Author: Farnam Street

Why You Shouldn’t Slog Through Books

Our system for reading 25 pages a day has been adopted by many of our readers and members of the learning community to great success. A couple points have been misinterpreted, though, so we want to clear them up.

***

Reading is a way to open windows into other worlds that cross time and disciplines. While most of us don't have the time to read a whole book in one sitting, we do have the time to read 25 pages a day (here are some ways you can find time to read). Reading the right books, even if it's a few pages a day, is one of the best ways to ensure that you go to bed a little smarter than you woke up.

Twenty-five pages a day doesn't sound like much, but this commitment adds up over time. Let’s say that two days out of each month, you probably won’t have time to read. Plus Christmas. That gives you 340 days a year of solid reading time. If you read 25 pages a day for 340 days, that's 8,500 pages. 8,500. What I have also found is that when I commit to a minimum of 25 pages, I almost always read more. So let’s call the 8,500 pages 10,000. (I only need to extend the daily 25 pages into 30 to get there.)

With 10,000 pages a year, at a general pace of 25/day, what can we get done?

Well, The Power Broker is 1,100 pages. The four LBJ books written by Robert Caro are collectively 3,552 pages. Tolstoy’s two masterpieces — War and Peace, and Anna Karenina — come in at a combined 2,160. Gibbon's The Decline and Fall of the Roman Empire is six volumes and runs to about 3,660 pages. That’s 10,472 pages.

That means, in about one year, at a modest pace of 25 pages a day, you’d have knocked out 13 masterful works and learned an enormous amount about the history of the world. In one year!

That leaves the following year to read Shirer’s Rise and Fall of the Third Reich (1,280), Carl Sandburg’s Six Volumes on Lincoln (2,000?), Adam Smith’s Wealth of Nations unabridged (1,200), and Boswell’s Johnson (1,300), with plenty of pages left to read something else.

This is how the great works get read: day by day, 25 pages at a time. No excuses.

We hold to this advice today. But there are two areas that have been misinterpreted over the past year, so let's clarify them and make sure everyone is set on the right course.

Twenty-Five Pages a Day: Minimum, Not Maximum!

Our friend Ryan Holiday had an interesting retort to our piece, saying that while he agreed with it, he found it impractical in his own life.

Farnam Street had a post recently talking about how the way to get through big books is 25 pages a day. I don’t totally disagree with that, I’ve just found that style is nice in theory but less effective in practice. Really, it’s about whether you can go through large blocks of time at this thing, concerted but sustained blocks of effort—almost like a fartlek workout. Because broken up into too many pieces, you’ll miss the whole point of the book, like the proverbial blind man touching an elephant. Those who conquer long books know that it’s not a matter of reading some pages before you fall asleep but rather, canceling your plans for the night and staying in to read instead.

I suspect that our disagreement is one of degree and perhaps misinterpretation. We totally agree on the point of reading in long, sustained blocks. That's exactly how we read ourselves!

The point of assigning yourself a certain amount of reading every day is to create a deeply held habit. The 25-pages-a-day thing is a habit-former! For those of us who already have a strong reading habit, it's not altogether necessary. I love reading, so I no longer need to force myself to read.

But many people dream of it rather than doing it, and they especially dream of a day when they will read for hours at a time with great frequency, as Ryan does and as we do.

The problem is, when they start tasting the broccoli, they realize how tough that commitment can be. They think, “If I can't read for hours on end, why bother starting?” So instead of doing their daily 25 pages, they don't read anything! The books sit on the shelves, collecting dust. We know a lot of people like this.

Those folks need to commit to a daily routine — to understand what a small commitment compounds to over time. And, like us, most of these people will naturally read far more than 25 pages. They will achieve the dream and plow through a book they really love in a few sittings rather than with a leisurely 25 pages per day. But creating the habit is where it starts.

Eventually, you’ll love it so much that you’ll force yourself to read less at times so you can get other things done.

Don't Slog Through Books You Don't Like

The other misconception comes from the meaty books we referred to: long ones like The Power Broker, War and Peace, and Gibbon's Decline and Fall. Some readers took that to mean that they should attempt these huge tomes out of pure masochism and use the 25-page daily mark to plow through boredom.

Nothing could be further from the truth! (Our bad.)

Too many English lit professors have promoted the idea that “the classics” contain some sort of unique unobtanium of wisdom. Sorry, but that’s bullshit.

If you've gone through our course on the Art of Reading (which we recently updated and revised), you'll realize that there are many better strategies than plowing ahead. You must pursue your curiosities! This is by far the most important principle of good reading.

The truth is that when you're super bored, your interest and understanding come to a screeching halt. There are many, many topics that I find interesting now which I found dull at some point in my life. Five years ago, there was no possible way I would have made it through The Power Broker, even if I tried to force myself. And it would have been a mistake to try.

Here’s another unspoken truth: Any central lesson you can take away from War and Peace can also be learned in other ways if that book doesn't really interest you. The same goes for 99% of the wisdom out there — it's available in many places. Unfortunately, too many English lit professors have promoted the idea that “the classics” contain some sort of unique unobtanium of wisdom. Sorry, but that’s bullshit.

The better idea is to read what seems awesome and interesting to you now and to let your curiosities grow organically. A lifelong interest in truth, reality, and knowledge will lead you down so many paths, you should never need to force yourself to read anything unless there is a very, very specific reason. (Perhaps to learn a specific skill for a job.)

Not only is this approach way more fun, but it works really, really well. It keeps you reading. It keeps you interested. And in the words of Nassim Taleb, “Curiosity is antifragile, like an addiction; magnified by attempts to satisfy it.”

Thus, paradoxically, as you read more books, your pile of unread books will get larger, not smaller. That’s because your curiosity will grow with every great read.

This is the path of the lifelong learner.

Givers, Takers, and the Resilient Mind. My Conversation with Adam Grant

Adam Grant

Are you a giver or a taker?
Have you ever struggled to find work/life balance?
How do you build resilience in yourself, your team, or your children?

I tackle these topics and many more in this interview with my special guest, Adam Grant.

If you know who Adam is, I don’t need to say anymore to convince you to listen. In fact, you’ve probably already stopped reading so you could get to the podcast right away. That’s what I would have done, anyways.

If you aren’t familiar with Adam yet, let me introduce you:

He simply describes himself as a professor, author, and speaker.

Sure, Adam is all those things, but allow me to expand a bit on his humble description:

  • He’s a professor…at Wharton…who has been awarded top professor for six straight years.
  • He’s an author…who’s written three books — and all three have been New York Times bestsellers, selling over a million copies and translated into 35 languages.
  • And he’s a speaker…whose last two TED talks have been viewed over ten million times.

On top of all of that, he carves out time to be a dedicated husband and father.

In short, he’s a helluva guy. And if you are an employee, an entrepreneur, a manager, (or quite frankly, someone who interacts with human beings in any way), then Adam has some incredibly valuable insights to share.

In this interview, we cover a lot, including:

  • How to tell if you are a giver or a taker (Spoiler: if you just told yourself you’re a giver, you might be in for a rude awakening)
  • How Adam filters down hundreds of ideas and opportunities to the select few he focuses on
  • How to tell if your business idea is a winner or a huge waste of time
  • Why “quick to start and slow to finish” is great advice for budding entrepreneurs
  • How to nurture creativity and resilience in your children (or team culture)
  • How to create positive competitive environments that bring out the best in people
  • Adam’s two core family values and how he instills them in his children
  • “Mental time travel” and how it can make you resilient to any challenge or obstacle
  • Why “how can I be more productive” is the wrong question to ask (and what to ask instead)
  • How Adam and I each address the topic of work/life balance

And so much more.

There’s so much great stuff packed in this episode, you won’t want to miss it.

Listen

Transcript

A lot of people like to take notes while listening. A lightly edited transcript of this conversation is available to members of our learning community or you can purchase one separately.

The Difference Between Open-Minded and Closed-Minded People

Why is it that some people seem to make constant progress in their professional and personal lives, while others appear to be doomed to repeat the same mistakes over and over?

While the answer isn’t cut and dry, I’ve noticed an interesting mindset difference between these two groups: they approach obstacles and challenges very differently.

The first group approaches life with an open mind — an eagerness to learn and a willingness to be wrong. The second group digs their heels in at the first sign of disagreement and would rather die than be wrong. The way each group approaches obstacles, it turns out, defines much of what separates them.

So which group are you in?

Before you smugly slap an open-minded sticker on your chest, consider this: closed-minded people would never consider that they could actually be closed-minded. In fact, their perceived open-mindedness is what’s so dangerous.

It’s a version of the Batesian Mimic Problem — are you the real thing or a copycat? Are you the real deal, or have you simply learned to talk the talk, to look the part?

These are tough questions to answer. Nobody wants to admit to themselves that they’re closed-minded. But the advantages of having that courage are massive. The ability to change your mind is a superpower.

The ability to change your mind is a superpower.

The rate at which you learn and progress in the world depends on how willing you are to weigh the merit of new ideas, even if you don’t instinctively like them. Perhaps especially if you don’t like them.

What’s more, placing your trust and effort in the right mentor can propel you forward, just as placing it in the wrong person can send you back to the starting point.

So how can you tell what camp you're in? How do you make sure you're being influenced by the right group of people?

In his book Principles, Ray Dalio, self-made billionaire and founder of the largest hedge fund in the world, lays out seven powerful ways you can tell the difference.

1. Challenging Ideas

Closed-minded people don’t want their ideas challenged. They are typically frustrated that they can’t get the other person to agree with them instead of curious as to why the other person disagrees.

Closed-minded people are more interested in proving themselves right than in getting the best outcome. They don’t ask questions. They want to show you where you're wrong without understanding where you’re coming from. They get angry when you ask them to explain something. They think people who ask questions are slowing them down. And they think you’re an idiot if you don’t agree.

In short, they’re on the wrong side of right.

Open-minded people are more curious about why there is disagreement. … They understand that there is always the possibility that they might be wrong and that it’s worth the little bit of time it takes to consider the other person’s views….

Open-minded people see disagreement as a thoughtful means to expand their knowledge. They don’t get angry or upset at questions; rather, they want to identify where the disagreement lies so they can correct their misperceptions. They realize that being right means changing their minds when someone else knows something they don’t.

2. Statements vs. Questions

Closed-minded people are more likely to make statements than ask questions.

These are the people who sit in meetings and are more than willing to offer their opinions, but never ask other people to expand on or explain their ideas. Closed-minded people are thinking of how they would refute the other person’s thoughts, rather than trying to understand what they might be missing.

Open-minded people genuinely believe they could be wrong; the questions that they ask are genuine.

Open-minded people know that while they may have an opinion on a subject, it could count for less than someone else’s. Maybe they’re outside their circle of competence or maybe they’re experts. Regardless, they’re always curious as to how people see things differently and they weigh their opinions accordingly.

(At Syrus Partners, for example, Jeff’s financial analysis trumps mine when we disagree. Why? He’s simply better at it than I am. He finds things that business owners don’t even know about. Do I care that his analyses take precedence? No. Why? Because I want the best outcome.)

3. Understanding

Closed-minded people focus much more on being understood than on understanding others.

People’s default behaviors offer a quick tell. When you disagree with someone, what’s their reaction? If they’re quick to rephrase what they just said or, even worse, repeat it, then they are assuming that you don’t understand them, rather than that you are disagreeing with them.

Open-minded people feel compelled to see things through others’ eyes.

When you disagree with an open-minded person, they are quick to assume that they might not understand something and to ask you to tell them where their understanding is incomplete.

4. I Might Be Wrong, But…

Dalio nails this one. I have nothing to add.

Closed-minded people say things like “I could be wrong … but here’s my opinion.” This is a classic cue I hear all the time. It’s often a perfunctory gesture that allows people to hold their own opinion while convincing themselves that they are being open-minded. If your statement starts with “I could be wrong”…, you should probably follow it with a question and not an assertion.

Open-minded people know when to make statements and when to ask questions.

5. Just Shut Up

“Closed-minded people block others from speaking.”

They don’t have time to rehash something already talked about. They don’t want to hear anyone’s voices but their own. (Dalio offers a “two-minute rule” to get around this: Everyone has the right to speak for two minutes without being interrupted.)

Open-minded people are always more interested in listening than in speaking.

More than that, they say things like, “Sam, I notice you’ve been quiet. Would you like to offer your thoughts to the group?”

“The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”

— F. Scott Fitzgerald

6. Only One Sperm Gets In

Closed-minded people have trouble holding two thoughts simultaneously in their minds.

This reminds me of the memorable quote by Charlie Munger: “The human mind is a lot like the human egg, and the human egg has a shut-off device. When one sperm gets in, it shuts down so the next one can’t get in.” It’s our nature to close our minds around our favorite ideas, but this is not the ideal way to think and learn.

Open-minded people can take in the thoughts of others without losing their ability to think well—they can hold two or more conflicting concepts in their mind and go back and forth between them to assess their relative merits.

7. Humble Pie

Closed-minded people lack a deep sense of humility.

Where does one get humility? Usually from failure—a crash so terrible they don’t want to repeat it. I remember when a hedge fund I was on the board of made a terrible investment decision. We spent a lot of time rubbing our noses in it afterward in an attempt to make sure we wouldn’t repeat the same mistake. In the process, we learned a lot about what we didn’t know.

Open-minded people approach everything with a deep-seated fear that they may be wrong.

***

If you recognize closed-minded behavior patterns in yourself, you’re not alone.

We’re all somewhere on the continuum between open- and closed-minded by default. Further complicating things, it varies by day and subject.

Staying open-minded won’t happen by accident.

When you find yourself exhibiting these behaviors in the moment, acknowledge what’s happening and correct it. Don’t blame yourself. As soon as you can, find a quiet place and reflect on what’s going on at a deeper level. Try to do better next time. Remember that this stuff takes work.

Maybe you have your self-worth wrapped up in being right, or maybe you’re not the right person to make a given decision. Or maybe it’s something else. Either way, this is something worth exploring.

I have one more thing to add: Being open-minded does not mean that you spend an inordinate amount of time considering patently bad ideas just for the sake of open-mindedness.

You must have what Garrett Hardin calls a “default status” on various issues in your head. If someone offers you the proverbial free lunch, it’s OK to default to skepticism. If someone offers to build you a perpetual motion machine, I suggest you ignore them, as they’re violating the laws of thermodynamics. If someone offers to help you defraud the government and suggests that “no one will know,” I suggest you walk away immediately. There is wisdom in closed-mindedness on certain issues.

But consider this: Do you know anyone who doesn’t have any blind spots? I strongly doubt it. Then why would you be any different? As Dalio makes clear, you must be active in the process of open-mindedness: It won’t happen by accident.

Complex Adaptive Cities

Complex adaptive systems are hard to understand. Messy and complicated, they cannot be broken down into smaller bits. It would be easier to ignore them, or simply leave them as mysteries. But given that we are living in one such system, it might be more useful to buckle down and sort it out. That way, we can make choices that are aligned with how the world actually operates.

In his book Diversity and Complexity, Scott E. Page explains, “Complexity can be loosely thought of as interesting structures and patterns that are not easily described or predicted. Systems that produce complexity consist of diverse rule-following entities whose behaviors are interdependent. Those entities interact over a contact structure or network. In addition, the entities often adapt.”

Understanding complexity is important, because sometimes things are not further reducible. While the premise of Occam’s Razor is that things should be made as simple as possible but not simpler, sometimes there are things that cannot be reduced. There is, in fact, an irreducible minimum. Certain things can be properly contemplated only in all their complicated, interconnected glory.

Take, for example, cities.

Cities cannot be created for success from the top down by the imposition of simple rules.

For those of us who live in cities, we all know what makes a particular neighborhood great. We can get what we need and have the interactions we want, and that’s ultimately because we feel safe there.

But how is this achieved? What magic combination of people and locations, uses and destinations, makes a vibrant, safe neighborhood? Is there a formula for, say, the ratio of houses to businesses, or of children to workers?

No. Cities are complex adaptive systems. They cannot be created for success from the top down by the imposition of simple rules.

In her seminal book The Death and Life of Great American Cities, Jane Jacobs approached the city as a complex adaptive system, turned city planning on its head, and likely saved many North American cities by taking them apart and showing that they cannot be reduced to a series of simple behavioral interactions.

Cities fall exactly into the definition of complexity given above by Page. They are full of rule-following humans, cars, and wildlife, the behaviors of which are interdependent on the other entities and respond to feedback.

These components of a city interact over multiple interfaces in a city network and will adapt easily, changing their behavior based on food availability, road closures, or perceived safety. But the city itself cannot be understood by looking at just one of these behaviors.

Jacobs starts with “the kind of problem which cities pose — a problem in handling organized complexity” — and a series of observations about that common, almost innocuous, part of all cities: the sidewalk.

What makes a particular neighborhood safe?

Jacobs argues that there is no one factor but rather a series of them. In order to understand how a city street can be safe, you must examine the full scope of interactions that occur on its sidewalk. “The trust of a city street is formed over time from many, many little public sidewalk contacts.” Nodding to people you know, noticing people you don’t. Recognizing which parent goes with which kid, or whose business seems to be thriving. People create safety.

Given that most of them are strangers to each other, how do they do this? How come these strangers are not all perceived as threats?

Safe streets are streets that are used by many different types of people throughout the 24-hour day. Children, workers, caregivers, tourists, diners — the more people who use the sidewalk, the more eyes that participate in the safety of the street.

Safety on city streets is “kept primarily by an intricate, almost unconscious, network of voluntary controls and standards among the people themselves, and enforced by the people themselves.” Essentially, we all contribute to safety because we all want safety. It increases our chances of survival.

Jacobs brings an amazing eye for observational detail in describing neighborhoods that work and those that don’t. In describing sidewalks, she explains that successful, safe neighborhoods are orderly. “But there is nothing simple about that order itself, or the bewildering number of components that go into it. Most of those components are specialized in one way or another. They unite in their joint effect upon the sidewalk, which is not specialized in the least. That is its strength.” For example, restaurant patrons, shopkeepers, loitering teenagers, etc. — some of whom belong to the area and some of whom are transient — all use the sidewalk and in doing so contribute to the interconnected and interdependent relationships that produce the perception of safety on that street. And real safety will follow perceived safety.

To get people participating in this unorganized street safety, you have to have streets that are desirable. “You can’t make people use streets they have no reason to use. You can’t make people watch streets they do not want to watch.” But Jacobs points out time and again that there is no predictable prescription for how to achieve this mixed use where people are unconsciously invested in the maintenance of safety.

This is where considering the city as a complex adaptive system is most useful.

Each individual component has a part to play, so a top-down imposition of theory that doesn’t allow for the unpredictable behavior of each individual is doomed to fail. “Orthodox planning is much imbued with puritanical and Utopian conceptions of how people should spend their free time, and in planning, these moralisms on people’s private lives are deeply confused with concepts about the workings of cities.” A large, diverse group of people is not going to conform to only one way of living. And it’s the diversity that offers the protection.

For example, a city planner might decide to not have bars in residential neighborhoods. The noise might keep people up, or there will be a negative moral impact on the children who are exposed to the behavior of loud, obnoxious drunks. But as Jacobs reveals, safe city areas can’t be built on the basis of this type of simplistic assumption.

By stretching the use of a street through as many hours of the day as possible, you might create a safer neighborhood. I say “might” because in this complex system, other factors might connect to manifest a different reality.

Planning that doesn’t respect the spectrum of diverse behavior and instead aims to insist on an ideal based on a few simple concepts will hinder the natural ability of a system to adapt.

As Scott Page explains, “Creating a complex system from scratch takes skill (or evolution). Therefore, when we see diverse complex systems in the real world, we should not assume that they’ve been assembled from whole cloth. Far more likely, they’ve been constructed bit by bit.”

Urban planning that doesn’t respect the spectrum of diverse behavior and instead aims to insist on an ideal based on a few simple concepts (fresh air, more public space, large private space) will hinder the natural ability of a city system to adapt in a way that suits the residents. And it is this ability to adapt that is the cornerstone requirement of this type of complex system. Inhibit the adaptive property and you all but ensure the collapse of the system.

As Jacobs articulates:

Under the seeming disorder of the old city, wherever the old city is working successfully, is a marvelous order for maintaining the safety of the streets and the freedom of the city. It is a complex order. Its essence is intricacy of sidewalk use, bringing with it a constant succession of eyes. This order is all composed of movement and change, and although it is life, not art, we may fancifully call it the art form of the city and liken it to the dance — … to an intricate ballet in which the individual dancers and ensembles all have distinctive parts which miraculously reinforce each other and compose an orderly whole. The ballet of the good city sidewalk never repeats itself from place to place, and in any one place is always replete with new improvisations.

This is the essence of complexity. As Scott Page argues, “Adaptation occurs at the level of individuals or of types. The system itself doesn’t adapt. The parts do; they alter their behaviors leading to system level adaptation.”

Jacobs maintains that “the sight of people attracts still other people.” We feel more secure when we know there are multiple eyes on us, eyes that are concerned only with the immediate function that might affect them and are not therefore invasive.

Our complex behavior as individuals in cities, interacting with various components in any given day, is multiplied by everyone, so a city that produces a safe environment seems to be almost miraculous. But ultimately our behavior is governed by certain rules — not rules that are imposed by theory or external forces, but rules that we all feel are critical to our well-being and success in our city.

Thus, the workings of a desirable city are produced by a multitude of small interactions that have evolved and adapted as they have promoted the existence of the things that most support the desires of individuals.

“The look of things and the way they work are inextricably bound together, and in no place more so than cities,” claims Jacobs. Use is not independent of form. That is why we must understand the system as a whole. No matter how many components and unpredictable potential interactions there are, they are all part of what makes the city function.

As Jacobs concludes, “There is no use wishing it were a simpler problem, because in real life it is not a simpler problem. No matter what you try to do to it, a city park behaves like a problem in organized complexity, and that is what it is. The same is true of all other parts or features of cities. Although the inter-relations of their many factors are complex, there is nothing accidental or irrational about the ways in which these factors affect each other.”

Reciprocation Bias

“There are slavish souls who carry their appreciation for favors done
them so far that they strangle themselves with the rope of gratitude.”

—Friedrich Nietzsche

***

If you are like me, whenever receiving a favor, you too feel an immense need, almost an obligation, to pay it back in kind.

If a friend invites you over for dinner, you are almost sure to invite them over to your place for dinner as well. It almost seems as if we were meant to do each other favors and, more important, return them.

Have you ever wondered why?

A large part of the reason is that this behavior seems to have strong evolutionary benefits. It’s so pervasive in human culture, it’s believed that there is no society that does not feel reciprocation’s pull. The archaeologist Richard Leakey believes reciprocation is the foundation on which we have evolved: “We are human because our ancestors learned to share their food and their skills in an honored network of obligation.”

The web of indebtedness created by reciprocation allows for the division of tasks, eases the exchange of goods and services, and helps create interdependencies that bind us into units that are more productive than each of us is on our own. Reciprocation allows one person to give something to another with the expectation that the favor will be returned and the giver will not be taken advantage of.

Throughout human history, reciprocation lowered the cost of transactions, as almost everything begins with one person trusting another. Land could be farmed with one person lending seeds to another. Gifts could be given. Currency could be lent. Aid could be given to the weak. Moreover, reciprocation is not a human concept — it exists in the physical world. Newton's third law is that for every action there is an equal and opposite reaction. You might push on a wall, but the wall pushes back on you.

There is such an advantage to be gained from reciprocation that it’s become imprinted onto our subconscious. For example, we teach our kids to invite others they may not like to their birthday parties because our kids were invited to those kids’ parties. Deeper still, we negatively label people who violate the rule: untrustworthy, moocher, welsher. Because social sanctions can be tough on those who fail to cooperate, the rule of reciprocity often evokes guilt.

As with most things, however, reciprocation has a darker side. Just as we tend to reciprocate good behavior, sometimes we also pay back bad deeds. One of the most effective game-theory strategies is tit for tat.

“Pay every debt, as if God wrote the bill.”

— Ralph Waldo Emerson

Hate

The reciprocation of bad behavior is best evidenced in wars. Brutality escalates as each side feels obliged to return the violence it experienced from its counterpart. This spiral can lead to more mindlessly destructive behavior, including torture and mass deaths. There are plenty of examples of this negative reciprocation; consider World War II, the Crusades, and the Mongolian invasions led by Genghis Khan.

It might seem that we humans have exclusively caused much suffering in the world in a relatively short period of time. However, the reciprocation rule is overarching — the human species is not the only one capable of extreme cruelty. Charlie Munger believes that reciprocal aggression appears to be more of a rule rather than an exception among other species, too:

One interesting mental exercise is to compare Genghis Khan, who exercised extreme, lethal hostility toward other men, with ants that display extreme, lethal hostility toward members of their own species that are not part of their breeding colony. Genghis looks sweetly lovable when compared to the ants. The ants are more disposed to fight and fight with more extreme cruelty.

If the reciprocation rule is so overpowering, the natural question here would be, is there a way we can still control our response to it?

Munger advises us to train our patience.

The standard antidote to one’s overactive hostility is to train oneself to defer reaction. As my smart friend Tom Murphy so frequently says, “You can always tell the man off tomorrow if it is such a good idea.”

There’s also another way. Because the reciprocation tendency is so extreme, we can reverse the course of events by doing good rather than harm to the other party.

Particularly in WWI, the fighting sometimes paused after a positive feedback loop of less severe damage occurred. Here is how a British staff officer described his surprise about the degree of trust between the British and German soldiers:

[I was] astonished to observe German soldiers walking about within rifle range behind their own line. Our men appeared to take no notice. I privately made up my mind to do away with that sort of thing when we took over; such things should not be allowed. These people evidently did not know there was a war on. Both sides apparently believed in the policy of “live and let live.” (Dugdale 1932, p. 94)

Such behavior was not restricted to this one case, but was rather common in trench warfare during the later stages of the war.

And this makes me think that if such things could happen even during a war, there is little doubt that we could improve our relationships by doing a little undeserved good for the other person.

Love

Reciprocation is just as important in breeding love as it is in breeding hate.

Andy Warhol said, in The Philosophy of Andy Warhol (From A to B and Back Again):

Love affairs get too involved, and they’re not really worth it. But if, for some reason, you feel that they are, you should put in exactly as much time and energy as the other person. In other words, “I’ll pay you if you pay me.”

This is the reciprocation tendency at its finest. Truth is, love and marriage would lose much of their allure if there were no reciprocation tendency among partners. By loving, we literally may become loved.

As lovers and spouses, we promise loyalty to our partners and we expect it to be returned. We are encouraged to practice the virtues of marriage in front of not only our partners, but also society. These effects reinforcing each other can be thought of as the fabric of many of today’s relationships.

Furthermore, reciprocation not only holds us together, but can also bring us together in the first place. Displaying generosity can be a powerful way to advance a relationship by setting up implicit expectations of compliance from the other person.

Women, in particular, often report on the pressure they feel after receiving expensive gifts or dinners. In Influence, professor of psychology Robert Cialdini quotes the words of one of his (female) students:

After learning the hard way, I no longer let a guy I meet in a club buy me a drink because I don't want either of us to feel that I am obligated sexually.

Perhaps the key to genuine relationships lies at least partially in each party being kind without expectations. Indeed, in communal relationships like marriage, friendship, and the parent-child relationship, the accounting is unnecessary, and if you think about it, you’ll see that it is hardly ever practiced.

What is exchanged reciprocally instead is the near-unconditional willingness to provide what the other side needs, when it is needed. Still, some symmetry seems to be best; even in close friendships, strong inequalities will eventually make themselves noticed.

Abusing Reciprocity

As with any human tendency, reciprocity holds a great potential for abuse. Charlie Munger recalls how the eccentric hedge-fund manager Victor Niederhoffer managed to get good grades with an impressive course load when he was an undergraduate student at Harvard.

Contrary to what one may expect, Niederhoffer was not a very hard-working student. Instead of studying, he liked spending his time playing world-class checkers, gambling in high-stakes card games, and playing amateur-level tennis and professional-level squash. So how did he manage to get those good grades?

Munger explains:

He thought he was up to outsmarting the Harvard Economics Department. And he was. He noticed that the graduate students did most of the boring work that would otherwise go to the professors, and he noticed that because it was so hard to get to be a graduate student at Harvard, they were all very brilliant and organized and hard working, as well as much needed by grateful professors.

And therefore, by custom, and as would be predicted from the psychological force called reciprocity tendency, in a really advanced graduate course, the professors always gave an A. So Victor Niederhoffer signed up for nothing but the most advanced graduate courses in the Harvard Economics Department, and of course, he got A, after A, after A, after A, and was hardly ever near a class. And for a while, some people at Harvard may have thought it had a new prodigy on its hands. That’s a ridiculous story, but the scheme will work still. And Niederhoffer is famous: they call his style “Niederhoffering the curriculum.”

There are cases that are less innocent than Niederhoffer’s gaming the system. For example, when a salesman offers us a cup of coffee with cookies, we are likely to be subconsciously tricked into compliance by even such a minor favor, which combines reciprocity and association. Buying can be just as much about the actual experience as it is about acquiring goods at an optimal price, and salesmen know this.

Your Costs Are My Benefits

In our personal expenses, we are the ones suffering from our follies, but an important problem arises when we buy on someone else’s behalf. Imagine that you are the purchasing agent for an employer. Now the extra costs that are paid in return for the minor favor you receive are incurred not by you but by your employer.

Gifts and favors tend to create perverse incentives on the purchaser’s part and allow the seller to maximize his advantage. Smart employers know this and therefore do not allow their purchasing personnel to accept gifts. Sam Walton is one notable example; he wouldn't let Walmart’s purchasing agents accept even a hot dog from a vendor.

The exchange of favors at another’s expense is not restricted to purchasing on someone’s behalf.

Munger notes that the reciprocation tendency can also be held responsible for some wicked pay dynamics in the boardroom of public companies:

It’s incredible the reciprocity that happens when CEOs keep recommending that directors get paid more, and then the directors raise the CEO’s pay — it’s a big game of pitty pat. And then they hire compensation consultants to make sure no-one else is getting paid more. This is true even if the CEO is a klutz and a little dishonorable. I think the existing system is very bad and my system would work better, but it’s not going to happen.

In order to prevent these dynamics, he suggests that the board of directors does not get paid at all.

I think tons of eminent people would serve on boards of companies like Exxon without being paid. The lower courts in England are run by unpaid magistrates. And Harvard is run by boards of people who don’t get paid — in fact, they have to pay [in the form of donations to the school]. I think boards would be better if they were run like Berkshire Hathaway’s.

For these same reasons, Munger believes that the reciprocity tendency should be part of the compulsory law curriculum; otherwise, students may unknowingly steer away from representing their clients’ best interests. Ignorance of the reciprocation rule may explain why malpractice still occurs even among lawyers with the best intentions. The law schools simply don’t know, or care to teach, what Sam Walton knew so well.

The Concession

Besides the obvious doing of favors, there is a more subtle technique that may lure us into reciprocal and cooperative behavior. Rob Cialdini recalls an incident that made him aware of the technique:

I was walking down the street when I was approached by an 11- or 12-year-old boy. He introduced himself and said he was selling tickets to the annual Boy Scouts Circus to be held on the upcoming Saturday night. He asked if I wished to buy any tickets at $5 apiece. Since one of the last places I wanted to spend Saturday evening was with the Boy Scouts, I declined. “Well,” he said, “if you don't want to buy any tickets, how about buying some of our chocolate bars? They're only $1 each.”

Cialdini automatically bought two chocolates and immediately realized that something was wrong:

I knew that to be the case because (a) I do not like chocolate bars; (b) I do like dollars; (c) I was standing there with two of his chocolate bars; and (d) he was walking away with two of my dollars.

After meeting with his research assistants and conducting experiments with a similar setup on his students, Cialdini arrived at a rule that explains this behavior: The person who acts in a certain way toward us is entitled to a similar return action.

The person who acts in a certain way toward us is entitled to a similar return action.

This rule has two consequences:

  1. We feel obliged to repay favors we have received.
  2. We feel obliged to make a concession to someone who has made a concession to us.

As Cialdini and his research group reflected, they increasingly saw that the Boy Scout had brought him under the rule. The request to purchase the chocolates was introduced as a concession — a retreat from the request that Cialdini buy some $5 tickets.

If Cialdini was to live up to the dictates of the reciprocation rule, there had to be a concession on his part. And there was — after all, Cialdini moved from rejection to compliance after the boy had moved from a larger to a smaller request. The remarkable thing, and this is where bias comes in, was that Cialdini was not at all interested in either of the things the boy had offered.

Why would this rule be so important? Because it can lead to a lot of unnecessary trouble.

Both Cialdini and Munger believe that a subconscious reciprocation tendency was an important lever that allowed Watergate, one of the biggest political scandals in history, to occur.

Breaking into the Watergate offices of the Democratic party was a plan that was conceived by G. Gordon Liddy, an aggressive subordinate with a questionable reputation. Liddy pulled the same trick on his superiors that the twelve-year-old boy did on Cialdini. The $250,000 break-in plan was not the first that Liddy proposed — it was a significant concession from the previous two. The first of these plans, for $1 million, entailed a program that included a specially equipped “chase plane,” break-ins, kidnapping and mugging squads, and a yacht featuring “high-class call girls,” all meant to blackmail the Democratic politicians.

The second plan was a little more modest, at half of the initial price and reductions in the program. After the two initial plans were rejected by his superiors, Liddy submitted the third, “bare bones” plan, which was a little less stupid and cost “a mere” quarter of the initial price.

Do you see what Liddy did there?

Unsurprisingly, his superiors gave in; eventually, the plan was approved and it started the snowball that caused Nixon to resign. As the Watergate example illustrates, an unwatched reciprocation tendency may subtly cause mindless behavior with many extreme or dangerous consequences.

***

One of the reasons reciprocation can be used so effectively as a device for gaining another's compliance is that it combines power and subtlety. Especially in its concessionary form, the reciprocation rule often produces a yes response to a request that otherwise would surely have been refused.

I hope that the next time you come across a situation where you feel the need to return a favor, you will think twice about the possible consequences of accepting it in the first place. You may think, for example, that someone offering you a free pen will not influence you at all, but there is an entire human history arguing otherwise. Perhaps Sam Walton’s policy, of not accepting favors at all in matters where impartiality is preferred, is best.

Yet there is some truth to saying that reciprocal behavior also represents the best part of human nature. There are times when successful trade, good friendships, and even romantic relationships develop out of the need to feel symmetrical in our relationships. Indeed, it could well be that the very best parts of our lives lie in relationships of affection in which both we and the other party want to please each other.

The Wrong Side of Right

“It is amazing what you can accomplish if you do not care who gets the credit.”

— Harry Truman

One big mistake I see people make over and over is focusing on proving themselves right, instead of focusing on achieving the best outcome.

People who are working to prove themselves right will work hard finding evidence for why they’re right. They’ll go to the ends of the earth to disagree with someone who has another idea. Everything becomes about their being right.

These otherwise well-intentioned people are making the same costly mistake that I did.

One of the biggest differences between running a company and working for a company is how I think about outcomes.

As a knowledge worker employed by someone else, I wanted to be right. I saw being right as how I proved my worth. The best outcome was my being right. Because …

If I wasn’t right, then what was I? Wrong?

But … I couldn’t be wrong. My ego wouldn’t let me.

Other people? They could be wrong. But not me.

If I was wrong, then what was I?

I worked toward achieving the best outcome I came up with myself and not the best outcome that was possible.

For the longest time, I thought that if the winning idea wasn’t my idea, then I’d be nothing. I thought no one would see me as valuable. No one would see me as insightful. People would think I wasn’t adding value. And worse, I’d see myself as not contributing.

I’ve never been so wrong.

“Avoid having your ego so close to your position that when your position falls, your ego goes with it.”

— Colin Powell

I had so much of my identity wrapped up in being right that I was blind to how the world really works. I was acting like an amateur — I worked toward achieving the best outcome I came up with myself and not the best outcome that was possible.

At Farnam Street, one of our principles is that we work with the world as it really is, not as we want it to be. My desire to be right reflected how I wanted the world to work, not how it actually worked.

The most important lesson I’ve learned from running a company is that the more I give up trying to be right, the better the outcomes get for everyone. I don’t care who gets the credit. I care about creating the best win-win outcomes I can.