Principles 1.8

"Weigh second - and third-order consequences."


A second-order consequence is the long term result of an action.


For example:


Staying up to watch the end of the game might be fun, but the late bedtime and subsequent lack of sleep will lead to a groggy tomorrow.


Or


Starting a new exercise plan will be challenging and painful in the moment, but you'll be stronger and fitter in a few months.


Our ability to select for positive second-order consequences is a huge factor in our eventual success. But I believe there is a limit to this, and it's one that Dalio only hints at.


I've just begun to think about third-order consequences, and I believe that over an extended timeline, they need to be strongly considered.


Let's imagine a track athlete spending four years training for the Olympics. This athlete has likely given up many first-order pleasures in pursuit of the second-order success of athletic improvement.


For example, alcohol impedes recovery, so that's out. And sleep is vital, so nights on the town with friends are off the table.


However, I'll make the argument that an occasional glass of wine with friends has positive third-order consequences. Despite leading to less than optimal recovery for the next day's training, the psychic benefit of a night of normalcy may help avoid burnout and lead to better training over several months and years.


I like to think about this in my life as well.


Choosing to study hard concepts instead of reading easy material is certainly beneficial in the long term, but I've found that an easy read or two recharges my mind for the next hard concept. Without breaks, my studying mojo wanes, and I find myself struggling through fewer and fewer pages per day. The easy book - or binge-watched show - may not have positive second-order consequences, but the third-order consequences are fantastic.


There are many ways to look at this, and my ideas are far from fully formed. Maybe I'll post a more in-depth analysis in the future, but for now, here's the takeaway:


Make your 12-year-old son do his homework. But also take him to Game 1 of the World Series on a school night. He wasn't going to remember that day's lesson anyway, but he'll never forget that night at the stadium. (Thanks Dad)


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