Tyler's three laws and twelve rules (with Tyler Cowen)
Spencer Greenberg speaks with economist Tyler Cowen about his three laws, including why all propositions about real interest rates are wrong. They also discuss trends in economics, cultivating mentorship, cultural learning, and the importance of intellectual breadth.
Deep Dive Analysis
15 Topic Outline
Cowan's Third Law: Unpredictability of Real Interest Rates
Critique of Economists' Specialization and Opinions
Impact of Political Correctness on Economics
Analysis of Modern Monetary Theory (MMT)
Major Unsolved Questions in Economics
Role of Mathematics and Behavioral Economics in the Field
Tyler Cowen's Worldview and Holding Opinions
Cowan's First and Second Laws: Flaws and Literature
Learning from Those Who Offend You
Cultivating Mentors and Small Peer Groups
Understanding Cultures Through Symbolic Systems
Studying Super Effective People and Human Moldability
Critique of Large Foundations and Philanthropy
The Undiscussed Phenomenon of Lookism
Raising Others' Aspirations as a High-Return Activity
6 Key Concepts
Real Interest Rate
The interest rate adjusted for inflation, calculated as the nominal interest rate minus the inflation rate. Its behavior has historically defied consistent prediction or explanation by economic theories, often surprising economists.
Cowan's Third Law
The proposition that all claims and predictions about real interest rates are wrong. This highlights the inherent difficulty in understanding macroeconomics, where variables interact in complex, unpredictable ways that economic theories often fail to capture.
Cowan's First Law
The principle that there is something wrong with everything. This law suggests that no research paper or theory is perfect, and true understanding is achieved only when one can articulate the flaws within it.
Cowan's Second Law
The principle that there is a literature on everything. This advises researchers to thoroughly investigate existing knowledge and research before assuming they are the first to approach a problem, emphasizing the breadth of academic work already available.
Devalue and Dismiss
A psychological tendency where one identifies a flaw in an argument or person, then lowers its status and mentally relegates it, thereby ceasing to learn from it. Tyler Cowen advises against this, especially when encountering ideas that cause offense.
Lookism
The act of judging people based on their physical appearance. This phenomenon is pervasive but underexamined, leading to biases and prejudices that can result in people being undervalued or facing unacknowledged difficulties in life.
11 Questions Answered
This means that economic claims and predictions regarding real interest rates (nominal rate minus inflation) consistently fail to hold true over time, often surprising economists and defying theoretical expectations due to complex interactions of variables.
Tyler Cowen suggests that most economists are not necessarily wrong about specific theories, but rather exhibit too much careerism, hyper-specialization, and an unwillingness to think broadly about the big picture, often adopting opinions from mainstream media rather than deep economic thought.
Historically, economics has been an area where politically incorrect things could be said without severe backlash, but the influence of social media, particularly Twitter, is increasingly affecting economists' opinions and what they are willing to write about.
Major open questions include what drives economic growth, what produces innovation, why unemployment can be stubbornly high, and how to explain the complexities of the business cycle. Progress in these areas often means a deeper understanding of their complexity rather than definitive answers.
While economics has become less mathematical in terms of pure theory, it has become much more so in terms of data manipulation, programming languages, and working with databases, reflecting a shift towards real-world problems and data-driven research.
Behavioral economics has refined earlier insights by demonstrating which behavioral phenomena are most general versus context-specific, leading to the understanding that many are more context-specific than previously thought, making them harder to incorporate into general models.
Tyler Cowen believes that people often implicitly hold opinions (even if conformist or deferred to experts) and should be more honest about them, holding them in a fallibilist and qualified manner, even if they are generalists with opinions on only a small percentage of topics.
Being offended can be a sign of under-investment in understanding another's viewpoint. Resisting the urge to 'devalue and dismiss' those who offend can lead to greater intellectual growth and a deeper understanding of complex issues, even if their core views remain problematic.
A mentor is someone who knows an area you don't, is willing to help you learn, and takes delight in instruction, often learning from you in return. Mentorship can be informal and is crucial for making progress in new areas by making knowledge more vivid.
Engaging with these symbolic systems helps one develop a mode of learning similar to art appreciation, fostering openness and a multifaceted understanding that is beneficial for comprehending political and intellectual discourse. These arts also reveal the stories a culture tells about itself, offering deeper insights than direct political analysis alone.
Many people are not ambitious enough, and their imaginations limit the possibilities they consider. By making potential achievements vivid through examples or direct encouragement, one can significantly increase others' ambition and lead to much higher and more rapid compounding returns in their careers and achievements.
13 Actionable Insights
1. Cultivate Mentors & Peer Groups
Actively seek out mentors in areas you want to learn more about and have a small group of smart, interesting, or useful peers you work with. This approach makes learning more vivid and effective, as humans are programmed to learn better with other people involved.
2. Learn From Those Who Offend
Actively learn from people who offend you, as taking offense can be a sign you’ve under-invested in understanding their point of view. Resist the urge to devalue and dismiss them, and instead be drawn to them as a source of learning.
3. Steel-Man Opposing Views
To truly understand an issue, write out and articulate other points of view that are not your own, making the best possible case for them. This practice, known as ‘steel-manning,’ will deepen your overall understanding.
4. Broaden Your Worldview
Spend more time reading, traveling the world (especially to highly relevant countries like China and India), and thinking about bigger, broader, deeper questions to expand your understanding beyond specialized topics.
5. Study Symbolic Systems
Study the symbolic systems of art, music, literature, and religion to better understand alternative points of view in political and intellectual discourse. This approach helps crack cultural codes and keeps you more open-minded.
6. Avoid Devalue and Dismiss
Resist the tendency to ‘devalue and dismiss’ arguments or people by finding one flaw and then lowering their status, which prevents you from learning from their potential wisdom.
7. Identify Undervalued Talent
Recognize that judging people by their looks (’lookism’) is a market inefficiency and an opportunity to gain deeper understanding and support undervalued talent. Companies can gain an advantage by hiring people overlooked due to appearance biases.
8. Raise Others’ Aspirations
Engage in raising other people’s aspirations by making possibilities vivid through human examples of achievement. Many people are not ambitious enough because their imaginations are not vivid until they see success embodied in others.
9. Articulate Flaws to Understand
Apply ‘Cowan’s First Law’ by recognizing that there is something wrong with everything, and you don’t truly understand an idea or paper until you can articulate its flaws.
10. Be Honest About Opinions
Be honest about your opinions, even if you hold them weakly or are not a specialist, rather than pretending to have no opinion or defaulting to conformist views.
11. Use Teaching to Test Understanding
Teach concepts, even those you don’t fully agree with, and present them objectively. If you struggle to make a good case for something to a class, it’s a warning sign that you may not understand it very well.
12. Research Existing Literature
Before embarking on new research or problem-solving, ensure you know what existing literature is already out there, as ’there is a literature on everything’ (Cowan’s Second Law).
13. Optimism for Lifelong Improvement
Maintain optimism about people’s ability to improve at all different stages in their lives, and avoid writing people off, as demonstrated by examples like Grandma Moses starting painting in her seventies.
7 Key Quotes
All propositions about real interest rates are wrong.
Tyler Cowen
Macroeconomics is maybe more art than a science.
Tyler Cowen
If it's complicated, what progress means is to see how complicated it is.
Tyler Cowen
You're taking offense as a sign you've under-invested in understanding them.
Tyler Cowen
People with terrible views can be super smart.
Tyler Cowen
Small groups and mentors are my two nearly universal pieces of advice.
Tyler Cowen
People's imaginations are not vivid enough.
Tyler Cowen
3 Protocols
Learning from Others' Perspectives
Tyler Cowen- Seek out the flaws in your own worldview.
- Write out other points of view that are not your own.
- Articulate these alternative views and try to make the best possible case for them (steel manning).
- Use teaching as a way to test your understanding; if you can't explain something, you may not understand it well.
- Avoid 'devalue and dismiss' when encountering arguments or people you disagree with or find offensive.
- Be drawn to those who offend you as potential sources of learning, resisting the urge to stop learning from them.
Cultivating Mentorship and Small Groups
Tyler Cowen- Have a small group of smart, interesting, or useful peers you work with.
- Actively seek out mentors, defined as people who know an area you don't, are willing to help, and take delight in instruction (and often learn from you).
- Recognize that mentorship can be informal; you might already know a mentor but redefine the friendship to include learning.
Understanding Cultures and Ideas through Symbolic Systems
Tyler Cowen- Study the symbolic systems of art, music, literature, and religion.
- Recognize that these systems offer a deeper, more multifaceted understanding of a culture and its people than direct political analysis.
- Apply the open, complex-appreciating mode of learning from art appreciation to other areas of life, including political and intellectual discourse.