Saved by Kyle Steinike and
100 Little Ideas
Luxury Paradox : The more expensive something is the less likely you are to use it, so the relationship between price and utility is an inverted U. Ferraris sit in garages; Hondas get driven.
Morgan Housel • 100 Little Ideas
System Justification Theory : Inefficient systems will be defended and maintained if they serve the needs of people who benefit from them – individual incentives can sustain systemic stupidity.
Morgan Housel • 100 Little Ideas
Cobra Effect: Attempting to solve a problem makes that problem worse. Comes from an Indian story about a city infested with snakes offering a bounty for every dead cobra, which caused entrepreneurs to start breeding cobras for slaughter.
Morgan Housel • 100 Little Ideas
Depressive Realism : Depressed people have a more accurate view of the world because they’re more realistic about how risky and fragile life is. The opposite of “blissfully unaware.”
Morgan Housel • 100 Little Ideas
Anscombe’s Quartet : Four sets of numbers that look identical on paper (mean average, variance, correlation, etc.) but look completely different when graphed. Describes a situation where exact calculations don’t offer a good representation of how the world works.
Morgan Housel • 100 Little Ideas
Apophenia : A tendency to perceive correlations between unrelated things, because your mind can only deal with tiny sample sizes and assuming things are correlated creates easy/comforting explanations of how the world works.
Morgan Housel • 100 Little Ideas
Pareto Principle : The majority of outcomes are driven by a minority of events.
Morgan Housel • 100 Little Ideas
McNamara Fallacy : A belief that rational decisions can be made with quantitative measures alone, when in fact the things you can’t measure are often the most consequential. Named after Defense Secretary McNamara, who tried to quantify every aspect of the Vietnam War.
Morgan Housel • 100 Little Ideas
Compassion Fade : People have more compassion for small groups of victims than larger groups, because the smaller the group the easier it is to identify individual victims.