Second-order thinking

Second order thinking (also called second-level thinking) involves deliberately looking beyond the immediate, obvious consequences (first-order effects) of a choice to anticipate the subsequent ripple effects, chain reactions, long-term implications, and unintended outcomes. It is a powerful mental model for superior decision-making that was popularized by investor Howard Marks in his book The Most Important Thing (2011). Seconder order thinking separates average thinkers from exceptional ones — especially in investing, strategy, leadership, and life decisions.

Second order thinking frequently discussed by investors Ray Daliom Shane Parrish (Farnam Street), and others.

See also

• Analytical thinking

• Rational thinking