This, by Corey Hoffstein, is the most insightful thing I read yesterday.
“You are not a Monte Carlo Simulation” (click title for link)
It presents a simple but profound idea. It helped me pull together and contextualize several “gut feelings”.
- The average experience of a population (ensemble average) can be very different from the experience of the average person (median)
- This is especially true when the lower bound is zero and the upper bound is infinity. Income is a classic example
- It helps understand why we are risk averse: why we feel the loss of $1 to be twice as painful as the gain of $1. The log-scale provides an appropriate measuring tape
- Our lives are a single replica multi-period game, not multiple replicas of a single game
Check it out!