Second Order Thinking: The Ripples of COVID-19

COVID-19 has masterfully exposed first-level thinkers.

If you understood that a national lockdown in China would impact supply chains in the US, then you could foresee the market would crash.

If you understood that the virus would spread to other countries, you understood air travel and tourism would suffer. If air travel and tourism would suffer, then their stock prices would go down. If these companies are struggling, they will fire employees.

You get the idea.

If you understand how a system will react to a decision, you can hypothesize how additional changes will happen. This process is known as Second Order Thinking. Once you consider possible second-order effects, you can generate predictions.

For example: COVID-19 is going to exacerbate drug overdoses.

Contrary to Narcos, most drugs enter the US through commercial routes. Planes, traffic trailers, and cars. All of these transportation routes have been reduced due to travel restrictions. So now the drugs are stuck in their countries of origin. There’s less supply in the US, which means prices are going up. Meanwhile, countries like Columbia have excess supply, so the prices are falling. Traffickers have a large incentive to move this surplus quickly into the US once travel returns.

So when transportation and trade return to normal, waves of drugs will flood the US, and drive prices down.

Combine this with record unemployment and emotional distress, and you have a recipe for profound drug abuse.

UPDATE: Unfortunately, emerging research confirms overdose deaths are up. An 11.4 percent increase in overdose deaths “driven by increased substance use due to anxiety, social isolation and depression.”

Second Order Thinking takes a lot of work. It’s not easy to think in terms of systems, interactions, and extended time-horizons. We can never fully anticipate the future, but we can better prepare ourselves for it.