Mental model examples: How to actually use them

Jan 19, 2023 8:01 PM

The paradigm shift

Elon Musk is on record that he makes decisions using the same technique as Jeff Bezos. I found YouTube videos of them explaining their "mental models," which is what prompted this post.

Mental models are frameworks for thinking. They simplify complex situations so you can reason through them easily. They help you make good, long-term decisions without needing to know everything about a situation.

Few people deliberately use mental models every day. Your hunter-gatherer brain is not wired to prioritize them. Your brain is biased toward instincts and short-term objectives. This inability to plan for the future is a phenomenon known as hyperbolic discounting.

However, in every generation, a few humans manage to rewire their biology: they force themselves to always think in mental models.

This outlier discipline is how a young physics geek obsessed with clear thinking found himself the founder of PayPal, Tesla, and SpaceX in a short amount of time. In fact, Musk, Bezos, and Buffet are on record talking about the critical importance of mental models.

The problem is nobody is listening.

If you were to listen and read between the lines, here's what you’d learn: your intellectual life is divided into two parts—before you use mental models and after.

"You get further in life by avoiding repeated stupidity than you do by striving for maximum intelligence." —Charlie Munger

What mental models are

Mental models do two things: they help you assess how things work and they help you make better decisions. These two concepts underlie everything you do.

For example, how does a rocket engine work (system)? And which type of rocket fuel should you use (decision)?

The rocket engine is a system for you to reverse engineer and understand. It has many parts that depend on each other, and you want to map out how. As for which type of fuel to use, that's a decision you need to make.

Mental models guide you toward the best answer to both questions.

Without mental models, you typically stumble around in two ways:

  1. You go wherever your existing momentum takes you. You don't ask questions.
  2. You use your instincts—shaped by past experiences and memorized advice. This is a better approach than blindly following your momentum, but it's not that much better.

When facing important decisions, Musk and Bezos pause to use mental models. You and I, in contrast, do a bit of Googling then roll with whatever seems to make the most sense.

Many people think that Musk and Bezos are outliers because they’re privileged, have high IQ’s, work hard, and lucked out. Yes, that's part of it, but here's the conundrum: that also describes tens of millions of other rich, well-educated people. So, why is there only one Elon Musk?

The answer lies in our broken education system: growing up, no one taught us mental models nor instilled the discipline to use them. Musk and Bezos happened to stumble into mental models and somehow managed to take them very, very seriously. (Recognizing that our education system failed us by prioritizing dinosaurs over mental models, Musk built his kids a school from scratch. It’s called Ad Astra.)

Like Musk and Bezos, the most accomplished people I know share three traits:

  • They regularly reassess their priorities without fear of changing them. They don't fall prey to inertia.
  • They're biased toward taking action—not lazily deferring. If they encounter a mental model they value, they make sure they use it.
  • They're always looking to prove themselves wrong. Their ego doesn't get in the way of their mental models.

In short, they balance progress with indulging curiosity. How? By using mental models.

"Anybody who doesn't change their mind a lot is dramatically underestimating the complexity of the world." —Jeff Bezos

How to assess systems

The world makes more sense when you see it as a patchwork of systems—each of which can be reverse engineered with mental models.

A "system" is simply anything with multiple parts that depend on each other. Every machine and process is a system at some level. For example:

  • A business, such as Microsoft or a startup.
  • A tool, such as a rocket or a keyboard.
  • A process, such as economic growth or sustaining a romantic relationship.
  • A state of being, such as your health or happiness.

A mental model of a system is a reduction of how it works. The model identifies the core components that matter and how they interact. This clarity is necessary to drastically improve the system:

  • When you improve the system of business, you make more money.
  • When you improve the system of relationships, you gain deeper friendships.

Here's a mental model that Musk uses to reduce complex systems:

First Principles

The SpaceX team looked past decades of incremental rocket improvements to re-examine spaceflight from scratch. They asked, What do the underlying engineering (not historical) principles reveal to be the most cost-efficient and power-efficient way to build a rocket? They worked up from those physical realities to build the world’s most efficient rocket.

They let a simple mental model—one that fits on a cue card—guide them through the deconstruction of a massive system so they could drastically improve it.

That is the leverage of models. Imagine if you looked at every part of the world this way.

Some people do.

First Principles in practice

How do you use First Principles for your down-to-Earth problems?

For every project, ask:

  1. What system underlies this project? Is it a relationship, a business, a product, or something else with multiple components relying on each other?
  2. Is this system already efficient?
  3. If not, what are the ironclad principles underlying it?
  4. Can I start over from those principles to identify a remarkably better way to design this system?

Anything that takes up a lot of your time must be investigated like this.

This brings us to our next question: How do we know which systems in our lives are worth significantly improving? To answer this, we'll use yet another mental model: one that I call One Level Higher.

One Level Higher

One Level Higher

If you work for years to earn a 15% raise when you could switch jobs for an instant 25% salary boost, you're optimizing a cog (salary) in the machine (your job). You'd reach your goal quicker if you optimized the machine instead: find another job altogether. That's the higher level optimization.

But you can go a level even higher.

The job market is itself a cog in another machine: earning financial stability. But what if you could achieve financial stability without having to toil away at a 9 to 5? If your real passion lies outside of the office, then climbing the corporate ladder would be falling prey to inertia. Instead, the better path would be reducing your expenses by moving to a cheaper city and living more modestly. With lower costs, you could switch to part-time and pursue your passions.

Isn’t that the higher-level game you're really optimizing for?

We have a problem

The One Level Higher model is the process of asking yourself: Is it higher-leverage to optimize a level above the one I'm focused on?

This is a hard question to ask due to the phenomenon of inertia. Using a mental model to break out of your flow and question what you’re doing is like ripping the carpet out from under your goals. It’s painful to confront the possibility that you’ve spent years on the wrong thing. Whether it’s coding, a 9-5, saving money, building muscle—anything—you’ve been riding the momentum of steady progress.

What people don't realize is that working hard without asking what are the better things to be working on is a hidden form of laziness. Yes, appreciate the beauty of flow when you're in it, but don't become addicted to it.

Losing agency over your life due to extended flow is what I call flow paralysis. It is the archenemy of critical thinking. It's the clearest sign you’ve abandoned mental models, because the use of models continually adjusts your life trajectory. This is what I meant earlier when I said: "Accomplished people regularly reassess their priorities without fear of changing them. They don't fall prey to inertia."

Think of it like this: mental models are powered by information. They produce different recommendations based on the updated information you put into them. So, if you're in a flow state for a long time, you'll have buried your head without ingesting new data, advice, articles, and so on. Your mental model will no longer be a functioning compass for what to do next.

A classic example is how teenagers are told to go to college. They enter a flow state in pursuit of college but at no point do they question themselves out of it: Should you really be going to school for the degree you chose? Or did you choose the degree because “it felt right" when you were 17 and you haven’t re-examined the decision since? Could you make a convincing argument for why all the other degrees would not be better options? If you can’t make that argument convincingly, you’re not thinking critically. Once they get to college, they're in a flow state of trying to graduate. They play a low-level game of securing a high GPA instead of a higher-level game of learning useful skills that prepare them for the job market.

That's four years of a life treated like a homework assignment instead of a deliberate decision of what's best for oneself.

This applies to everything we do. How about your job? Did you pursue it simply because it met your conditions and it was available when you needed it? And now you've been working there for years, yet you learned everything it could teach you in the first year? And how about your friendships? Are you socializing with people who aren't great to be around? Why? There are seven billion other people to spend time with.

These are the systems and decisions you must periodically reassess.

This brings us to our next mental model category: how to make decisions.

"When you view the world as a series of outputs, you form opinions. But when you view the world as a series of systems, you form strategies." —Channing Allen

How to make decisions

I’ve only discussed half the power of mental models: optimizing systems to get more out of them. The other half is making better decisions.

Good decision-making is the discipline of silencing your instincts and switching over to mental models.

Leave the "gut decisions" for playing sports, and avoid them when playing life.

Everyday decisions fall into two categories:

  • Prioritizing — Which path is the best to take?
  • Allocating — How much attention, time, or capital should be spent on this?

Here’s an example of a mental model to prioritize which projects to work on:

Regret Minimization

This mental model leverages the lifehack that encompasses all others: be good to your future self. Our brains aren't wired to prioritize our future selves, so we need mental models to keep us disciplined.

Hear Jeff Bezos explain how this model works:

Bezos used Regret Minimization to break out of his Amazon flow and prioritize his own space exploration company. Like Musk, he then used First Principles to re-examine space flight from the ground up. His space company, Blue Origin, competes with Musk's SpaceX for NASA contracts.

Pareto principle

Now here’s another decision-making mental model. This one helps you allocate resources:

Pareto Principle

For example, 80% of the value you get from socializing comes from the top 20% of your friends. So, preferentially strengthen relationships with those friends and drop many of the rest. Be cognizant of nourishing the friendships that actually matter.

Another example: 80% of your procrastination comes from 20% of your indulgences. So, place those 2-4 top indulgences out of arm’s reach, and you’ll see an outsized gain in weekly output. The implication is that you don’t have to completely isolate yourself from distractions. That would be inefficient and impractical. Just do the 80/20.

Putting mental models to use

Enough theory. Let's apply these models to your life.

The mental models below are recommended because they’re frequently needed, easy to apply, and reliably accurate at achieving better outcomes.

After these examples is the most important part of this essay.

Optimizing systems

As a reminder, here are examples of systems:

  • A process, such as economic growth or maintaining a romantic relationship.
  • A business, such as Microsoft or a sports team.
  • A machine, such as a toothbrush or a rocket.
  • A state of being, such as your health or happiness.

And here’s what to do when encountering important systems in your life.

1 One Level Higher

First, when dealing with a system, start by identifying the highest-leverage level to optimize at: Ask whether you’re optimizing the machine or a cog within it.

2 Theory of Constraints

Once Local/Global has shown you the best system, begin optimizing that system by following the Theory of Constraints: At any time, know that it's just one of a system’s inputs that is constraining the other inputs from achieving a greater total output. Therefore, to continuously increase a system’s output, iteratively identify and address the current constraint.

For example, if you’re trying to pursue a hobby but you can’t get yourself to start, first identify the underlying inputs:

  • Time
  • Motivation
  • Knowledge of how to move forward

Ask yourself: By doubling which of these inputs could I finally get myself to pursue the hobby? Increase that input first. Then, if you find yourself stuck again after starting, ask the question once again. Perhaps next time it'll be your time or motivation that's the new constraint.

The Theory of Constraints is especially important in business. Maybe you're not getting more customers because one of your inputs is constraining the others:

  • Lead flow
  • Sales skill
  • Product quality
  • Pricing

Find your bottleneck, increase its capacity, and continuously repeat this process until you get where you want. At any given time, one thing will be holding you back the most. Your job is to remember to pause and look for it.

Eventually, you'll hit the maximum potential for your current implementation. That's when you switch to First Principles or revisit One Level Higher to break out of your bubble and move onto better things.

3 First Principles

If making iterative improvements using the Theory of Constraints doesn’t get a system to your desired level of efficiency, discard the system's current approach and re-examine the system from the ground up. Take nothing but the proven, underlying principles as given. Work up from there to create something better.


Using the above three models, we can navigate systems with efficiency:

  • Use One Level Higher to identify the right level to be optimizing.
  • Use the Theory of Constraints to optimize the system.
  • When that gets you as far as you can go, use First Principles to break out of your rut and design a better system from the ground up.

Making decisions

We can follow a similar chain of mental models for decision-making.

1 Long-term: Regret Minimization

Make long-term life decisions using Regret Minimization: choose whichever option you’ll most regret not having pursued when looking back at the end of your life. This is how you optimize for long-term fulfillment.

2 Medium-term: Pareto’s Principle

Make medium-term decisions using Pareto's Principle: to maximize ROI, preferentially invest in the 20% of inputs that produce the most output.

This is how you optimize each year or decade of your life—who to spend time with, which skills to hone, and which businesses to build.

3 Short-term: ICE

Make short-term decisions using the ICE model: When facing many options needing prioritization, score each on three variables using a scale of 1-10:

  1. How much positive Impact the option would have if it succeeded.
  2. The Confidence you have that this option will succeed if you attempt it.
  3. How Easy (low resource, low time) it would be to pursue this option.

Add the 1-10 scores together then divide by three to get your average. Repeat this exercise for each option you're considering then rank all the options by their ICE scores.

Options at the top of the list will have the highest expected value and should be given priority over the others.

This is how you plan your life on the timescale of weeks or months. For example, it's how my business decides which marketing projects to pursue.

4 Immediate: Eisenhower Matrix

Finally, The Eisenhower Matrix helps you make day-to-day decisions: Make a 2x2 grid with its axes labeled "Important" and "Urgent." Categorize your daily tasks into the four quadrants and prioritize them in this order: important and urgent, important but non-urgent, unimportant but urgent, and unimportant and non-urgent.

Refer to this image for context.

"Your entire life runs on the software—the models—in your head. Why wouldn’t you obsess over optimizing it?" —Tim Urban

Elon Musk and Jeff Bezos

Mental models are what people mean when they use the word “wisdom.”

When we think of someone as “wise,” they’re simply using models to generate insights—whether they realize they're using models or not. Specifically, a wise person is doing one of two things:

  • Using a model to explain how a system works in a way you hadn’t realized.
  • Using a model to identify the best decision to make amid all the noise.

Every wise thing you’ve ever heard falls into one of those two categories.

Wisdom is therefore the arbitrage one person has over another due to their greater use of mental models and the data they have powering them.

This gets us back to Musk and Bezos. They’ve unlocked God mode in the game of life by learning to love breaking out of their flow to use mental models.

We motivate ourselves to do this by overcoming future self-continuity, the phenomenon where, by default, humans see their future selves as other people whose problems are not their own. Musk and Bezos uniquely internalize their future selves as part of their present selves. This compels the use of mental models so that our future selves feel fulfilled. This is the heart of the Regret Minimization framework: be good to your future self because you are your future self dammit.

For Musk and Bezos, breaking their inertia isn’t a very painful process. It's a rush. Similarly, the smartest people I’ve met have retrained their minds to enjoy being wrong. They get a dopamine hit when proven wrong because they’re excited to be closer to the truth. The truth is addictive.

In contrast, if you refuse to lose a debate, your brain keeps running old firmware.

What you're supposed to do now

Mental models are critical for living wisely. Yet, somehow they're not even a blip on our educational radar.

Why on Earth do kids learn about dinosaurs before learning about clear thinking?

School failed you. But you no longer have that excuse. You now understand the significance of mental models. The onus is on you to cultivate the discipline to use them.

Here's what I recommend: Schedule a recurring event in your calendar. Every second Friday, block out 20 minutes to step back from your life and run all your systems and decisions through the mental models listed above.

Apply these models to your life as if you’re improving somebody else’s life. Research shows that when you act like you’re giving a friend advice, you sidestep your flow paralysis. Meaning, talk to yourself in the third person: “Julian, you are doing X. Why aren’t you doing Y instead? What would a mental model suggest is the best path forward?”

That’s all it takes to get started: every week, run your life through mental models as if you’re assessing somebody else’s life.

This post is a 3,500 word PSA advising you to be more thoughtful about your life because you only have one and your future self is you.

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