#707 – Morgan Housel – 9 Timeless Lessons About Human Psychology | Modern Wisdom

Intro

In this episode of the “Modern Wisdom” podcast, host Chris Williamson interviews Morgan Housel, author of the highly anticipated book “Same as Ever.” They discuss timeless lessons about human psychology and how understanding these principles can help predict the future. Housel shares insights on the fragility of historical events, the importance of managing expectations, the power of storytelling, and the dangers of excessive growth. Get ready to dive deep into the fascinating world of human behavior and its impact on our lives.

Main Takeaways

Timeless Lessons About Human Psychology

• Human psychology has timeless laws that remain true, no matter the time and place.
• The way most people make predictions is problematic.
• Trajectory is more important than position.
• Stories are more powerful than statistics.
• Focus on human behavior that never changes to predict the future.

The Fragility of Historical Events

• Surprises tend to be what matter over time.
• Themes repeat themselves across history in any field, but characters change.
• Tiny changes in circumstances can utterly transform everything in history.
• Historical events are fragile and reliant on chance occurrences.
• The future is just as fragile and unpredictable as the past.

Managing Expectations and Happiness

• Low expectations can lead to more happiness because happiness is the gap between expectations and circumstances.
• Unsatisfactoriness is baked into our existence, and even if things exceed our expectations, we quickly look for what’s next.
• We get the most dopamine from anticipation, not from achieving the experience.
• All wealth is relative, and people want to be happier than others.
• Our perception of success is heavily influenced by the moment and our bias towards those on the rise.

The Pitfalls of Fame and Success

• Extreme personalities that push people to the top can also push them over the edge.
• Fame is something many people implicitly or explicitly hope for in life, but it comes with a lot of baggage.
• Personal lives of admired individuals are often not enviable.
• The success of a first book can set the bar too high for subsequent books.
• Be careful who you look up to because the good and the bad always come one and the same.

The Power of Storytelling and Uncertainty

• Compelling storytelling is more powerful than statistics or having the right answer.
• The world needs more signal, not more noise.
• People are seduced by those who speak in black and white terms, even if it’s not accurate.
• Providing certainty, even if proven wrong, is how cults are formed.
• The world is not always rational and driven by forces that cannot be measured.

The Dangers of Excessive Growth

• Too much, too soon, too fast is a bad idea, especially in relationships and investing.
• Understanding the natural rate at which things should grow is important to avoid disappointment and failure.
• Growth can be beneficial, but forcing it too much can lead to negative consequences.
• Knowing the natural growth rate and size of a business is crucial to avoid killing the company culture.
• Personalities that work well in one situation may be disastrous in another.

Summary

Timeless Lessons About Human Psychology

Human psychology operates based on timeless laws that remain consistent across time and place. Most people make predictions in a problematic way, focusing on position rather than trajectory. However, understanding that trajectory is more important and that stories are more powerful than statistics can help us make more accurate predictions about human behavior and the future.

The Fragility of Historical Events

Historical events are fragile and reliant on chance occurrences. Surprises tend to be what matter over time, and tiny changes in circumstances can completely transform everything in history. While themes may repeat themselves, the characters change, and the future is just as fragile and unpredictable as the past. By recognizing the fragility of historical events, we can better understand the uncertainties of the future.

Managing Expectations and Happiness

Managing expectations plays a significant role in our happiness. Low expectations can lead to more happiness because it creates a larger gap between expectations and circumstances. Humans are wired to constantly seek what’s next, and our perception of success is heavily influenced by the moment and our bias towards those on the rise. Understanding the role of expectations and the relativity of wealth can help us find more joy and contentment in life.

The Pitfalls of Fame and Success

Fame and success come with their own set of challenges. Extreme personalities that push people to the top can also push them over the edge. Personal lives of admired individuals are often not as enviable as they may seem. The pressure to maintain success can be intense, and the success of a first book or achievement can set unrealistic expectations for subsequent endeavors. It’s important to be mindful of who we look up to and recognize that everyone has both good and bad aspects to their lives.

The Power of Storytelling and Uncertainty

Compelling storytelling is more powerful than presenting raw data or having the right answer. People are seduced by those who speak in black and white terms, even if it’s not accurate. The world is not always rational, and uncertainty plays a significant role in decision-making and outcomes. Providing certainty, even if proven wrong, is how cults are formed. Understanding the power of storytelling and the limitations of certainty can help us navigate a complex and uncertain world.

The Dangers of Excessive Growth

Excessive growth can have negative consequences. Pushing for too much, too soon, and too fast can lead to disappointment and failure. Understanding the natural rate at which things should grow is crucial to avoid killing company culture and personal relationships. Personalities that work well in one situation may not scale to other areas of life. By recognizing the dangers of excessive growth, we can find a balance and avoid potential pitfalls.

Conclusion

Morgan Housel’s discussion on timeless lessons about human psychology provides valuable insights into predicting the future and understanding the complexities of human behavior. By recognizing the fragility of historical events, managing expectations, appreciating the power of storytelling, and being mindful of the dangers of excessive growth, we can navigate life’s uncertainties with more clarity and make informed decisions. Whether it’s in our personal lives, careers, or society as a whole, understanding human psychology can help us thrive and find fulfillment.