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Second-Order Thinking

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Re: Second-Order Thinking

#191

Post by atq2119 »

smckk wrote: post #38

Applied Economics: Thinking Beyond Stage One by economist Thomas Sowell[0] explores this in good detail, applying it to political and economic policies, in his book. Housing policies, medicare and today's problem of defund the police can be better analysed if the framework of second-order thinking is used to view the pros and cons of such policies and their subsequent ramifications. Second-order thinking is a great m…

Ironically, a lot of economics sound-bites are all about ignoring first order effects in favor of questionable second order effects.

I'm mostly thinking here about deficit spending discussions, where it's popular to inject worry about second-order effects creating a drag on the economy, e.g., crowding out. Meanwhile, it completely ignores the fact that the first-order effects are almost always all positive for the economy, e.g. more spending directly translates to higher GDP. (Plus, there are second-order effects that are positive for the economy as well.)

So yes, by all means try to understand the second-order effects, but don't let yourself get hoodwinked by people who want you to miss the first-order effects.

Re: Second-Order Thinking

#192

Post by tootallgavin »

EVa5I7bHFq9mnYK wrote: post #136
smckk wrote: post #38

Applied Economics: Thinking Beyond Stage One by economist Thomas Sowell[0] explores this in good detail, applying it to political and economic policies, in his book. Housing policies, medicare and today's problem of defund the police can be better analysed if the framework of second-order thinking is used to view the pros and cons of such policies and their subsequent ramifications. Second-order thinking is a great m…

After subtracting the cost of the book, and time wasted times minimal wage, I highly suspect the average wealth generated by reading it is negative.

Is this your assessment of books like Human Action by Mises? It took many months for me to work through both works.

Would you say the same for the books by Spivak or Resnick? What about a college degree?

Re: Second-Order Thinking

#193

Post by jonnycomputer »

Important, but our knowledge of higher order consequences will usually be more uncertain and plagued by ambiguity, where we don't even know the probabilities involved. My guess is that this can be a recipe for indecision and paralysis, i.e. you need to apply n-order thinking to the decision process itself, with humility about what you know, what you can know, and your own biases, which likely will have a bigger effect the more uncertain situation you are in.

Re: Second-Order Thinking

#196

Post by jyriand »

blackbear_ wrote: post #106
smckk wrote: post #38

Applied Economics: Thinking Beyond Stage One by economist Thomas Sowell[0] explores this in good detail, applying it to political and economic policies, in his book. Housing policies, medicare and today's problem of defund the police can be better analysed if the framework of second-order thinking is used to view the pros and cons of such policies and their subsequent ramifications. Second-order thinking is a great m…

Another similar book is "Economics in One Lesson" by Henry Hazlitt [1]: > From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate hut at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for a…

Came here to post about Hazlitt and you've beaten me to it.

Re: Second-Order Thinking

#197

Post by snapcaster »

rob_c wrote: post #56
forgotusername6 wrote: post #53

Earlier quoted context omitted.

Not necessarily. It describes 2nd order and above in contrast to the immediate effects of a decision. The 2nd order effect may be in 5s time or even immediate but not a direct consequence of the original action.

how is that not long term thinking?

Some second order thinking might involve long term thinking but my understanding of what is commonly meant is:

Long term thinking is termporally based, what will X look like in Y amounts of time

Second (or third) order thinking, is based on response to consequences or changes. Could be over a long term, or over a short term.

This seems pretty straightforward but you seem to take issue with it. I'm curious what you think is being messed up by people using these definitions?

Re: Second-Order Thinking

#199

Post by cbm-vic-20 »

js8 wrote: post #109
OJFord wrote: post #97

Earlier quoted context omitted.

'order' has many meanings in mathematics, and I'm not sure of the best metaphor that is actually called an order there, but when people talk colloquially about 'second order effects' etc. IME they mean something like a vertex v2 (doing something) in response to a change to v1, where there exists a vertex vj and edges (v1, vj) & (vj, v2) - and implicitly no edge (v1, v2). Higher 'orders' similarly extending the chain.…

IMHO, the figure of speech "n-th order" generally comes from Taylor series approximation, where n-th term is indeed expressed using n-th derivative. Also, if the series converges, the higher order terms will become smaller, thus the practice of approximating the reality up to n-th order term. Also, it's often practical to ignore 2nd order and higher terms, because then you have a linear function - something really ea…

E = mc^2 is a notable example.

Re: Second-Order Thinking

#200

Post by coldtea »

atoav wrote: post #86
kqr wrote: post #60

This article, and some of the comments here, seem to confuse "second-order" with "long-term". Long-term just means doing the same analysis far out into the future: "If I spend less on maintaining software product $LEGACY, I will save money. If I continue to do this, I will save more and more money by each passing month." Second-order means discovering neighbouring causal links. "If I spend less on maintaining softwar…

I am not particularily familiar with the connotation of the term second-order-thinking , but to me it implies the somewhat mathematical meaning of it. The first order might be some value (e.g. a voltage) and the second order might be the rate with which that voltage changes and the third the rate with which this rate changes etc. To me this implies that thinking on a higher order is somewhat about stepping back and v…

It's simply about looking further down up the casual chain, not stopping at the initial cause-effect: thinking about the effects of effect themselves (and, in third order, the effects of the effects of the effects, and so on).

A simple example of failing to do so and only considering the first level cause-effect:

"The British government, concerned about the number of venomous cobras in Delhi, offered a bounty for every dead cobra. Initially, this was a successful strategy; large numbers of snakes were killed for the reward. Eventually, however, enterprising people began to breed cobras for the income. When the government became aware of this, the reward program was scrapped. When cobra breeders set their now-worthless snakes free, the wild cobra population further increased".

Here's another one:

Caribbean plantation owners were tired of their relentless war against field rats – the rodents were eating into their precious sugar cane crops. Come 1872, a chap called W.B. Espaut had an original idea: why not bring over a few Indian mongooses – those unpretentious mammals known as enthusiastic rat hunters? Espaut travelled to India, had some mongooses captured and brought them to Jamaica. The problem – it soon turned out – was that the mongooses did not just kill rats; they killed birds, ate eggs, insects, useful reptiles, even small deer fawns. True, the mongooses also hunted and killed lots of rats; but they did not kill them all. In fact, the rodents continued to multiply – and so did the mongooses. Worse, both rats and mongooses carry a disease called leptospirosis, which can be lethal to humans. To cut a long story short, rather than getting rid of one pest, the hapless Hawaiians ended up with two.

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