The Most Important Thing · Howard Marks

Second order thinking examples

Curated by · reviewed 2026-06-01

Second-order thinking asks 'and then what?' — looking past a choice's immediate result to the consequences of those consequences, where most real outcomes live. Examples:

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5 examples of second order thinking

  1. A price cut

    First order: more sales. Second order: a price war, and rivals who all match you.

  2. Banning something

    First order: it stops. Second order: a black market, often worse (see the cobra effect).

  3. Eating the treat

    First order: it tastes great. Second order: the crash, the habit, the regret.

  4. Automating a job

    First order: savings. Second order: lost knowledge, fragile systems, frustrated customers.

  5. Quick fixes at work

    First order: today's problem gone. Second order: three new problems next month.

How to spot it in yourself

You'll forget most of this by next week.

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