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.
You have to talk about mistakes and then talk about what you have learned and how to move forward. You acknowledge missteps right away, you deal with them, and you move ahead.
It's very easy to walk on a wire if you spend a whole lifetime practicing for it.
I'd rather be strongly wrong than weakly right.
There are certain things that cannot be adequately explained to a virgin either by words or pictures.
Temperance and labor are the two real physicians of man.
"I can see nothing," said I, handing it back to my friend. "On the contrary, Watson, you can see everything. You fail, however, to reason from what you see. You are too timid in drawing your inferences."
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