Second-Order Thinking — Effects of effects
When we make a decision or devise a solution for a problem, we anticipate its effects and consequences at the same time. That’s how our brain works, we can’t make decisions just for its sake. But the thing is, the reality is not so simple. Our world is a dense network of actions and their effects. Each action is connected to multiple events that influence it. Most of us ignore this dense network and think too straightforwardly. This is why we need to understand the “Law of Unintended Consequences” through Second-Order Thinking.
What is Second-Order Thinking?
Simply put, it is thinking about the effects of the effects of your actions. As I said, an event is a result of multiple factors and also branches out further, thus taking second-order results into account is referred to as Second-Order Thinking (as shown in the figure).
Why is this relevant, you ask?
Good question. This talk is about using Second-Order Thinking in real life — choosing long-term benefits over quick pleasures and making smarter decisions. When we think beyond the immediate, we often end up with bigger rewards. Let’s break this down with an example.
Imagine two brothers — Ram and Shyam — each receiving a million rupees.
Ram can’t resist and spends most of it on a flashy car and the latest phone, even though he already has both. He’s left with just a small chunk, which he saves.
Shyam takes it slow. He doesn’t have any urgent plans, so he invests most of his money — four hundred thousand in stocks and six hundred thousand in real estate.
Fast forward five years, and a business opportunity pops up needing over twenty-five lakhs. But Ram’s assets have lost value, and he’s down to just a few lakhs. Shyam, on the other hand, has seen his assets grow to over thirty lakhs, tripling his money. He can easily jump on the opportunity he sees coming.
You see who’s the smarter decision-maker here. Shyam, who thought about the long term, or Ram, who got caught up in the excitement of a new car.
But, how to think in second order?
Thinking this way isn’t too hard, but it’s not simple either. You can create a sort of map (like this example) that shows your actions, what comes from them, and what comes from that, using logical guesses. Stay updated on important info — the more you know, the better decisions you can make. These steps sound simple, but they need some effort, like doing research for a particular situation.
Remember, though, that Second-Order Thinking should help, not overwhelm. Don’t overthink and get stuck. Stick to what’s most likely to happen based on common sense, and don’t dive too deep.
In the end, the most important word here is “Thinking.” Approaching things calmly and logically can solve many problems. Once you understand a problem, you’re halfway to solving it. So, remember to keep an eye on long-term goals, take time to think about solutions, weigh the pros and cons, and avoid overthinking.
