Juan David's Newsletter - April 3, 2022
Figure out Incentives, Figure out the World.
April is here and then summer and fall, and it repeats all over again. That is one thing I’d like to figure out the mystery of time. Time seems to be affected by gravity, and similar forces and no one knows why! In the meantime, I’ll refuse to have a watch with the proper time, wake up with alarms, or look at the time ever. The tyranny of time, the more you care, the faster it goes.
You have been incredibly supportive, and that’s why I’d like to share episode #12 to thank you (#5 was the latest). This is a unique episode where Aaryaman and I sit down to reflect on the show, our friendship, and of course, our section: Overrated/Underrated. Watch the episode here.
Lastly, I’ve been thinking about writing a book about incentives as a way to discover and explore the question. Most problems aren’t due to a lack of money, knowledge, or talent. We can solve pretty much anything. Most of the time has to do with our inability to align incentives.
I’m sharing an essay with my first thoughts and how I’m thinking about approaching such a broad and complex question. I’d appreaciate your sincere thoughts, and feedback.
Figure out Incentives, Figure out the World
Over the last five years, I’ve learned about startups, theoretical physics, social media marketing, academia, the history of progress, and many more. Yet, I see one common issue: incentives, incentives, and incentives.
Incentives halt or catapult anything in our world from the biggest industries or biggest problems to any person or even animals.
We can solve any problem if we can figure out how to align incentives systematically.
This is the most overlooked subject in recent years and something we must learn more about because of what it reveals about human nature, our future, and the universe.
What are we waiting for? Let’s try to figure it out.
First, framing. What frame am I using? Why am I interested in this question, and why is it important that we solve it?
I’ve noticed that many of our current problems aren’t due to a lack of knowledge but our inability to align the incentives correctly. In the past, you couldn’t figure out X problem because you didn’t know but now if you don’t know, we can learn the how-to and actually do it.
This is huge. Imagine getting rid of YouTube? I would not have been to learn Calculus from Professor Leonard, chemistry from the Organic Chemistry Tutor, or Data Structures from Abdul Vari. That’s only for an academic setting but what about people who learn to install floors by watching YouTube? No YouTube means less independence to do things.
Those are less important examples but if we can learn how to align incentives we can solve any problem. Name any. Climate Change? Sure. World Hunger? Of course. Nuclear holocaust? A bit tough but sure. Education? Easy. The workings of the brain? Yes! And the list continues.
This is why is I want to solve this problem. Everyone tells you to be hyper-specialized to make progress in any field but genius is about connecting things no one thought possible, connecting the unimaginable. That is why you need imagination.
What are Incentives?
When I say incentives, what do we mean by that? Incentives are like a magnet because it attracts people toward you or away from you. Magnets, we can create and modify to do what we want.
When I say incentivize, I mean I’m using a magnetic force to increase the likelihood of something happening. If I want to sleep early, I can incentivize myself by writing in the morning. Or if I want to incentivize someone to come to my college event, I can do so by getting free food and t-shirts (I have no idea why that works but people love it).
When you have two magnets together, you create a magnetic field which are those lines that connect them together. When thinking about incentives, figuring those lines work is what we are interested in.
Knowing how those lines work gives you something interesting. Whenever you see these lines, you create something called a magnetic field, the magnetic field has more components like velocity, magnetic force, and so on. In order to figure all of that out, we use the right-hand rule.
The right hand rule states that: to determine the direction of the magnetic force on a positive moving charge, point your right thumb in the direction of the velocity (v), your index finger in the direction of the magnetic field (B), and your middle finger will point in the direction of the the resulting magnetic force (F). Negative charges will be affected by a force in the opposite direction.
And if we know where the magnetic field is going, we can know where the direction of the current flow.
What do we want to do? Figure out the direction of incentives so we can determine the direction of aligning the impact of the results of the incentive alignment.
So what? Why am I telling you this? To illustrate what I’m thinking and where we are going.
To be continued…
The hardest challenge has been on how much intuition vs how much to research. What you just read was pure intuition. Part of me tells me to “intuition” my way through this question while the other part is telling me to read a bunch of incentive literature.
Thank you for reading,
Juan David Campolargo