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First Principles vs Analogy

I came across the idea of “first principle reasoning” while reading a fascinating biography on Elon Musk. It sounds a bit abstract, but the underlying concept is really simple – and it’s quite useful when examining problems. Basically, it goes like this: when we are confronted with a problem the natural tendency of our brain is to compare it to something else (analogy), in an attempt to judge the feasibility of a possible solution. But what if, instead of comparing it to something else, we broke it down into the most basic¬†components needed to solve the problem, and tested the feasibility of those? These fundamental, proven concepts are called “first principles.”

The problem with analogy is that it is based on what was possible in the past – “things have always been done this way.” The mistake here¬†is – things change. And we are entering into an era where things are going to begin changing really, really fast. One of the examples Elon has used to illustrate this is the relative high cost of lithium batteries in the past. In order to build a Tesla, he needed massive amounts of battery power for each vehicle. So when the car was being developed, instead of accepting the current market price of lithium batteries (reasoning by analogy, i.e. lithium batteries have always been expensive), he broke down the current cost of manufacturing the individual components needed to make the batteries (first principle reasoning). By doing this, he was able to lower the cost tremendously, thus making the cost of a high performance electric car feasible.

We can use this type of reasoning in our everyday lives to answer questions and help us make informed decisions. We can expand our ideas of what is possible by looking at first principles instead of relying on analogy.