Why Mental Models Are The Most Useful Things to Learn

It doesn't surprise me if you've never heard of mental models before.

What does surprise me is that mental models are not more widely known than they are, and the fact that they're not included in the school and university curriculums. Judging by how extremely valuable mental models are for making sense of the world, they should have been one of the most essential subjects in our education systems.

Sadly, our education system teaches facts instead of thinking tools. So it’s up to you to educate yourself about this.

A few short years after I finished my BA degree, I considered going back to university to study physics or computer science.

But when I discovered mental models I knew that my time would be much better spent studying those instead. When it comes to being wise and making intelligent and "educated" decisions, there is nothing more useful than having a deep understanding of mental models. 

Elon Musk has in a few interviews urged young people to study physics because it’s a good framework for solving problems we will face in the future. What he refers to isn’t just the practise you get in solving mathematical problems by applying formulas. Without mentioning it explicitly, I believe he is referring to the mental models that are implicitly learnt through a physics degree. The mental models that come with a physics education are not usually acknowledged as thinking tools or mental models that can be applied to unrelated fields.

To understand the most useful thinking tools in physics, you don’t need to learn everything in the physics syllabus. By learning mental models as a subject in itself, you will gain the most valuable skills that an academic degree would offer.

Because of this insight, I was no longer so eager to spend three years taking a new bachelor degree. I was more interested in learning mental models thoroughly. The discovery of mental models has been one of the most fortunate serendipities in my life. It’s just a shame that I had to stumble across it by chance.

I hope this article can enlighten you in a similar way.

What mental models are

So what exactly are mental models? Mental models are thinking tools and concepts that help you make better decisions. Without mental models, the world is just an utterly complex mess where decision making is just pure guesswork. Mental models simplify complex scenarios. When these scenarios are simplified, you see the problem or situation much clearer. In fact, you see them so clearly that you can confidently make the decision that is more likely to yield the best outcome. Life is just a bunch of scenarios where you have to make decisions. With mental models, you have a tool to become a master at the most important activity humans engage in - decision making.

Mental models also expose a lot of cognitive biases. Being aware of these biases will help you avoid unfortunate pitfalls when making decisions. If you are unaware of these biases, you will always commit them when making decisions. This will lead you to make the wrong decisions and to fail and fail and fail. Mastering mental models will drastically increase your chances of success.

So how many mental models exist? Thousands. Any skill takes time to master. It's the same with mental models.

How many mental models do you need to learn?

Don’t worry, you don’t need to learn all mental models that exist. Only 80-100 of all mental models are really useful, and only a handful of these are extraordinarily useful. So by knowing only the most common ones, you can get really far.

You should learn mental models throughout your life. It's a fun, never-ending process. The famous investor and business leader, Warren Buffett, is a great fan of mental models. He often accredits them for his massive success. He has spent a lot of his time learning about them, and he still does.

Start by understanding the concept of 4 or 5 mental models (I've got 4 for you here to check out). Then actively look out for situations in your life where you can apply them.

Then add 5 more to your repertoire. And make sure you are actively thinking about how you can use them before moving on to the next 5.

Shane Parrish has collected a list of the 109 most useful mental models.

This should keep you busy for a while.

Time to give you some examples.

Some examples of mental models

Here is an explanation of some of my favourite mental models.

The Pareto principle (or the 80/20 rule)

You might already have heard of the 80/20 rule. It's a pretty well-known productivity concept.

The Pareto principle is named after the economist Vilfredo Pareto who discovered a curious ratio (80/20) that seemed to repeat itself in a range of systems. In business, the 80/20 rule suggests that you should focus your attention on the 20% of tasks that yield 80% of the outcome.

This is a rule that works almost all the time because in most cases, it is only a few tasks or activities that produce most of the outcome.

The 80/20 ratio doesn’t only appear in business and productivity. Here are some other examples:

• The most successful investors choose to invest in just a handful of companies that make more money than hundreds of smaller businesses combined.
• In many cases, 80% of the complaints companies receive come from 20% of its customers. This tells you something about which customers to focus on.
• It's only just a few of Mozart's pieces we have heard about - because they are truly unique and stand out from the rest.
• Reading one excellent self-help book will help you much more effectively than if you read 5 mediocre ones.

In fact, this ratio appears so often that it is considered a universal concept. Even animals and natural phenomena follow this rule.

This sounds like a simple rule to apply, but just knowing what it means isn't enough to start using it yourself. It wasn’t until I understood this rule on a deeper level when I really started to take advantage of it.

If you want to be able to apply this rule to your own life, start by reading two or three articles about it. These two are good:

• Understanding the Pareto Principle (The 80/20 Rule
• 80/20 Rule

Then, start looking out for situations in your life where you can apply this rule. Do you have time-consuming tasks on your to-do list that produce little to no result? Scrap them. Instead, do more of the tasks that have proven to drive you closer to your goals. Are you a website or business owner? Which marketing technique gives you the majority of your customers? If there are one or two marketing techniques that result in the majority of your customers, consider focusing your attention on these techniques instead of wasting time on techniques that might not work that well for your business.

Have a critical eye on everything you are doing and analyse the situation. Is there any way you can apply the 80/20 rule to this?

This is one of the most useful and universal mental models, so I would highly encourage you to develop the habit of regularly thinking about how to apply this concept.

Multiplying by Zero

Most people who have been a victim of our education system know that anything multiplied by zero is zero.

This is a mathematical concept, but it is also incredibly useful in a business setting.

Let's say you own a website that sells products that people can buy online. And let's say that people can find products only by searching. If the webpage that this action is happening on is slow, has glitches, is cumbersome to use or for some reason doesn't work properly, your customer won't buy any products at all. In other words, your business depends on this search function. You can have a lot of great products on your site, but if this function doesn't work, no products will be sold.

We can call this a multiplicative system. A system is only as strong as its weakest component. Try this math puzzle and see for yourself:

57348 * 4354 * 4353 * 43 * 0 = ?

No matter how high the numbers are in a multiplicative system, if you multiply by zero, you will be left with zero.

An additive system is different. If you have a low number in a chain of numbers that you add together, it doesn't have such a dramatic effect as when you're multiplying.

57348 + 4354 + 4353 + 43 + 0 = 66 098.

A weak component in an additive system doesn’t have an effect on the other components.

This can be applied to your website as well.

Let's say that the search function on your website is working well. Instead, the link for one of the products is broken. There is no way people can buy this product. Is this a big problem? It probably depends on what this particular product is. But even if people can’t buy this product, there is nothing stopping them from buying all the other products.

A broken link for one single product (a problem in an additive system) is much better than a problem in the search function (a problem in a multiplicative system).

Often, to make the right decision, you need to know if the system you are operating in is multiplicative or additive. 

Too often, people think they are operating in an additive system, whereas in reality, they are in a multiplicative system. And as you have learnt now, focusing on the wrong thing in a multiplicative system can have dramatic consequences.

First principles thinking

First principles thinking consists of reverse engineering a system and breaking it down to reveal the fundamental parts which together make up the whole system.

A famous example of this is what Elon Musk did when making batteries for his Tesla cars. People around him said that he wouldn't be able to succeed since car batteries are too expensive. Musk then asked himself why car batteries were so expensive. Did they have to be that expensive? He did some reverse engineering and thought about the ingredients that make up these batteries. He realised that if you buy the ingredients separately, simplify some of the design and put it together yourself, you are left with a battery which is much much cheaper.

That's first principles thinking in a Musk-shell.

By the way, he went through the same process when making rockets for SpaceX.

First principles thinking is the best way of thinking if you want the truth about something. This is because it strips everything down to the bone, revealing only the fundamental parts.

Aristotle defined first principles as “The first basis from which a thing is known”.

The opposite of reasoning by first principles is reasoning by analogy. The difference between someone who reasons from first principles and someone who reasons by analogy can be described by the difference between a chef and a cook.

Shane Parrish gives a great description of this on Farnam Street:

“The difference between reasoning by first principles and reasoning by analogy is like the difference between being a chef and being a cook. If the cook lost the recipe, he’d be screwed. The chef, on the other hand, understands the flavor profiles and combinations at such a fundamental level that he doesn’t even use a recipe. He has real knowledge as opposed to know-how."

To reason by analogy is to copy what someone else has done before. Reasoning by first principles is to understand something at a fundamental level and then assess what's physically possible based on those ingredients. First principles thinking usually takes longer, but it often leads to a better result.

James Clear, the author of the New York Times bestseller Atomic Habits says:

“First principles thinking is a fancy way of saying “think like a scientist.” Scientists don’t assume anything. They start with questions like, What are we absolutely sure is true? What has been proven?"

The first step of starting to use first principles thinking in your own life is to gain a deeper understanding of this concept than I have described to you here. Here are two good articles to get you started:

First principles explained by Shane Parrish

First principles explained by James Clear

Applying first principles thinking is much harder than just understanding the concept. You need to actively look out for situations where you can use this idea. And it takes deliberate practise to get better at it.

Second-Order Thinking

“First level thinking is looking at the immediate impact of whatever decision we make. Whereas second order thinking is looking at all of the potential consequences of whatever decision we make."
- Rick Melnyck from Prime Your Pump

This concept has been explained by investor Howard Marks in his brilliant book The Most Important Thing.

If you only use first-level thinking, you run the risk of leaving out potentially vital information that will have an impact on your decision later on.

If you use first-level thinking, you will think like everyone else. However, using second-order thinking will enable you to reach different results than others because you take a more unconventional approach.

The reason why most people stick to first-level thinking is that it takes a lot more work to use second-order thinking.

To use second-order thinking, Howard Marks suggests that we ask some questions when making decisions:

• What is the range of likely future outcomes?
• Which outcome do I think will occur?
• What is the probability I’m right?
• What does the consensus think?
• How does my expectation differ from the consensus?

This list is taken from Prime Your Pump.

Learn more

If you want to start making better decisions in your life and career, I suggest that you block out some time every week to learn about mental models.

One of the best places to learn about this is on Farnam Street. Shane Parrish, the creator of Farnam Street, has built an impressive collection of articles about mental models.

Being aware of mental models is one thing. Taking action and applying them to your life is something entirely different. And this is often the most important part.

Once you have understood the concept of a handful of mental models, read Shane Parrish’s article about how to take action and start using them.

If you are seriously dedicated to mastering mental models, I would encourage you to check out Michael Simmons’ Mental Models Club. The aim of this club is to master a new mental model every month.

And if you prefer books, Shane Parrish has written two books that dive deep into mental models. These books will provide you with the knowledge you need to make better decisions. This knowledge will enable you to make decisions based on how the world actually works instead of just how you think it works:

The Great Mental Models Volume 1: General Thinking Concepts

This book is a Wall Street Journal National Best Seller. It offers deep insights into 9 of the most useful mental models.

The Great Mental Models Volume 2: Physics, Chemistry and Biology

Sources:

• https://fs.blog/
• https://www.julian.com/blog/mental-model-examples
• https://medium.com/accelerated-intelligence/modern-polymath-81f882ce52db
• https://medium.com/accelerated-intelligence/this-is-exactly-how-you-should-train-yourself-to-be-smarter-infographic-86d0d42ad41c
• https://waitbutwhy.com/2015/11/the-cook-and-the-chef-musks-secret-sauce.html
• https://jamesclear.com/first-principles
• https://primeyourpump.com/2019/03/04/second-order-thinking/
• https://www.innovativepolicysolutions.org/articles/who-uses-first-principles-thinking-and-why-you-should-become-one-of-them/
• https://mentalmodelclub.com/