People are reasonably good at estimating how things add up, but for compounding, which involved repeated multiplication, we fail to appreciate how quickly things grow.
Interpretation
Compounding can lead to significant growth over time, yet people often underestimate this concept.
The quote by Paul Romer highlights the human tendency to grasp basic arithmetic but struggle with the exponential nature of compounding. While we can understand addition and the incremental changes it brings, compounding, which multiplies values over time, has a much more dramatic effect that is often overlooked in our calculations and future projections.
In practice
In a financial literacy workshop to explain the benefits of investing early.
When somebody discovers something like the quadratic formula or the Pythagorean theorem, the convention in science is that he can't control that idea. He has to give it away. He publishes it. What's rewarded in science is dissemination of ideas.
An economy can survive with 10% of the population insolation. It can't survive when 50% of the population is in isolation.
One of the most powerful insights in economics is this idea of a division of labor. You do the thing you're good at. Other people do something else that they're good at. The net effect is better for everybody.
Human material existence is limited by ideas, not stuff, people don't need copper wires they need ways to communicate, oil was a contaminant, then it became a fuel
It is the job of government to prevent a tragedy of the commons. That includes the commons of shared values and norms on which democracy depends.
In the developing world, most people don't yet live in big well-run cities. Given the chance to move to one, hundreds of millions of people would go there to get a job, get an education for their children, and live in a place that is clean, safe, and healthy.
To be a real man or woman, you've got to know what you believe in. You've got to understand that your actions have consequences and that they are connected to everything that you are.
Extreme remedies are very appropriate for extreme diseases.
The real pleasure of one's life is the devotion to a great objective of one's consideration.
I'm still learning, you know. At 80, I feel there is a lot I don't know.
Self-development is a higher duty than self-sacrifice.
. . . your history is no less important to your survival than your ability to breathe. In the end, you can only determine whether to saturate your memories with pain or with perspective. Forgetting is not an option. I tell you the truth now: Pain was not God's plan for this life. It is a reality, but it is not a part of the plan.
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