The Morgan Housel Podcast -- timeless lessons on wealth, greed, and happiness.
How to Engage With History
This episode discusses my take on what you should pay attention to when reading history.
There’s a quote I love from writer Kelly Hayes who says, “Everything feels unprecedented when you haven’t engaged with history.”
It’s so true. History’s cast of characters changes but it’s the same movie over and over again.
To me, the point of paying attention to history is not the specific details of certain events, which are always random and never repeat; it’s the big-picture behaviors that reoccur in different eras, generations, and societies.
Let me share a little theory I have about optimism, and why progress is so easy to underestimate.
I’ll explain it in four parts.
A Few Thoughts on Spending Money
Behavioral finance is now well documented. But most of the attention goes to how people invest. But the study of how you spend money might be far more interesting -- and practical. How you spend money can reveal an existential struggle of what you find valuable in life, who you want to spend time with, why you chose your career, and the kind of attention you want from other people.
There is a science to spending money – how to find a bargain, how to make a budget, things like that.
But there’s also an art to spending. A part that can’t be quantified and varies person to person.
Information That Would Get Your Attention
There’s obviously a hierarchy of information. It ranges from life-changing good to life-changing disastrous.
That got me thinking: What would be the most interesting and useful information anyone could get their hands on?
Years ago I asked that question to Yale economist Robert Shiller. “The exact role of luck in successful outcomes,” he answered.
I loved that answer, because nobody will ever have that information. But if you did, your entire worldview would change. Who you admire would change. The traits you think are needed for success would change. You would find millions of lucky egomaniacs and millions of unlucky geniuses. The fact that it’s impossible to possess this information doesn’t make it useless – just thinking about how powerful it would be to have it forces you to ponder a topic that’s important but easy to ignore.
Keeping the idea that the most interesting information doesn’t have to be realistic – it can be impossible-to-obtain, magical-wish thinking – here are three other things that would get your attention.
Active vs. Passive Learning
There are two big ways to learn:
Active learning: Someone tells you what to learn, how to learn it, on a set schedule, on pre-selected standardized topics.
Passive learning: You let your mind wander with no intended destination. You read and learn broadly, talk to people from various backgrounds, and stumble haphazardly across topics you had never considered but spark your curiosity, often because it’s the topic you happen to need at that specific time of your life.
I can’t be alone in realizing that most of what I’ve learned in life has come from passive learning.
Respect Each Others’ Delusions
One sentence that knocked me off my feet when I read Will and Ariel Durant’s The Lessons of History was: "Learn enough from history to bear reality patiently, and respect one another’s delusions."
I love that so much.
The key here is accepting that everyone is deluded in their own unique way. You, me, all of us.
When you realize that you – the good, noble, well-meaning, even-tempered, fact-driven person that you are – have views of how the world works that are sure to be incomplete if not completely wrong, you should have empathy for others whose deluded beliefs are obvious to you. I am such a fan of Daniel Kahneman’s observation that we are better at spotting other people’s flaws than our own.
This episode shares three reasons why all of us become deluded in our own way.
Morgan Housel has given me a refreshingly different way of looking at personal finance.