Charlie Munger on Mental Models, Wisdom, and Human Psychology

charlie munger mental models

Your brain is a roughly million-year-old piece of hardware – designed and built to operate in the world of hunting and gathering – where a dangerous animal may lurk behind the nearest bush. While our society has changed massively in the last 10,000 years (or even the last 500 years) – our brains have not had time to catch up.

You and I are equipped with a tool that – while wonderfully sculpted by evolution to thrive and reproduce in the world of hunter-gatherers – is riddled with shortcuts and processing errors that can manifest in mistakes, calamities, and all around terrible decisions.

Over the last year or so I have spent much time studying Charlie Munger – the billionaire “right hand man” of Warren Buffett. Charlie developed a rather unique worldview on human behavior and problem solving (that he dubs “worldly wisdom”) rooted in the idea fundamentally that you need a wide range of tools (what he calls mental models) to solve the many problems that life throws at you.

Among one of Charlie’s greatest insights were the combined notions that  (1) all academic disciplines must respect each other in order to be true and (2) that psychology underpins nearly all of them because it impacts and shapes human decisions.

What this means is that to think more effectively and achieve your goals you need to both master psychology and understand the mental models that underpin reality.

One of the most powerful things that you must understand about everything that I’m sharing with you here – these are not anecdotal observations or opinions – the decisions, mistakes, and behavior patterns that human engage in again and again, to their own determinant, are rooted fundamentally in science and proven repeatedly by numerous psychological studies.

Learning More About Charlie Munger’s Mental Models

As a starting point for that journey, I wanted to share with you several resources that I have learned from along the way.

I would absolutely start by watching (or listening to) this Youtube Video of Charlie Munger on “The Psychology of Human Misjudgment.” The video is priceless and I’ve listened to it 10+ times. Some of the examples are a bit dated because the speech is from 1995, but the message is timeless.

From there, I would recommend digging into a few books. I’ve put these in a particular order and suggest sticking to it – this will slowly introduce you to the topic and layer in key pieces of knowledge to build a more comprehensive understanding of Charlie Munger’s Mental Models and the Psychology of Misjudgment. [Click the titles for a link to Amazon]

Predictably Irrational by Dan Ariely

Predictably Irrational is absolutely the best starting place to dip your toes into this subject. It’s a quick read that is easy to grasp and has some great examples that will stick with you. I would compare this to Freakonomics in the sense it’s aimed at a popular audience and does a great job making the subject very approachable.

Influence by Robert Cialdini

In many ways the “bible” of this school of thought – Charlie Munger even mentions it several times in his speech on the psychology of human misjudgment. More technical than Predictably Irrational but a critical next step to go deeper on the topic.

Poor Charlie’s Alamanc by Peter Kaufman

Once you’ve completed your necessary psychology prerequisites – now its time to dig into the meaty stuff. This is a big book, I’m not gonna lie to you. Read every word. This is where Charlie Munger really starts laying out his framework for Worldly Wisdom and explaining in detail how to use psychology as well as mental models to think about the world. This book will explain how and why “worldly wisdom” and “mental models” are important, but does not go deep into actually explaining every mental model that governs reality.

Seeking Wisdom by Peter Bevelin

WARNING: DO NOT READ THIS FIRST. That said, wow. This book. I have never in my life underlined more phrases in a single book. This is probably the most information dense book I have ever read. It’s a treasure trove of information and can serve as a vital reference book for the rest of your life. You absolutely have to read the other books first or this will be like reading something written in Mandarin. This fills out an extremely detailed checklist of both the “Psychology of Misjudgment” and the “Psychics and Mathematics of Misjudgment” – replete with pages and pages of detail, studies, and information on a huge array of mental models.

Thinking Fast & Slow by Daniel Kahneman

Kahneman is a titan among research psychologists and in many ways the godfather behind many of these concepts – including being one of the founders of Prospect Theory, which uncovered many of these mental models and how they shape the world. This book is BIG and full of tough and often counter-intuitive mental models and psychological concepts, but this is the book you want to read to really dig into the core research that underpins much of these other books.

Podcasts on Mental Models

I wanted to share a few links to two Science of Success Podcast episodes where we also dig into these topics.

The Psychology of Making Better Decisions with Michael Mauboussin

How to Build a Toolbox of Mental Models to Understand Reality with Shane Parrish

Blog Posts on Mental Models

I also wanted to share a few links to two blogs that I particularly enjoy that both have wonderful and deep sections focusing on mental models.  Each of these are filled with dozens of mental models as well as examples and explanations to help better understand them.

Farnam Street – Mental Models

Joshua Kennon – Mental Models

Mental Model Checklist – Human Misjudgement

As a bonus for you – I’ve also included Charlie Munger’s (updated as per Seeking Wisdom) checklist of the standard causes of human misjudgment.

1)     Bias from mere association

2)     Underestimating the power of rewards and punishment

3)     Underestimating bias from own self-interest and incentives

4)     Self-serving bias

5)     Self-deception and denial  – distortion of reality to reduce pain or increase pleasure.

6)     Bias from consistency tendency – includes confirmation bias – looking for evidence that confirms our actions and beliefs and ignoring or distorting disconfirming evidence.

7)     Bias from deprival syndrome

8)     Status quo bias and do-nothing syndrome

9)     Impatience

10)     Bias from envy and jealousy

11)     Distortion by contrast comparison – also underestimating the consequences over time of gradual changes.

12)     Bias from anchoring – over-weighing certain initial information

13)     Over-influence from vivid or most recent information

14)     Omission and abstract blindness

15)     Bias from reciprocation tendency

16)     Bias from over-influence by liking tendency – includes bias from over-desire for liking and social acceptance

17)     Bias from over-influence by social proof

18)     Bias from over-influence by authority

19)     Sense making – construction explanations that fit an outcome – being too quick to draw conclusion, also thinking events that have happened were more predictable than they were

20)     Reason-respecting – complying with requests merely because we’ve been given a reason. Includes underestimating the power of giving people reasons.

21)     Believing first and doubting later

22)     Memory limitations

23)     Do-something syndrome – acting without a sensible reason

24)     Mental confusion from say-something syndrome

25)     Emotional arousal – hasty judgments under the influence of intense emotions. Exaggerating the emotional impact of future events.

26)     Mental confusion from stress

27)     Mental confusion from physical or psychological pain

28)     Bias from over-influence by the combined effect of many psychological tendencies operating together [lollapalooza]

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Carl Sagan’s Cosmos, Conciousness, Venus Colonies and More

Cosmos Carl Sagan

I have long been a proponent of opening the space frontier, space colonization (Venus especially), Carl Sagan and space exploration, as many of you know. I often find myself emailing people lists of my favorite space related YouTube videos, short stories, and articles. Eventually I realized that I should simply type these links into a blog post about the Cosmos, Carl Sagan, and more to easily share with people and reach an even broader audience.

Cosmos by Carl Sagan

For starters if you haven’t seen the original Cosmos series with Carl Sagan – that is absolutely the first thing you should check out. It’s incredible. Despite being made in 1980 and featuring some seriously dated graphics, the concepts are so lucidly explained, simple, and yet often mind bending that it’s quite a journey. You can find the entire series on YouTube for free. Here’s Episode 1 of Cosmos by Carl Sagan

A full playlist can be found here. Occasionally episodes of Cosmos get deleted out and you have to find another one on YouTube, but it shouldn’t be too hard.

Cosmos & Consciousness

As part of my ongoing meditation practice I love digging into some of the deeper and more grand mysteries of both our existence and the cosmos itself. To that effect, I’ve created a YouTube playlist of a number of my favorite videos around the concept of life, our place in the cosmos, and what we are. Here’s a sample of one of these – a video by Symphony of Science called “We Are All Connected.” It gives me goosebumps to listen to this.

Awesome Short Stories

Whenever I get into a conversation with someone about space exploration, I always recommend checking out two incredible short stories.

The Last Question by Isaac Asimov (Written in 1956)

The thing that impresses me about both of these stories is how long ago they were written, yet how timely they seem today. The last question is a classic science fiction story by one of the genres all time greats. I don’t want to say too much without giving it away – but its deep and thought provoking.

The Gentle Seduction by Marc Stiegler (Written in 1989)

This story is absolutely amazing. Its one of the most lucid and clear descriptions of what I think “the singularity” might look like (and for those of you unfamiliar, all the more reason you should read this story). This one will take a bit of time to read but its incredibly worth it.

 The Fermi Paradox & The Drake Equation

Drake Equation The Fermi Paradox is another space concept that I absolutely love. This was a favorite of Carl Sagan’s as well. The concept is essentially – if you look at the fact that the Milky Way alone has 400 billion stars – each of which likely harbors multiple planets (the math of crunching these numbers is called The Drake Equation) – the math works out that we should be seeing alien life all over the place – but we don’t. Well why not? First, check out this great video which explains the paradox simply and easily.

But to me, the most interesting examination of this is actually the idea that Carl Sagan’s model for understanding the expansion of alien life slightly misses the point that it really more of a “big bang” type model – the notion that as soon as a single intelligent lifeform evolves in a given galaxy – within a relatively short cosmic time frame (approx. 20mm years) they will come to completely dominate their galaxy. So instead of many pockets of intelligent life within a galaxy – there will almost always ever be a single dominant life form. The chart below explains this distinction and this article is a full read on the theory and the math behind it. The main takeaway is the notion that humans are likely in 1 of 2 phases – either we are about to takeover our entire galaxy (assuming we avoid wipeout) or we are just at the cusp of another alien civilization taking over the Milky Way. Essentially we are either at Point A or Point D of this graph today. Fermi Paradox Drake Equation Either way – its fascinating stuff and I suggest digging into it if it’s the kind of thing that gets you excited. If you want to really go deep on this, read through the “Explaining the Paradox Hypothetically” section on Wikipedia, its great.

Venus Colonization

While most people are focused exclusively on the colonization of Mars, there is actually a surprisingly strong case for the colonization of Venus. I originally discovered this one day in a deep Wikipedia binge and have really gravitated to it since. Specifically there are 3 major risks to Mars colonization that people just gloss over.

  • Gravity – Mars only has approximately 0.4 of Earths gravity and the long term impacts of this low gravity could be several damaging. There are currently no known solutions for this problem. This is also something that even long-term would make terraforming Mars tough because we still end up with a planet that is too low gravity.
  • Pressure – Mars also has almost no surface pressure – requiring both every structure to be completely pressurized, which is extremely expensive and challenging from a design perspective, and people to constantly wear pressurized suits.
  • Radiation – Mars has almost no atmosphere which also makes radiation a very dangerous prospect – requiring further protection and raising the expense and challenges of permanent colonization.

The problem with Venus is that everyone looks solely at the surface – you have to zoom up about 30-40kms into the atmosphere to find the single most earth-like place in our solar system. A place where the atmosphere protects you from solar radiation at the equivalent of earth’s sea level, a place where the gravity is approximately 1g, and a place where the pressure is exactly the same as sea level pressure on earth. This means that all you would need to wear is a gas mask and you would be perfectly fine. The real kicker though is that at this height in Venus’s atmosphere – breathable air is lifting gas when unpressurized. What this means is that just filling a civilization with breathable air makes it automatically float – and there is no risk of a Hindenburg-esq explosion event because the pressure would be equal – the civilization doesn’t have to be pressurized so that even a rupture or tear would cause a very slow leakage of gas instead of an immediate implosion/explosion.

Here are also two great articles about the colonization of Venus.

The Surprisingly Strong Case for Colonizing Venus

Will We Build Colonies That Float Over Venus

Additional Space Resources

Lastly, I wanted to share a few awesome websites to check out about cosmos, space exploration, and much more.Here are three of my favorite sites to check out (all of them are in my Feedly RSS reader and I check them pretty much every morning) related to space news.


IFL Science

I hope you’ve enjoyed this post and if you’re passionate about space exploration please share and comment!