Monday, June 3, 2013

Think (Charlie Munger's) Mental Models?

The site Think Mental Models is impressive. The people behind it have put a lot of work into developing a list and explaining Charlie Munger's mental models.

Warren Buffett, Charlie Munger
Like Warren Buffett, I think it's a good idea to look to Charlie Munger for wisdom

Quoting Munger's longtime partner Warren Buffett, the site lauds Charlie Munger for having "the best 30-second mind in the world. He goes from A to Z in one move. He sees the essence of everything before you even finish the sentence."

Think Mental Models offers to help people think like Munger. It explains Munger's process as such, "he thinks by using the BIG IDEAS from disciplines as diverse as physics and psychology. He has a list of these ideas (mental models) in his mind and quickly picks the one(s) applicable to the given situation, much as a pilot automatically goes through a checklist prior to take-off."

Of course recognizing which models to use to analyze various situations is the hard part, as investor Mason Myers usefully deploys Clayton Christensen's thought to argue. "The trick is to know which theory to apply when." Indeed, even the best checklist (scroll to bottom of page for nice summary of Munger's checklists) is no good to someone who doesn't know how to use it.

Clayton Christensen knows the trick to Munger's mental models

Think Mental Models does provide a useful service; it lists and provides insight into a full 100 mental models either explicitly mentioned or inspired by Charlie Munger. It states, "Inspired by the work of Charles Munger, [this site] provides over 100 models that can be brought consciously to mind to aid the thinking process."

Think Mental Models compiles models into several categories:

Think Mental Models' Finance Models
Think Mental Models' Business Models
Think Mental Models' Thinking Models

Think Mental Models' Economic Models
Think Mental Models' Behavior Models

It's a pay site, and may be a good value. I'm sure its contents would aid the thinking process. Just understanding what mental models are and getting acquainted with the one hundred or so most important models will do wonders for anyone trying to get smarter. Adding Munger's insight that mental models need to be arranged in a supple mental latticework will help more. Add to that Munger's insight that you've got to continually use the models lest you forget them, and combine it with his concept of combined effects creating a 'lollapalooza effect' you'd really be onto something.

If Think Mental Models could teach the stuff Myers credits Munger & Christensen with teaching him, namely, "the best people can figure out which models are relevant to which situation," then it'd be a value at almost any price.

I haven't paid to see the site's elaborations of each model, but I wouldn't hold my breath that it could teach the skill of discerning how and when to use the models. Looking over the lists (and they are impressive lists) reminds me of a math class I took in junior high. Our teacher let us use one 5"x7" note card with any information we could hand print for the final test. We could write as many formulae as we wanted on the card. And we did. We even could have written (and perhaps some students smarter than I did!) write clues and rules to help determine when to apply which formula. Needless to say, even with the 'extra' help, not everyone got 100%.

Statue of Duke Huan of Ch'i
Duke Huan of Ch'i

The reason is explained by an old Chinese folk tale:

Duke Huan of Ch’i was reading a book at the upper end of the hall; the wheelwright was making a wheel at the lower end. Put­ting aside his mallet and chisel, he called to the Duke and asked him what book he was reading. “One that records the words of the Sages,” answered the Duke. “Are those Sages alive?” asked the wheelwright. “Oh, no,” said the Duke, “they are dead.” “In that case,” said the wheelwright, “what you are reading can be noth­ing but the lees and scum of bygone men.” “How dare you, a wheelwright, find fault with the book I am reading. If you can explain your statement, I will let it pass. If not, you shall die.” “Speaking as a wheelwright,” he replied, “I look at the matter in this way; when I am making a wheel, if my stroke is too slow, then it bites deep but is not steady; if my stroke is too fast, then it is steady, but it does not go deep. The right pace, neither slow nor fast, cannot get into the hand unless it comes from the heart. It is a thing that cannot be put into words [rules]; there is an art in it that I cannot explain to my son. That is why it is impossible for me to let him take over my work, and here I am at the age of seventy, still making wheels. In my opinion it must have been the same with the men of old. All that was worth handing on, died with them; the rest, they put into their books. That is why I said that what you were reading was the lees and scum of by­gone men.”

So should we give up hope of learning Munger's 'mental models'? No. If Munger learned them, others can, too. And if he could learn them, they can be taught. The Clayton Christensen class Mason Myers cites is highly instructive in this regard. So is the Harvard Business School class Munger cites in his lecture on worldly wisdom, "Many educational institutions—although not nearly enough—have realized this. At Harvard Business School, the great quantitative thing that bonds the first-year class together is what they call decision tree theory. All they do is take high school algebra and apply it to real life problems. And the students love it. They're amazed to find that high school algebra works in life." But I don't think a book will do it. Not even Poor Charlie's Almanack

In a future post, I'll detail why the old wheelwright had a hard time teaching his son his craft and why we have a hard time 'learning' Munger's mental models from books.


4 comments:

  1. Also check out Farnam Street, they do an awesome job on the Mental Models too.

    http://www.farnamstreetblog.com/mental-models/

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  2. Yeah, I've seen Farnam. (Found it after starting this blog...wish I'd seen it sooner!) The people who put that together are very smart. As I mentioned, I haven't seen what's behind TMM's paywall...but Farnam's content is vastly more nuanced and provides real insight into some of Munger's ideas.
    I do think, though, that the broader point I try to make about the process of learning to use the models, about the difference between learning information and judgement, applies to Farnam's content, too.
    But it's a lot better. Thanks for the tip.

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  3. Great post! I've been wondering the same thing: I keep reading and collecting mental models but when I'm in a situation where I could really use them I don't always remember them.

    With that in mind ... what about something like Spaced Repetition and Active Recall?

    I've been playing around with Anki (http://ankisrs.net/) as a way to learn/practice the mental models I've collected in the hope of making them more readily available when I need them.

    I'm still working on populating my Mental Models Anki flashcard deck so I can't say one way or another if it is helping but I figure it's worth a try.

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  4. Andrew,
    Yeah, I've heard a few people say they use the same technique. Seems like a parlor game to me, but, then again, practicing the models is never a bad idea.
    Munger obviously believes that you don't keep skills you don't regularly use. So, it's at least worth a shot.
    Thanks for the comment. Let me know how it goes for you.

    ReplyDelete