From the New York Times bestselling author of Clear Thinking and Farnam Street founder, Shane Parrish. The fourth and final installment in the timeless Great Mental Models series. Time and time again, great thinkers such as Charlie Munger and Warren Buffett have credited their success to mental models–representations of how something works that can scale onto other fields. Mastering a small number of mental models enables you to rapidly grasp new information, identify patterns others miss, and avoid the common mistakes that hold people back. Volume 4 of The Great Mental Models series delves into the realms of economics and art, presenting more than twenty-four valuable ideas with clear language and style. This book equips you with an understanding of the dynamics shaping our world. It will teach you strategies to leverage these principles and give you a significant edge in the aspects of life you value most. Some of the mental models covered in this book include: Creative destruction : New innovations must sometimes come at the cost of maintaining the status quo. - Representation : The depiction of an idea can be visual, but it can also rely on symbols or other ideas. - Genre : Creative expressions tend to be grouped according to socially constructed norms; while a work can play with or bend genre, it can’t exist outside of genre. The Great Mental Models series demystifies once elusive concepts and illuminates rich knowledge that traditional education overlooks. This series is the most comprehensive and accessible guide on using mental models to better understand our world, solve problems, and gain an advantage. “I’m really glad this exists in the world and I can see that I will be recommending it often.” — Matt Mullenweg, co-founder of WordPress, founder and CEO of Automattic “If you’ve read Charlie Munger’s Almanack this is the book you deeply crave in its wake. … Learn the big ideas from the big disciplines and you’ll be able to twist and turn problems in interesting ways at unprecedented speeds. … You owe yourself this book.” — Simon Eskildsen “This is what non-fiction books should aspire to be like. Informative, concise, universal, practical, visual, sharing stories and examples for context. Definitely, a must-read if you’re into universal multi-disciplinary thinking.” — Carl Rannaberg “I can truly say it is one of the best books I’ve ever had the pleasure of getting lost in. I loved the book and the challenges to conventional wisdom and thinking it presents.” — Rod Berryman “Want to learn? Read This! This should be a standard text for high school and university students.” — Code Cubitt Shane Parrish is the author of the New York Times bestseller Clear Thinking . He is an entrepreneur and wisdom seeker behind the popular website Farnam Street, where he focuses on turning timeless insights into action. His work has been featured in nearly every major publication, including The New York Times , The Wall Street Journal , and The Economist . His weekly newsletter, Brain Food , has captivated the minds of over half a million subscribers worldwide and his podcast, The Knowledge Project , is one of the most popular in the world. Scarcity When resources are finite. It sometimes feels as if we have temporarily solved the problem of scarcity and replaced it with the problem of excess. -Matt Haig Economics, as a field, exists because of a fundamental problem we face as individuals, groups, and a species: how to allocate scarce resources to meet limitless needs. All resources are scarce, meaning there is a finite amount available. Scarcity is like having one pizza for a hundred people at a party. You don't have enough for everyone who wants it. In economics, scarcity means a limited supply of things people want or need, such as money, time, or raw materials. One way to look at the development of human societies over time is as a process of overcoming different kinds of scarcity. Technology enables us to increase our access to scarce resources or to decrease our requirements for them. Scarcity forces creativity and invention. When we run up against limits, we find ways to increase supply of or reduce demand for resources. While eliminating scarcity is unlikely, technology helps us make resources go further. Where there is scarcity of something, its price goes up. For a resource to have economic value, it must be both scarce and desirable. If something is scarce, but no one wants or needs it, then it has no or low value. If something is desirable but not scarce, its value is also low or nonexistent. A resource can be valuable purely by dint of being scarce-for example, if owning it serves as a signal of wealth. Perceptions of scarcity impact our ability to make decisions. Not only does scarcity trigger our biological instinct for self-preservation, it often results in making trade-offs. We become fenced in by perceived limits, whether they reflect actual limits or not. E