How do we pick the course of our lives? How do we know what to put our efforts towards that will make the most significant contribution to society and personal success.

Life is lived forward but is only understood in retrospect, looking back.

In retrospect, every profound discovery and invention looks obvious.

How do we choose what to pursue in life, if we aspire to do something meaningful and fulfill our purpose?

Thinking in Bets

When we commit to learning a profession or choosing a career, we don’t get immediate feedback on how our decisions are faring.

There are precisely two things that determine how our lives turn out: the quality of our decisions and luck.

We need to acknowledge and accept the things we can’t change, and the courage to change the things we can. This clarity of judgement requires the wisdom to know the difference.

Thinking in probabilities helps us recognize the difference between the two.

Knowing that luck plays a role can help us not feel bad about pursuing good decisions that don’t pan out the way we hope.

We can make a good-quality decision and get a bad result. The unfortunate result can be the result of things outside our control, not going our way. When we think probabilistically, in terms of bets, then we can better learn from outcomes.

As far as achieving success, many times, it’s better to be lucky than good. The problem arises when we confuse luck with skill and think it was our doing. Then we don’t learn, and we are vulnerable to making mistakes in the future.

Keep in mind that every mistake is an inflection point that branches into a different future.

It is better to have failures that make us humble than successes that make us arrogant.

A too strong mental connection between results and the quality of the decisions preceding them is called “resulting.”

The hazard of “resulting” is that we take away lessons from our experiences that are wrong. That makes our future decisions less than optimal.

A great book that develops these ideas is “Thinking in Bets” by Annie Duke. I highly recommend it.

When making and reviewing the decisions in our own lives, we draw on experience. We draw on the lessons learned to inform the quality of our choices.

Harboring a binary relationship between results and decision quality affects our decisions. This daily error has far-reaching consequences.

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. — Mark Twain

There is an imperfect relationship between results and the quality of the decision that led to the outcome.

We are not omniscient, and we must always make decisions in the face of imperfect information.

We must decide among alternatives and consider what it is that we value. We assess the likelihood of different outcomes and put resources at risk.

Every decision commits us to a course of action that preempts other alternatives. There is always an opportunity cost in choosing one path and forgoing all others.

We are betting against all the future versions of ourselves that we are not choosing. That is scary and can lead to indecision, and indecision leads to regret.

Here are some examples of life regrets:

· Spending too much time worrying and being afraid.

· Not having enough adventure and staying in the comfort zone

· Staying too long in a bad work or relationship situation

· Not being smarter with money

· Not getting more education

· Lost opportunities.

· Hurting others including lovers, friends, and parents

· Abuse of alcohol and drugs

· Sex with the wrong people

All these regrets have to do with choosing the wrong path. Some are wrong paths based on poor decisions. Others are perceived wrong paths where luck played against our well-conceived decisions. We need to grant ourselves the ability to know the difference.

When we decide, we are betting whatever we value on one of a set of possible and uncertain futures. That is where the risk is.

Risk vs. Reward

Nothing ventured, nothing gained.

Hindsight bias is the tendency to see the outcome as having been inevitable.

Read biographies of famous successful people should be inspiring and motivating. But when we compare our lives to the lives of celebrated achievers, we tend to feel we fall short.

Every discovery or invention looks obvious after the fact. We can discern all the omens and precursor ideas that converged in the glorious moment of illumination.

The biographies of scientists, inventors, and entrepreneurs tend to describe the path of illumination and discovery as a straight line. The line starts at the problem and goes to the solution. With determination, they plow through obstacles and over hurdles. They redouble their efforts in the face of setbacks with foreknowledge of their ultimate correctness in pursuing their path.

All the naysayers and people who didn’t get it are shown as fools impeding the visionary hero’s path. In fact, their concerns were well-founded. In the context of their time and their limited knowledge, how could they deduce the future?

As Peter Diamandis said, “The day before something is a breakthrough, it’s a crazy idea.”

Paradigm shifting is tortuous work. Many parties have vested interest in the intellectual status quo. A breakthrough in a scientific field can be ruinous of established careers.

All the scientists that have studied and published and made their reputation have a lot to lose. It is devastating to see one’s life work rendered irrelevant.

Invention and creation is a process of groping in the dark. There is an impenetrable fog enveloping choice. Any choices of which path to pursue are uncertain. There is little to guide what way is potentially fruitful, while all the others are empty cul de sacs.

It can be a numbers game. Edison said he discovered 10,000 ways not to make a light bulb.

Biographies of famous scientists usually follow a narrative arc that looks inevitable. They sometimes tend more to hagiography than biography. The authors tend to edit out or summarize, the time consuming, and frustrating mistakes. We want to get to the good stuff, the money shot of success, and eureka moments.

Because of this bias towards victory, we underestimate the degree of risk they were willing to take. And because of survivor bias, anything a famous scientist did that wasn’t a mistake has become conventional wisdom.

Their risky choices don’t seem so precarious in retrospect.

Biographies of Newton focus on physics and math instead of his dedication to alchemy. The impression is that his faultless judgment led him straight to hidden truths.

Newton spent a lot of time and energy trying to turn base metals into gold. Alchemy is proto chemistry, but its practice is now discredited and seems crazy. Super smart people are often also crazy.

John Nash, of A Beautiful Mind fame, was a brilliant mathematician. He was also nuts. The voices he heard that qualified him as insane, were the same voices that delivered Nobel Prize-winning economic formulas. Where does inspiration come from? Sane people are risk-averse. You have to be a bit insane to pursue high-risk endeavors.

Smartness and craziness are not separate. It’s a thin line. Crossing it can lead to wild success or abject failure. Survivor bias shows us the winners and ignores the losers.

To us, with our 20/20 hindsight, physics seems a promising thing to pursue. And alchemy a blatant waste of effort. But we know how things turned out. We suffer from a look-ahead bias.

In Newton’s day, alchemy and mathematical physics were equally promising. Alchemy was more promising because if you could crack it, you would be rich. If alchemy were real, the payoff would be huge.

Newton’s work in physics was an inflection point that our entire tech world is a knock-on effect.

The Nash equilibrium revolutionized game theory and economics. The concept cemented John Nash’s name in intellectual history.

Newton and Nash made big bets. Some of them worked, and all were risky. Only in retrospect do any of them look like obvious paths to pursue.

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