Lindy Effect: A Simple Heuristic To Predict Life Expectancy

Assuming that human lifespan is 100 years, most of us are interested in predications of the future that can impact us during our lifetime. For example, we are far more interested in predictions about stock market performance over the next 10 or 20 years than the impact of climate change over the next 100 or 200 years. One line of thinking is - "Why worry about climate change if it is not going to impact us during our lifetime?".

So it is natural for us to ask questions that can help predict the future but only for those things that will impact us during our lifetime. For example, have you ever wondered about any of the following questions?

• Is the stock market safe to invest? What if the stock market ceases to exist?
• Is it possible for a company like Apple, Microsoft or Google to ever go bankrupt?
• Which book should you prioritize to read?
• Which foods should you eat and which foods should you avoid?
• Will democracy continue to exist?

What if all these questions can be reasonably answered with the help of one simple heuristic?

The Lindy Effect states that the future life expectancy of some non-perishable things like ideas, technology and institutions is proportional to their current age. It is another way of saying that in many domains, the old wins over the new.

For example, the iPhone was launched in 2007 i.e. 17 years ago as of 2024. Given how fast technology moves, how many more years will the iPhone be in production before it becomes obsolete? Using The Lindy Effect, the answer is at least another 17 years.

"Lindy effect is one of the most useful, robust, and universal heuristics I know." - Nassim Nicholas Taleb

Let us now answer the questions above using The Lindy Effect:

• Is the stock market safe to invest? What if the stock market ceases to exist?

  • The New York Stock Exchange was started in 1792 i.e. 232 years ago as of 2024.
  • This means we can expect the stock market to last at least another 232 years.
  • So the stock market will continue to exist during your lifetime and also likely to exist during the lifetimes of your children, grandchildren and great-grandchildren.

• Is it possible for a company like Apple, Microsoft or Google to ever go bankrupt?

  • Taking Apple as an example, it was started in 1976 i.e. 48 years ago as of 2024.
  • We can expect Apple to exist for another 48 years per The Lindy Effect.

• Which book should you prioritize to read?

  • Adam Smith's "The Wealth of Nations" was published in 1776 i.e. 248 years ago as of 2024. This book is considered as a foundational book for economics and continues to be as relevant today as it was all those years ago. We can expect it to be relevant for another 248 years.
  • On the other hand, there are tens of thousands of economics related books published each year.
  • Given The Lindy Effect, it would be better to first read a foundational book like Adam Smith's "The Wealth of Nations" which has stood the test of time instead of picking up the latest and greatest economics book from a bestseller list.

• Which foods should you eat and which foods should you avoid?

  • Wine is 8,000 years old while Coffee is at least a 1,000 years old.
  • Some of the oldest crops going back at least 10,000 years include wheat, barley, lentils, chickpeas, rice, millet, corn and peas.
  • Many of the newer food items on the other hand go back no more than a few hundred years. For example, white sugar was chemically created 200 years ago. High Fructose Corn Syrup (HFCS) was developed in the 1960's, Aspartame in 1965, MSG in 1908 and Trans Fats in 1950's.
  • Once again The Lindy Effect helps us apply the filter of time and tells us that we can't go wrong in eating the same foods or drink the same liquids that our ancestors had.

• Will democracy continue to exist?

  • This question should now be easy. The United States Of America is the oldest democracy in the world. In 2024, America celebrated 248 years of independence.
  • This means, per The Lindy Effect we can expect democracy to exist for at least another 248 years.

"Burn old logs. Drink old wine. Read old books. Keep old friends." - El Sabio

When Not To Apply The Lindy Effect

Now for some caveats. Notice that The Lindy Effect is a heuristic and not a law. A heuristic is a rule of thumb. It is a mental shortcut to allow for faster problem-solving and decision-making when facing complex or uncertain situations. It will not work universally. Let's look at some examples and situations where The Lindy Effect will not work.

Perishable Things

All living things by definition are perishable since they are bound by a biological clock. With each passing day, living things are closer to death. For example, if a person is of age 50, you cannot apply The Lindy Effect and predict that they will live to be 100 years. The Lindy Effect only applies to non-perishable things that gain from time.

Disruptions

Not too long ago, from 2001-2007 Nokia was the number one smartphone maker in the world. If we applied The Lindy Effect in 2007 we would have predicted that Nokia would continue to grow in dominance for another six years until 2013. However, in 2007 Apple disrupted the smartphone industry with the launch of the iPhone which ultimately led to Nokia exiting the smartphone business in 2014. Thus, even for non-perishable things we have to account for disruptions and black swan events that can completely alter the status quo.

Timescale

The shorter the timescale the less effective Lindy Effect will be. Oftentimes, hidden details are only revealed with time. For example, during the so-called "honeymoon phase" of a relationship everything seems rosy & happy. However, only time will tell if the relationship can survive the inevitable ups & downs.

Probability

Notice that we defined Lindy Effect as a way to predict life expectancy and not lifespan. The difference being that life expectancy is a probabilistic average whereas lifespan is a relatively fixed number that defines the maximum amount of time something can live. When we use the results of the Lindy Effect we are only making a probabilistic estimate that is bound by a degree of confidence. We are not making an assertion with absolute certainty. So, when we predicted that the iPhone will be around for another 17 years, we are only making a probabilistic estimate. Even within the same problem domain say technology, The Lindy Effect cannot be applied to all problems.

Above we saw just a few examples. There are of course a myriad of other situations where The Lindy Effect will not work. As with all heuristics, the best advice to offer here is to use your best judgement.

If you want to learn more about The Lindy Effect, Nassim Taleb's Incerto series of books are a must read.

"Not everything that happens happens for a reason, but everything that survives survives for a reason." - Nassim Nicholas Taleb

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