Maxims for Thinking Analytically

By Dan Levy (Richard Zeckhauser)

Thinking Straight

  • When you’re having trouble, go to an extreme case or simple case

  • Don’t take refuge in complexity

  • When trying to understand a complex situation, think of an everyday analogue

Tackling Uncertainty

  • The world is much more uncertain than you think

  • Think probabilistically about the world

  • Uncertainty is the friend of the status quo

Decisions

  • Good decisions sometimes have poor outcomes

  • Some good decisions have a high probability of a bad outcome

  • Weight errors as commission the same as errors of omission

Decisions

  • Don’t be limited by the options in front you

  • Information is only valuable to you if it can change your decision

Understanding Policy

  • Long division is the most important tool for policy (bang for buck)

  • Elasticities are a powerful tool for understanding many important things

  • Heterogeneity in the populations explains many things (subgroups)

  • Capitalize on complementaries

Living Fully

  • Strive hard to avoid envy - your friend’s success is your gain

  • Do your best to banish regret (wasteful emotion)

  • Make pleasure-enducing decisions long in advance

Life

  • There are some things you just don’t want to know

  • If you focus on people’s shortcomings, you’ll always be disappointed

  • Practice asynchronous reciprocity

The End

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