女人梦见小蛇在水里游:2012: A Year of Choices (3)

The Consequences of Path Dependency

Breathes there a parent who has not lectured his teenage children on the consequences of making good and bad choices? Who has not tried to help them learn to figure out their own path in life?

We make choices every day. What do we eat? What color shirt today? Do we take a new job, or ask for a raise? Almost everything is a choice or the result of a previous choice. There are whole genres of academic literature on choices and what drives us human beings to choose and do the things we do. Behavioral psychology and in particular behavioral economics is a topic oft discussed in this letter. But today I want to briefly focus on what might be thought of as the opposite of behavioral studies, and that is path dependency. These are not the choices that we think we make or that we would like to make, but the limited choices we have because of past choices and circumstances.

The classic studies of path dependence try to explain how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant.（有点接近因果关系） (I would encourage those interested to Google “path dependence” and spend an afternoon [or night] reading some of the research.) But now, let me dismay the academics among my readers and resort to anecdotes and analogies to set the stage for our analysis of the end of the Debt Supercycle and to open a view on what awaits us as we journey down that path.

There are several different types of path dependency. The simplest analogy is that we go down a path, come to a fork in the road, choose one direction, and go down that path until we are presented with another fork. If we decide we don’t like that path we can always go back to some previous fork and take another path. Our only loss is the time we took and the energy (or money) we spent on that path, while we did gain some knowledge of the path we left, even if we ultimately decided not to go on.

How many of us went to school to study one topic and perhaps even got a degree that we now don’t use? Or started all over again in a different course of study? How often do voters elect a different group of politicians, hoping for change or a new direction, only for a majority to become disenchanted with the changes and opt for yet another change, or go back to the old political party? We fall in love with a stock or investment and then lose that love over time, and either stick it out or find a newer, more interesting investment.

We can’t change the past, but we often tell ourselves that we can change things back if we want to – we can always turn around and try again, we assure ourselves.

Often there are things that are somewhat in our control. We can change. We can decide to eat healthy and exercise, or to change careers if we are unhappy. Sometimes those changes are positive and sometimes we act, even though the new path is not an easy one or one that makes everyone else happy.