I was reading the book “Narrative Economics” by Robert J. Shiller. As I was Reading I got stuck at a particular word. And that word is “Overspecialization”. I put a pause and asked myself if there is such thing as “Overspecialization”. If there is some phenomena of “too much knowledge or too much expertise in a certain discipline or area”. Well, there can’t be anything of that sort. There is no such thing as “too much knowledge or too much expertise”. There is always room for more. But I knew the author didn’t put it that way. He used the term “overspecialization” to refer to the phenomena where you become too much concentrated in a certain discipline or area that you ignore big ideas from other disciplines that may help you build much better mental models in decision making or problem solving.
I thought about these two words. Problem of “Overspecialization” and solution from “Consilience”. Robert J. Shiller mentioned Edward O. Wilson and his proposition of “Consilience”. So I moved on to the book “Consilience: The Unity of Knowledge” by Edward O. Wilson to understand this concept and his worldview as a whole. The book discusses about the unity of knowledge among differing disciplines mainly focusing on science and humanities. He discussed about the interaction between biology and culture, arts and science. He refused to see boundary between the scientific and literary cultures as a territorial line. He considered it as a broad and mostly unexplored terrain awaiting cooperative entry from both sides. And in doing so, it doesn’t matter anymore, which discipline a certain study or discovery belongs to. And we have been seeing such study or discovery where big ideas from different disciplines come together in enriching our understanding of the world we live in.
Like many other disciplines, I found the realm of finance and economics spreading its branches by incorporating big ideas from other disciplines. One of those branches in economics is behavioral economics where ideas from psychology have opened the way we think of individual participants and their behaviors in the market. It also challenged the existing idea of considering market as sum of rational individuals. Behavioral economics tells us about the biases market participants have and how those biases affect their decision making process. And these studies also answer to some extent about the market anomalies. Works of scholars like Daniel Kahneman, Richard Thaler and many more brought these ideas to broaden our understanding about the market.
We have been considering the market as a physics-based system where we think of everything on the basis of cause and effect relationship. But it turned out market is more like a biological system. It’s a representation of a complex adaptive system – where market participants are the agents in the system – they learn and adapt to an ever changing landscape. And looking at an individual participant doesn’t provide an accurate answer because the system becomes something bigger than sum of all the participants. It’s complex and always evolving.
In the book “Investing: The Last Liberal Art“, Robert G. Hagstorm explored the concept of incorporating big ideas from different disciplines in the art of investing. It was a great discovery for me as I came across his way of connecting these differing disciplines into the realm of investing. That is some fascinating way of thinking. The way I see it, it is all about being open to new ideas and being able to place them into your mental models so that you can work with them for enriching your understanding. Such task does seem daunting. But the way he explained in his book, it all come together if you keep working on it. Initially, the connection may seem too far fetching. But as you emerge into the work of consilience, you mental models become more flexible and dynamic. This is a practice of getting out of the stubbornness of sticking to linear way of thinking.
This is a practice of having the bayesian approach where we update our models with each new information we come across as we progress in the journey of consilience. This is a practice of having the bayesian approach where we update our models with each new information we come across as we progress in the journey of consilience.