What I learned in economics

Most of college I thought I learned little. With more distance, I realize I learned large ideas only absorbable over the course of many months, so college was a useful place to learn them. 

What did I learn?

1. Everything in life is a tradeoff. 

Deep down I realized nothing in life was free.

1a. 'Everything in life is a tradeoff' reeled in my expectations. I learned that almost all the time my life is perfect; it can't get any better. To get more of something I would have to make a tradeoff. 

1b. I started to embrace a full wheel philosophy on life: health, wealth, love, and happiness. I think about each category and see where I'm making tradeoffs. I can clearly see when the tradeoffs make sense. I don’t end up with some frankenwheel with a single oversized spoke. 

1c. I started thinking clearly about making the right choices. A little thought into each decision and life gets really good. And pretty easy. 

1d. 'Everything in life is a tradeoff' changed how I look at the world. Ben Campbell said “You can make a model of the whole world by looking at '>'. The preference story. "I prefer this. (to this. to this, and so on...)"

I directed this model/preference story inward and learned so much about myself. I used what I learned to correct some autopilot behaviors that were misallocating time or resources to something that was lower in the model than I thought. 

I also directed the model outward and learned about helping my friends and the people I cared about (this idea is compounded by the idea of comparative advantage - something lower on your preference ordering can by high on your friend's, and you can give it to them, or spend 5 minutes on that activity for them). 

2. Marginal utility. 

I learned what this graph really means. When I go from 0 units to 1 unit, I get so much value. When I go from 1 to 2, it's less of a big deal. And even less so when going from 9 to 10.

I noticed for eating, my brain would remember MarginalUtility1 of the dish when deciding to eat another bite. The real world wasn't MU1, it was less “good,” I was on MU3. I was making a bad decision, since I was deciding based on the memory of MU1's benefit but only receiving the benefit of MU3. 

I ended up eating much less ice cream and desserts. The first two bites make most of the experience. Splitting a dessert with your wife makes you just as happy and way more healthy. 

This also means when I go from 9 to 10, I chill. I'm an all-in person because compounding returns and the state of flow make me addicted to intensity. When I internalized the diminishing returns idea I added more variety to my life, trying random activities and starting new hobbies. I also started to appreciate little 0-1 details, like checking the internet on an old laptop after traveling for a long time. 

3. Institutions, not geography

• In economics, there is the institutions view and the geography view. Geography says you have factor endowments in the form of resources, labor, etc., which drive success. Institutions says North Korea and South Korea are similarly endowed, but one has lit-up cities and the other has darkness. The difference is the rules, the 'institutions' driving success.
• If we apply this to the individual, we are born with factor endowments: our genes. We are tall, and that gives us power. We are muscular, that gives us power. We have processing power/intelligence, that gives us power. But what if like North and South Korea, the most important factor driving success is what comes next? Because we have a long history too. Let’s focus on the rules. And what would those rules be… that’s what I love to learn. 

Those were the 3 main learnings. Additional minor learnings:

• Venture outside the system for high quantity learning. If class knowledge = 2. Berkeley neuroeconomics lab + imagical + internships experience = 290
• Output can have little to do with effort. Some topics I excelled. I could study 5 pages while walking to the exam and get a good grade. Some classes I worked very hard for a specific topic and got two standard deviations below the mean. Compound excellence areas
• After studying for 100’s of hours over the course of the semester, I saw how pieces fit together. I realized I liked XYZ topic, I had just started to understand what was going on in a way that was greater than practice problems or reading research. I realized for very difficult concepts/fields/ideas it may take this ‘100's of hours of inputs’ before I can know if I like something because that’s the prerequisite to be able to think critically about it