Aging and skills

You have to consider age when you think about skills. Physical and cognitive skills have different perspectives about age. Physical skills like playing basketball have different characteristics than cognitive skills like playing chess. All the statistics about ages are from Michael Mauboussin´s book The Success Equation. It is a good book about skills and luck.

Physical skills

Different physical skills like sports have different optimal ages for peak performance. They are not the exact figures but small ranges of ages. Men and women have small differences between their peak ages depending on the sports. There are no specific ways to determine which physical skills have higher or lower peak ages. A simple answer is that skills that need more fast-twitch muscle fibers have lower peaks and skills that need more slow-twitch muscle fibers to have higher peaks. For example, running fast requires fast fibers, and endurance running requires slow fibers. Peak performance for running fast happens when you are 22-24-year-old male and 21-23 old female. Peak performance for endurance running is 26-28 for both genders.

There are also some other physical characteristics like the visual system and the body-eye-coordination that need to be considered. Visual acuity weakens when you age. Therefore, baseball batters lose their edge after a certain age. Basketball players need both, fast-twitch fibers and great body-eye-coordination, therefore their peak age (24-26) is lower than peak age for baseball (27-29). Athletes that rely only on their body-eye-coordination like golfers (30-35) have higher peak ages than other athletes.

Cognitive skills

Cognitive skills usually mean the ability to make decisions. If you want to make good decisions, you have to be able to understand the stimuli you confront, how it relies on the understanding you already had about the similar or relevant stimuli about the situation, to understand what stimuli to discard and what to use to make a decision and overcoming your intuition if it is needed. Aging has a much slower effect on your ability to use your cognitive skills than using your physical skills. Aging helps in a stable environment and when you have lots of time. Peak age is much lower in an unstable environment with the necessity to make fast decisions.

Cognitive skills can be divided into two different groups. The ability to solve new problems and the ability to solve problems that are related to your experiences. The first group is called fluid intelligence. It peaks around 20 and is in constant decline about one percentage point a year until you die or your brain has big damage like Alzheimers-disease. Your ability to resist your intuition when it is wrong declines when you get older so does your ability to plan for the future. In other words, you cannot change your patterns of thought as well as you were younger. Therefore, the faster speed of change in the modern world becomes harder as you become older. You also have to be younger to create new things.

You can grow your ability to use things you learned before grows until you die, but in your early forties, the growth slows. Your peak when you are old is not much higher than you were in your twenties. It is only about 25 percent higher. Your vocabulary, ability to understand historical events, and geography, all grow until you die. If the current situation is just one of those previous events, you probably understand it better than later generations, especially if you have time to think about it. Your creativity in putting together old information and/or being an experimental creator peak later.

The overall cognitive performance declines after a certain age. The peak age is about 45 years. You cannot fool yourself in any way. You have to accept this. Some things that combine novel and old things like personal finance have later peak ages. The peak in the ability to make good decisions on personal finance is about 53 years of age.

You can read more about aging and skills from Mauboussin´s book. Until next time!

-TT

Luck; Skill, or both?

Do you need luck, skill, or both to become successful? You can find many answers to this question. Some people say others have luck and they have great skills. Some people say you need both. The answer to this question starts with words ”It depends on.” and continues with ”what you are doing. Michael Mauboussin has written a great book, ”The Success Equation” which gives more answers to this question than I can give to you in this text.

Let's start with the definition of luck. It can be defined as ”A single unrelated event that gives you an advantage or a disadvantage.” Some people may say that you can work hard to be lucky. They say you can develop yourself to become luckier. These phrases do not apply to the definition of luck. What happens is that when you have better skills in what you do, luck strengthens your success. Skill can be defined as: ”An ability to use your understanding to execute an action or a decision.” The more skilled you are the better ability you have to do this on average. The last two words are the most essential ones. Single actions or decisions that give you a great result do not mean you are skilled. Great executions that you can deliver on an average day by day are the best symptoms of great skills.

Luck-skill-continuum

Different types of actions or decisions can be put into luck-skill-continuum. On one side of the continuum are actions or decisions that need only luck and on the other side are actions or decisions that need only luck. You can find most actions and decisions from the middle of the continuum. They are based on luck and skill. In the middle are the actions that are based on both luck and skill and from this point to the left luck becomes more important and from this point to the right skill becomes more important. Lottery and most games like roulette at the casino are completely on the left side of the continuum and games like chess are on the right side of the continuum. Ask yourself: ”Can you lose on purpose?” if you want to know about the position on the continuum. If you can lose on purpose, you are on the right side of the continuum. If you cannot, you are on the left side of the continuum. In the middle, you can find an author that sells lots of books. Shitty authors cannot sell any books, but good ones can still not sell if they are not lucky.

Three things tell you more about the actions or decisions and whether to put them to the left or right side of the continuum. The first one is the sample size. When you are on the right side of the continuum, even the small sample size of the results can tell you much about skills. For example, the time for a hundred-meter run can tell you whether the runner is a good or a bad one. In the lottery, you can put hundreds of coupons and how much you win tells you nothing. In other endeavors like playing poker, small samples tell you nothing about the skills of the player, but when you play hundreds or thousands of hands, more skilled players win and worse players lose much more.

The second one is the form of feedback you get. When you need to be skilled, the feedback you get is based on clear cause-effect relationships not random or complicated like on the left side of the continuum. In this side, the feedback you get will lead you to problems. You may think that you are skilled even though you are just lucky. This does not happen on the right side of the continuum.

The third one is the return to the average or to mean if you want to use the statistical word. When the endeavor is based on skill, the return to the average happens slowly. When the endeavor is based on luck, the return to the average happens fast. In the middle of the continuum, the speed of the return to the average is somewhere in between.

There is an interesting paradox about the role of luck in the middle of the continuum. The better the relative skills of the performers are, the more luck you need to perform better than average. What I mean with this is that when the average performance is closer to the best one, the more luck you need to succeed and vice versa. The bigger the difference between the average performer and the best performer there is, the less luck the best performers need. When this is the case, you have to be sure you are better than your opposition.

I kept this text short. Sorry for not publishing anything for a long time. Hopefully, I will get something published in the next two weeks after this.

-TT

Personal systems you need

First I would like to say that this text is the last one during this year. It will be a short one.

The quality of your life depends on the quality of your systems. The problem with this fact is that you have tens or even hundreds of systems. Most of them do not even recognize. All your habits are systems. All your other behavioral routines are systems. What separates the other behavioral routines from habits is that they do not have clue-routine-reward order. Their electronic ”fingerprint” in your brain is not the same. Your life also depends on systems other people built like companies. In this text, I will focus on the personal systems you need. I will have a list of them, but I do not explain it to them very much. Most of them are self-explanatory and even obvious. Some of them you do not recognize as systems and some of them should be systems but are not in your daily use.

Let's start with the most obvious ones. You need to have systems to get enough sleep, to have high-quality nutrition, to have enough exercise, and to recover from your daily efforts at work or from the efforts in learning new things. You also need to have systems to use your hours as efficiently as possible, like using your best hours of the day in the most important things. You need to have systems for moving from one place to another, no matter what they are. As you can see, these things are not rocket science.

You need habits. You also need to have systems to change your habits and create new ones. Everyone has bad habits and you can only change them. Therefore, the former is harder than the latter. This means that they take more time and effort.

You need decision-making systems. You need to have decision-making systems for less and more important decisions. For example, you can have different systems for making decisions about small amounts of money and a large amount of money. You can also have different systems for intuitive tasks and deliberate ones.

You need to have practice systems to improve your understanding and skills in any endeavor you want to be better. One system is deliberate practice. It does not work in all skills. You need to have systems to maintain your edges in skills that are better than your competitors. You also need to have support systems to deal with your weaknesses and blind spots. You need a system that either destroys or confirms your strongest beliefs. This system has to focus on reality, not things that you believe are true. You need a system that produces constructive criticism. You may also need separate systems that measure the results of your actions and decisions. This system has to separate skill from luck or randomness.

You have to build strategies to get what you want from life. They are systems like the rest of the mentioned things. They have also subsystems but let's not get into them. You also need back up systems in the most important things.

I will update this list later.

Merry Christmas and happy new year!

-TT

Common antidotes to psychological biases

Psychological biases can be working in any situation. This text is about common antidotes to all of them. Each of them also has some specialized antidotes which I will not go through today. Most people think they are more invulnerable against the tricks of persuasion professionals than average. Most people think they can be rational in any situation. This is not true. When the moments come that you think you are the best way prepared to ward off all manipulations, you have the highest odds to be vulnerable. This applies even to people who know about the ways they are manipulated. It can be the worst position to suffer from persuasion. It is the position that can have the largest possible bad effects on the decisions you make. Confidence in your abilities is the worst foundation for these moments. Be suspicious about your abilities.

Even though I mentioned that confidence is bad for you, you have to first recognize these situations in which you are vulnerable. And this can make you feel you can resist anything. It is better if you do it before you have to deal with them. Avoiding them is the best solution. One of the most common situations, when you cannot avoid the effects of persuasion professionals, is when your willpower is low. This happens when you are tired, stressed, have external influences like other people to lead you the way, etc. One of the best signs of these situations is your overreaction to stimuli, whatever it is.

Bitter pills can work. When you voluntarily expose yourself to less harmful persuasion professionals, you can recognize your vulnerability to them. This makes you less confident about your abilities to resist them. When professionals have deceived you with small things, you can have better odds in avoiding persuasion attempts in bigger things. For example, book salesmen are not as harmful as car salesmen. Analyze your reactions to salesmen, their tricks, and how they deceive you or try to do it. Plan in advance. Do not expose yourself to a situation that can cost too much. You can also see these professionals at work, but with other customers, if you do not trust yourself enough to be a customer. Go to a cafe that has direct access to a shop or two. Have a coffee and watch it. You do not even have to hear what they say and you can still learn. You will learn less, but with smaller problems.

You can also practice your reactions to these situations. If you like to wander in a mall or you have to go and buy something from them, you can use so-called if-then scripts. For example, if a persuasion professional approaches you to sell you something, then tell him your wife takes care of these things in your family. You can also tell him that you have a job interview and you have no time to talk. You can invent more of these scripts yourself. Use your imagination and I am sure you will find something to say.

Some situations are more dangerous than others. If someone creates new expectations and wants to fill them, you have to be smart. For example, a company sells you some sugary and fatty foods and it also sells diets to lose weight, you have to be careful about it. That company wins twice. First, it sells you an unhealthy snack, and then it sells you something that lessens the bad effects of it. The other sign of a hidden agenda is selling something you have not experienced before. Try this new product X and enjoy it. This can be something like a test drive, or a new service, etc. When new things are free, be extra careful.

Frame these situations in different ways if you want to avoid them. Distance yourself from them. Think like you are an outsider. For example, ask yourself what others would do if they were you. Would they say yes or no? Practice their answers. You can also find outsiders about their opinion in advance. Use your critics if you can. Try to be neutral. Think about finding the truth and nothing but the truth. Be aware of your prejudices. Be careful when your response is too strong for the situation. It is the best sign that something is wrong.

This is all for today,

-TT

Losses, Gains and Possessions

You tend to worry more about losses than you care about the gains. This is one form of excessive self-regard. Even though you worry more about losses, you tend to be optimistic about having fewer possible risks than others. You believe that other people suffer more from unemployment, bad break-ups, and bad illnesses. The availability of possible risks changes the way you see them. You do not have to suffer from these incidents yourself. You just have to see them happening to someone else. If you lose something, your risk level rises to get it back. Overreaction to these incidents is a normal human trait. It protected your ancestors from irreversible harm. Today´s world is different.

The ratio of hurting more from losses than enjoy gains is about two to one. 200$ gain feels as good as 100$ losses feel bad. This fact leads to many irrational decisions. It can have bad effects on the outcomes of your life. This does not mean you should always choose the option of getting larger gains than avoid losses. You can do this when losses do not cause you any bad damage. For example, it is smart not to bet your last 1000$ if you can win 1500$ and chances are 50%. But you can bet your 1000$ to win 1500$ when chances are the same if you have a significant amount of extra money. In the long run, you have to use these possibilities to your advantage if you want to have a life you deserve. Constant choices for avoiding losses are not the best way to live your life.

Losses and gains produce some other irrationalities in your life. One thing that makes the difference is the total amount of your gains and losses. This applies not only to the sums of money but to how many times you lose or gain something. It s more painful for you to lose 100$ twice than losing 200$ once. When this happens to you in the sum of gains, winning 100$ twice feels better than winning 200$ once. There are limits to the effects of gains and losses. Losses feel less painful after a certain point. For example, if you have 1000$ and you lose 100$, it feels less painful than if you have 500$ and you lose 100$. The same applies to gains. For example, gaining 100$ when you have 1000$ feels less good than having 500$ and winning 100$. This applies to your wellbeing too. After a certain point, your wellbeing doesn´t increase when you get more money than you felt before.

Possessions

Anything you own is more valuable to you than before you owned it. If you pay 100$ for an item, its value to you increases. This applies not only to your possessions but the effort you put to get them. IKEA furniture is a good example of this effect. When you buy something from the store, you have to assemble it. Putting screws, using a hammer, and other efforts to put pieces together increase the value of the items. When you put these two things together, your items become much more valuable than you paid for them. Your emotional attachment to your possessions grows when the time goes by. The more you use them or the more available they are to you, the more valuable they become as their availability in your mind grows. Riots and revolutions usually happen after something are taken away from people. They do not happen when people never had anything. Even small possessions that are taken away destroy governments.

Framing losses and gains differently

Framing losses and gains differently can help you get what you want. Frame all the undesirable things in a way that they feel like losses. For example, risks with negative expected value can be framed to feel like losses. For example, frame lottery tickets as losses of the money you pay for them, not to the opportunities to gain millions. Risks with positive expected value can be framed in ways that not doing them feels like losses. For example, not accepting a coin toss to win 1500$ and lose 1000 will be a loss of 250$ of expected value. There is a certain way to make gains feel better and losses feel less bad. Always bundle your losses and separate your gains. Separating gains and losses is a bad idea when the gains are bigger. Talk about investments, not losses.

Valuing possessions

Avoid most pay later to get something now deals. You will feel like an owner before you have paid anything. This possession may feel more valuable than they are. Do not underestimate the value of ownership. If you cannot afford something, do not even try it. Be realistic about your possessions. Most of them are not so valuable to others than they are to you. Do not overprice things you own if you have to sell them. Ask experts about their real value. Most and for all, understand the value of your currency. The dollar is a dollar and pound is a pound, no matter how much effort you have put to your possessions and how available they are in your mind.

-TT

Do you update or calibrate your beliefs?

One of the forms of excessive self-regard is that you overrate your beliefs about the world, people, and ideologies, etc. Beliefs are good when they are right. You could not get anything done without them. Reality proves that most of your beliefs are right. Therefore, doing choices based on your beliefs make your life better. Unfortunately, you have to update or calibrate your beliefs in the modern world or you will lose the grasp of reality. To a certain extent, this happens to all of us. It has happened to me, at least.

Belief formation is a simple process

You form your beliefs with a simple process. First, you hear or see something. Second, you choose to believe it. Of course, sometimes you choose to ignore it. Let's keep things simple and focus on things you have approved in your mind. Most of your beliefs have common sources. When you are young, some kind of authority figures is the first sources of your beliefs. Your parents, other family members, and teachers tell you what to believe. Sometimes your friends are your sources. No matter who the sources are, your ability to question them is poor. When you get older, the number of your sources grows. At some point, the number of sources starts to diminish.

Beliefs and reinforcing feedback loops

The longer you live, the higher the odds that you do not calibrate or update your beliefs. Your beliefs are hard to change because you process new data in a way that strengthens your existing beliefs. The validity of your beliefs is hard to question because your brain seeks the data that confirms your beliefs and ignore the data that question them. This process is a self-reinforcing feedback loop that keeps strengthening until you disrupt it. The same reinforcing loop is at play when parents transfer their beliefs to their kids. This loop can continue centuries.

One of the misunderstandings about one´s beliefs is that the smarter you are, the better you are in changing your existing beliefs. The fact is a complete opposite. Even though smart people are better at processing data, they are also better at corrupting the data. They are better at finding people, research, and facts that support their point-of-view. They also have stronger beliefs because they can better explain themselves why their beliefs are the right. Therefore, they discard the evidence that contradicts their beliefs even when it is right. If the data is in the form of numbers, the better you are in twisting them to support your beliefs. The majority of the less smart people have higher odds of changing their beliefs. Intuitively, this makes no sense to you at all. The smarter you are, the more useful it is to you to find other people who disconfirm your beliefs.

How to calibrate and update your beliefs

Most scientific facts have been proven wrong. In the course of history, things that have been certain in people´s minds, like the earth being a center of the universe, have changed to other facts. You have to be prepared to update your facts and beliefs when new facts contradict them. It is not a sin to change your beliefs. The biggest sin is to cling on your false beliefs after you have learned new data about them. Unfortunately, the complete opposite has higher odds of happening. When you get disconfirming data about your beliefs, your brain often clings on your beliefs even harder.

Sometimes facts do not change completely. Then, you have to calibrate and/or update your beliefs. If you want to do that, you have to first acknowledge the fact that most of your beliefs are not certain. Nothing in life is 100% sure or 100% wrong. Therefore, you have to define odds with everything. You have to think about how confident you are about anything. For example, you can be 99,999% confident that gravity exists or you can be only 75% confident that you are qualified enough to do your job. You can also use a range of possibilities and put odds to the range. For example, you are 80% sure that your income will be between 50,000$ and 75,000$ in five years.

One way to see if your beliefs or facts need updates and calibration is to check their long-term track records. For example, if you believe in socialism, find out how well it has worked in the history of mankind. After you have done your due process, ask yourself whether you have found proof that it has worked before somewhere. If you have ways to measure the effects of your beliefs and facts on you, do it for a long time. Then think again if you have to update them or not. For example, if you have had a diet for a year, one way to see if it has worked is to measure your weight and/or the length of your waistline at least twice a year. Adjust your beliefs about your diet if you have to. You can also find out expert opinion about your beliefs or ask their critics to give you feedback about them.

This is all for now,

-TT

Two system archetypes and feedback loops

To understand this text, you should first read about feedback loops if you are not familiar with them.

Systems have the same principles and share common characteristics. Systems that have enough common characteristics can be described as archetypes. Systems that belong to the same archetype have a similar structure, goal, or purpose and their behavior is similar over time. Similar feedback loop behavior is the main common denominator in system archetypes. Reinforcing feedback loops produce archetypes more often than balanced ones. Reinforcing loops usually produce behavior that is too much for the balancing loops. It is a rare occasion when balancings loops produce archetypes.

Limits to success archetype

Sometimes success is too hard to handle. Most people are not prepared to handle it. Limits to success archetype usually have a self-reinforcing feedback loop and a balancing loop that keeps reinforcing loop stable. When the balancing feedback loop cannot handle the acceleration in the self-reinforcing loop, problems will start to occur. After a while, the reinforcing loop cannot produce growth and your balancing loop becomes the dominant one. Then your success starts to deteriorate.

For example, when you become suddenly famous and successful and you are not prepared to have a balancing feedback loop that is strong enough to handle your success. The demands for your success will increase. Your growth can be in danger because later some limiting factor that was not a problem before like time appears. This growth becomes less sustainable because maintaining the growing demands more of your time. Suddenly, growth disappears because the balancing loop begins to dominate the system and your time and other resources are tied to the wrong places.

You have to make changes to solve the problem, but you have to figure out the main cause of it. Did your priorities change? Did the problem of saying no to less important things become a real problem for you? What you have to do is to find the right limits for these activities that weren´t your problem before? When you have found them and you cannot limit the time used for them yourself, you might need to hire somebody else to manage your time and say no to less important things so that you can focus your efforts on the most important things.

Escalation archetype

Competition is usually a good thing. But it can go too far and produce some unwanted consequences and escalate into a full-blown war between two or more competing entities. Usually, the escalation archetype is consisted of limited stock, competitors, and balancing loops. Escalation is more or less a zero-sum game. If two competitors have limited shares of goods, one of them cannot have more than 100%. This means that these two can have a combined share of 100% of the goods. Usually, competitors fight from a slowly growing amount of goods. And this fight usually is pretty stable because of those balancing loops. When some variables in balancing loops change as things escalate, self-reinforcing loops inside the balancing loops are shaped. These loops create problems.

Before escalation, the shares of goods are almost or completely stable between the competitors. All their efforts go to maintain this balance in the shares of goods. Escalation begins when one competitor changes its behavior and another sees that behavior as a threat to their position. What happens is that the competitor who was interested in maintaining balance has to react to the first mover´s behavior. For example, this can result in a price war escalation. The first mover reduces the price of their goods and the other competitor has to follow. This can change into a self-reinforcing pricing war with several rounds of price reductions. It usually ends when both competitors are not able to reduce their prices or one/all competitors are destroyed.

Competition is good for society and actors in it. Even escalation can be a good thing. Positive goals are good. Many escalating competitions can produce good results for societies. For example, competition in developing new medicines can produce better ways to cure diseases. If this competition escalates, it helps others. It can even help companies if they develop faster processes to develop medicines. The best way to reduce the problems of this archetype is to avoid it. Collaboration is often the best way to manage things. It should be your first choice.

There are many other system archetypes and most of them usually are about feedback loops and their mismanagement. Changes in the variables in feedback loops can produce unintended effects and these can change system behavior in a completely different direction. Sometimes it is about changing goals or dominant interconnections that produce addictions.

There are many good books about systems and you can find more information about different archetypes from them.

Source:

Learn to Think in Systems, Albert Rutherford

Until next time,

TT