🤯Unknown Unknowns #71 - Do You Know What You Think You Know?
The latest cohort of Write of Passage just started again. After I took this course the first time, I realized how important creating is. Creating supplies a sense of meaning that is otherwise only noticed in its absence. My friend Michael Sklar pointed out that Write of Passage helps some people connect their rational left brain with the creative right brain. This is certainly the case for me.
Most people look at feedback as benefitting the writer. And it’s true, a lot of the benefit of the course is the feedback you get from the other students. But the best part of each cohort for me is reading everyone else's essays. As an Editor, it's my responsibility to give feedback, but I enjoy giving feedback so much that I would do it anyway. There are so many interesting ideas and people that I want to read every essay. Once I start reading, I want to learn more and I start asking questions to help flesh out the ideas. I wrote before that feedback isn't just crossing t's and dotting i's, it's helping the writer develop the ideas. By treating the essay as a conversation, you can help the writer develop and clarify ideas by asking what is confusing or pointing out what's interesting and where you want to learn more.
Discoveries:
1️⃣
I was listening to the Value AfterHours podcast and Jake Taylor brought up the concept of "explanatory depth." It's a false assumption of knowledge. As an example, try to draw how a bicycle works, what the frame looks like, how the wheels connect, how the chain works. And then compare your drawing to a picture of a bike. That your bike will immediately collapse if it was real - that shows your lack of explanatory depth.
🔗 Podcast Here Explanatory Depth (@~13:00)
Blast from the Past:
A new section where I will share my work experience. Maybe some funny stories, but the main goal is to dispel the myth that finance and economics are complicated or "rocket science". Instead, there are a few simple concepts that even practitioners may not realize but will recognize.
“Show me the incentive, and I will show you the outcome.” – Charlie Munger
The first thing I want to talk about are incentives. Anytime you don't understand what's going on in finance, look at the incentives. How is someone compensated? Another way to think about this is "Follow the money". People will do things that sound crazy until you understand how they will benefit. In 2016, it was revealed that because Wells Fargo paid their employees according to how many accounts they opened, the employees opened a plethora of new credit cards, debits cards, and other services - all with associated fees.
The Principal-Agent Problem is a great example of following the incentives. A few months ago, I explained how to look at the Principal-Agent Problem through toilet paper.
Quote of the week:
You can’t ever reach perfection, but you can believe in an asymptote toward which you are ceaselessly striving. - Paul Kalanithi
Saw this quote today and thought it went well with last week’s newsletter. Living up to your ideals is something you will never reach, but striving to is important. People tell me that it’s impossible to never lie. Or to not be a hypocrite. Or that politicians can’t act virtuously. Well, what if we all just try? And be kind to ourselves when we fail.
Questions, suggestions, complaints? Email me at [email protected]. Feedback welcome.
If you enjoyed this newsletter, please share it with a friend or two. And feel free to send anything you find interesting to me!
Leaving you in peace,
Chris
Maybe explanatory depth is also linked to the false sense of familiarity. Most of us have seen a bike, and think that we know exactly what it is, how it works and what it looks like. At large first year orientation sessions at university I used to ask the students which way the Queen is facing on the NZ gold coins ($1 or $2). Most of them have seen it and grew up seeing it. They think their answer is correct because they are familiar with it. But only about 20% of students would get it right. The best thing about making this mistake is that they would now remember the correct answer if it came up in a pub quiz. But now that King Charles III is ruling, his imprint on the coin would face the opposite direction from the last monarch.
> Well, what if we all just try? And be kind to ourselves when we fail.
A sentiment I can get behind fully 😊