29 - "All Else Equal" Mental Model (Ceteris paribus)

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"All Else Equal" Mental Model or Ceteris Paribus - Show Outline

The full show notes for this episode are available at https://www.diyinvesting.org/Episode29

Background of Ceteris Paribus Mental Model

• Often a tool used in economic theory
• Especially used for explaining concepts such as supply and demand

'All Else Equal' Mental Model applied to Personal Finance

• Increased income is better than lower income
• Lower expenses are better than higher expenses
• The longer you live, the more wealth you'll build

Application to Investing

• The All Else Equal Mental model can be applied to investing to create Investing First Principles

Next Episodes: A series on First Principles of Investing

• Uses what learned in this episode and combines it with Episode 9 where we first introduced the concept of First Principles. 

References:

• https://en.wikipedia.org/wiki/Ceteris_paribus