Rules of thumb

In 2020, friends and family were urging us to buy a house.

Nearly everyone around us was buying.

House prices were surging.

The message was clear: get in before you miss out.

We chose to miss out.

Buying property as a good investment is one of the most widely held rules of thumb of our generation.

And that was exactly why we paused.

People love a good rule of thumb. They feel like inherited wisdom, passed down through generations like a grandmother's recipe. You don't need to understand why it works, you just follow the steps and it turns out beautifully.

In The Beginning of Infinity, David Deutsch describes a rule of thumb as a predictive theory whose explanatory content consists entirely of background knowledge, the familiar assumptions we take for granted.

Because we take that background knowledge for granted, rules of thumb feel like they work by magic. There's no explanation visible. It just works.

But the explanation is always there, whether we can see it or not.

The rule of thumb is the recipe.

The explanation behind it is the chemistry.

And that distinction is where the danger lives.

"Heuristics are simplified rules of thumb that make things simple and easy to implement. But their main advantage is that the user knows they are not perfect, just expedient, and is therefore less fooled by their powers. They become dangerous when we forget that." – Nassim Nicholas Taleb

Rules of thumb hide their explanations. Which means two things.

First, they only hold reliably within the narrow range of circumstances the explanation was built for. Step outside that range and the rule fails.

Second, when the original conditions shift, the explanation quietly expires. But the rule keeps circulating, because nobody stopped to examine it. Nobody announces when a rule expires. It just keeps extracting your finite life resources while delivering less and less of what it once promised.

Take "buy property as a good investment."

The rule worked for decades because the economics supported it.

But today the conditions have shifted while the cultural weight of the rule remains. What was once a sound financial rule of thumb is now leaving many under the weight of a mortgage they can barely afford, at the opportunity cost of capital that could be compounding elsewhere.

Or consider "work hard and you'll get ahead."

In the industrial economy, hours in translated reliably into value out.

But in a knowledge economy, leverage is what creates wealth, not linear effort. Hard work still matters, but blindly following the rule can lead to misdirected effort and prevent you from ever stepping back to build something that decouples your time from your income. The rule persists because it feels virtuous, not because the explanation still holds in the same way.

The takeaway

Rules of thumb aren't inherently bad. As shortcuts, they have genuine value.

The problem is running them without ever looking at the explanation underneath.

Before you let a rule of thumb govern a decision, find the underlying explanation. Understand it. Then assess whether that explanation actually holds in your circumstances.

If it does, use the shortcut. You've approved it.

If it doesn't, you've just avoided spending your finite life resources executing a recipe written for a kitchen that no longer exists.

The highest return on your finite life resources comes from favouring good explanations over rules of thumb.

In 2020, the property rule wasn't wrong in every context. It was wrong for ours, at that stage in our lives, in that environment. We could only see that because we questioned the explanation first.

Society hands us recipes.

Critical thinkers demand to know the chemistry.