PartnerHacker Weekend 09/03: Principles over Expertise

A quick recap of the PhD from this week:

Recently published:

First Principles > Domain Knowledge?

Experts in politics, economics, and business are worse than both novices and random chance at predicting what will happen in their area of expertise.

I'm not kidding! (See video below with source)

People who spend their entire lives studying end up less able to understand what's going to happen than if they hadn't studied it at all.

That's super weird.

Most things that happen in politics, economics, and business are one-off events. Each election or recession or IPO has too many unique variables for experts to be able to do effective "chunking."

Chunking works in chess, physics, and many sports. These are repeat activities with a bounded set of patterns that, once memorized through thousands of hours, experts are able to spot faster and with fewer variables than novices.

When the brain sees only a few variables but has memorized all the possible patterns so well, it can fill in the blanks.

Here's a painful confirmation:

As a guy who's watched just about every Detroit Lions game for the past 30 years, I have developed an expert ability to spot a defeat unfolding even when the Lions have a healthy lead.

For this reason, we should be leery of expertise in fields that do not repeat.

This is also why the most useful form of expertise in these areas is the least specific - the first principles kind.

The most basic, foundational principles are the facts and causal connections that repeat, even as all other variables change. These often seem too basic and boring, so they get ignored for fancy or more fun theories based on one-off observances. But the basic axioms are the most important parts.

What doesn't change?

Try to get to that small list of principles rather than starting with an exploration of all the changing variables.

This can seem a little boring at first or lacking penetrating insight and bold, specific prediction. But if you can build out a causal chain of even a handful of unchanging principles, you can avoid being duped by lots of wild theories.

Instead of basing predictions on one-offs, you'll have a better sense of what's generally possible and likely.

Learn the basic causal structures and components that tend to repeat over and over. Those are the patterns that matter most. Specific, recent, or novel parts are least likely to give good predictions.

In the partnership world, these are mostly principles of human nature, emergent order, communication, networks, and institutional incentives.

Sounds far removed from the daily to-dos, but the power to unearth and understand these patterns will set you on a firmer foundation than the hottest biz prediction of the month.

Check out this great video that inspired today's newsletter:

The 4 things it takes to be an expert. Click here to watch.

Prefer to listen? Subscribe to our PartnerHacker Articles Podcast.

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