision making.

As an avid reader of FS myself, I recently caught up with Shane to discuss its genesis, how he works through a problem, why he was frustrated with his education, and, of course, Justin Bieber.

Here are two excerpts, in particular, I think you’ll enjoy.

The first is on my experiences doing an MBA.

Beshore: What was the core problem with your MBA program?

Parrish: There is a big difference between knowing what something is called and understanding. My MBA was all about vocabulary. For me, it was too much memorizing and regurgitating. …

The second one focuses on incorporating mental models into your thinking.

Beshore: How can we use these mental models to improve our decision making?

Parrish: When you come across a difficult decision, you really want to have a double filter that shifts your mind from reactive to rational. The first filter is running through your mental models and determining the factors that govern the situation. If I look at this through the lens of evolution, what do I see? What about supply and demand? What are the incentives?

The second filter is how you might be fooling yourself. What’s happening subconsciously? Am I only looking at a small subset of data? Am I in love with my solution? Am I biased by authority?

One of the added benefits of this approach is that when you make a bad decision, and you will, you now have a mental framework where you can account for your mistake in the future. If you failed to consider something you should have, you can easily identify it and account for it. So you’re always getting incrementally better and, over a long life, those increments will make a huge difference.

Beshore: Can you give a hypothetical example of how this system of thinking might play out?

Parrish: Looking at problems through a single discipline often leads to the wrong conclusion. For example, let’s say you’re the CFO of a textile company. The industry is not profitable and plagued with overcapacity, with only one company posting profits in the last 12 months. Your board is pressing you to demonstrate a credible path to profits.

A salesman shows up at your door one day, offering new processing equipment that is 50 percent more efficient. It will save your company a ton of money, improve margins, and pay for itself within only a few years. You verify his claims and determine that by purchasing this equipment, you’d get a 20 percent pre-tax return on your investment. Should you do it? Most people would say yes, but I’d say no.

If you only look through a financial lens, it seems to make sense. But that’s not going far enough. The second question is, “Where will the savings go?” What will likely happen is you’ll install this machine and either keep prices the same (to improve margins) or lower prices (to gain market share). But the salesman is already on the way to your competitors. Only now, he can say they must install this to stay competitive. The salesman points to your increasing market share or big margins, ensuring your competitor purchases the same equipment. Eventually, everyone has the same equipment, plummeting prices. Things go back to the way they were, only now you have more capital invested in the business. But that salesman will be back next year with a newer, improved version.

So from a mental model perspective, we can just list some of the ones at play: incentives (the salesman is not your friend), game theory, and The Red Queen Effect (where you need to put continuously more money in to keep your same position). Of course, I didn’t come up with this myself. Warren Buffett faced a similar dilemma in the early 1980s with Berkshire Hathaway’s unprofitable textile business.

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Avoiding Ignorance

Reading Time: 3 minutes

This is a continuation of two types of ignorance.

You can’t deal with ignorance if you can’t recognize its presence. If you’re suffering from primary ignorance it means you probably failed to consider the possibility of being ignorant or you found ways not to see that you were ignorant.

You’re ignorant and unaware, which is worse than being ignorant and aware.

The best way to avoid this, suggests Joy and Zeckhauser, is to raise self-awareness.

Ask yourself regularly: “Might I be in a state of consequential ignorance here?”

They continue:

If the answer is yes, the next step should be to estimate base rates. That should also be the next step if the starting point is recognized ignorance.

Of all situations such as this, how often has a particular outcome happened. Of course, this is often totally subjective.

and its underpinnings are elusive. It is hard to know what the sample of relevant past experiences has been, how to draw inferences from the experience of others, etc. Nevertheless, it is far better to proceed to an answer, however tenuous, than to simply miss (primary ignorance) or slight (recognized ignorance) the issue. Unfortunately, the assessment of base rates is challenging and substantial biases are likely to enter.

When we don’t recognize ignorance the base rate is extremely underestimated. When we do recognize ignorance, we face “duelling biases; some will lead to underestimates of base rates and others to overestimates.”

Three biases come into play while estimating base rates: overconfidence, salience, and selection biases.

So we are overconfident in our estimates. We estimate things that are salient – that is, “states with which (we) have some experience or that are otherwise easily brought to mind.” And “there is a strong selection bias to recall or retell events that were surprising or of great consequence.”

Our key lesson is that as individuals proceed through life, they should always be on the lookout for ignorance. When they do recognize it, they should try to assess how likely they are to be surprised—in other words, attempt to compute the base rate. In discussing this assessment, we might also employ the term “catchall” from statistics, to cover the outcomes not specifically addressed.

It’s incredibly interesting to view literature through the lens of human decision making.

Crime and Punishment is particularly interesting as a study of primary ignorance. Raskolnikov deploys his impressive intelligence to plan the murder, believing, in his ignorance, that he has left nothing to chance. In a series of descriptions not for the squeamish or the faint-hearted, the murderer’s thoughts are laid bare as he plans the deed. We read about his skills in strategic inference and his powers of prediction about where and how he will corner his victim; his tactics at developing complementary skills (what is the precise manner in which he will carry the axe?; what strategies will help him avoid detection) are revealed.

But since Raskolnikov is making decisions under primary ignorance, his determined rationality is tightly “bounded.” He “construct[s] a simplified model of the real situation in order to deal with it; … behaves rationally with respect to this model, [but] such behavior is not even approximately optimal with respect to the real world” (Simon 1957). The second-guessing, fear, and delirium at the heart of Raskolnikov’s thinking as he struggles to gain a foothold in his inner world show the impact of a cascade of Consequential Amazing Development’s (CAD), none predicted, none even contemplated. Raskolnikov anticipated an outcome in which he would dispatch the pawnbroker and slip quietly out of her apartment. He could not have possibly predicted that her sister would show up, a characteristic CAD that challenges what Taleb (2012) calls our “illusion of predictability.”

Joy and Zeckhauser argue we can draw two conclusions.

First, we tend to downplay the role of unanticipated events, preferring instead to expect simple causal relationships and linear developments. Second, when we do encounter a CAD, we often counter with knee-jerk, impulsive decisions, the equivalent of Raskolnikov committing a second impetuous murder.

Bringing you Farnam Street took thousands of dollars and nearly 1,500 hours in 2013. If you find any value in it, I’d greatly appreciate your support with a modest donation. For extra Karma points, become a member with a monthly donation.

References: Ignorance: Lessons from the Laboratory of Literature (Joy and Zeckhauser).

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