From an ecosynomic perspective, the world is hard, for two reasons: the environment and the individual. The environment is the exterior experience of the embedded agreements we live in. The individual is the interior experience of our perception of our existence in the world.
- Embedded Agreements. Humans live in an environment of related elements, a set of agreements that are embedded in a system we humans mostly do not see, and we mostly unconsciously accept as given.
- Our Ability to Perceive. Humans seem to perceive 1-2 dimensions, at a time, in a multi-dimensional world. We humans experience, simultaneously, being apart from and a part of the higher-dimensional reality we live in. We have evolved triggers and signals for working with these apart-from and a-part-of experiences.
Professor Thaler uses this quote to point at what we can do to improve our outcomes and experiences. It you think people are dumb, then you can either make them smarter or deal with the fact that they are dumb. If you think people are not dumb, and the world is hard, then you can try to make interacting in the world less hard. Thaler suggests it is more the environment than the people. We agree.
We can understand the embedded agreements, in a way that works with our ability to perceive. We can develop lenses on our agreements and processes for shifting them, which we can test, to see if they lead to the behaviors (outcomes and experiences) we want to have.
[To hear Professor Thaler describe what he means with this quote, listen to the July 11, 2018 Freakonomics podcast.]