Path Dependence: What It Is & Why It Matters

Path dependence can be a blessing and a curse. But we’re all subject to its effects. Learn when and how to use it to your advantage.

What Is Path Dependence?

Path dependence is the effect of history on your available options. There are two types of path dependence:

  • “History matters” in general: you’re more likely to do things that you’ve already been doing, due to comfort
  • “Lock-in” to a certain set of options, due to choices you’ve made in the past

How Path Dependence Works

Path dependence, as the name suggests, locks you in to a certain path, and increases the costs to changing course. Some examples that show how deep the rot can go:

  • QWERTY keyboards are used the world over, but aren’t the most efficient layout for typing in any language. We use the layout due to typewriter history. Legend has it that the layout was chosen so that “Type Writer Quote” could be written using just the first row of letters for sales demos. An alternate theory is that it was chosen to reduce the jamming of typewriter keys together.Both of these explanations may have made sense at the time, but they’re totally useless reasons to keep this layout today. And yet, because it’s the layout we all learn to type on, it’s what is used on every computer. We pay for this with less efficient typing.
  • Legacy code and outdated programming languages are rife in old, non-tech industries that were quick to adopt technology early on. Banking in the US, for example, uses mostly outdated programming languages, with codebases so complex and impenetrable that most database-level technical work is done by old-timers. But because the path was set so early on, and a mistake in updating it could cost billions of dollars a minute, these legacy systems persist.

Path Dependence In Your Own Life

The Bad, Or What To Avoid

There are many ways path dependence can have negative effects on your own life. Keep an eye out for these and learn to avoid them.

You can become path dependent in your thinking. It’s very easy to get stuck on a path related to a certain type of thinking. It’s embarrassing to admit you’re wrong, if you tie your emotion and ego into your opinions. This is why fringe thinkers often seem like nutjobs. It’s why ideology is a straitjacket.

The solution to path dependence in thinking is to hope you are wrong. Don’t become invested in any one ideology or outcome, and instead just look for what is true, and what works for you.

You can also become affected by the path dependence of others. There is a common incentive problem with service providers. Think of doctors, for example, “treating” you for high cholesterol. Commonly, they will prescribe statins, even though there is reasonable concern about the effects of these drugs. But the path dependence and incentives of the healthcare system are set up so that if the doctor doesn’t prescribe you statins, you could sue him for negligence if your condition worsens. If he does prescribe you statins but your condition worsens, he can at least say he was following the medical consensus.

Look for where you’re being locked in by your previous choices. If it harms you, find a way out. And don’t let the path dependence of others affect you if you don’t need it to.

The Good, Or How To Use Path Dependence To Your Advantage

Lock-in doesn’t have to be a bad thing. Making a serious commitment to something with a high probability of improving your life locks you in to that path.

For example, let’s say you’ve been thinking of starting a business manufacturing small items to sell on Etsy. You can umm and ahh for months without making a commitment, achieving nothing. But if you embrace fear and spend $10k buying a bunch of raw materials, you’re now out ten thousand dollars unless you spend time making something out of them. This puts you in a path-dependent state to actually starting the business. And if it fails, at least you gave it a shot – better than living with what-ifs.

The commitment doesn’t have to be large, but it has to be serious. Cheap signals are worthless, but a serious commitment is a costly signal to yourself and to the world that you’re going to be doing something. It can be as simple as finding a workout buddy to get you to the gym.

Bottom line: decisions you make, and that others make, can lock your life into path dependency. Watch for these effects, avoid negative restrictions, and make serious commitments for positive improvement. Done correctly, you’ll free yourself from shackles, and lock yourself in to productive habits.

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One comment Add yours
  1. Another insightful article. This is why your blog is one of the few that I have on my daily ‘to read’ list.

    I’ve found that creating and nurturing deliberate structure and habit in one’s life is a good way to lock in beneficial path dependence, too (re. the “history matters” effect). For example, getting up and going to the gym, or writing, or working on your business. I’m also a fan of the phrase “comfort should make you uncomfortable.” It’s a warning sign that you’re taking things too easy and are likely stagnating as a result.

    Glad to see you’re tackling all these kinds of issues in an informative and inspiring way here. You’re building up a solid reference base.

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