Investor Morgan Housel writes on his blog that the amount of raw, accessible information we have access to is orders of magnitude more than it was 20 years ago.

For example, Yahoo has historical financial statements of every public company. Twitter spits out 200 billion tweets a year.

Information is ubiquitous and free.

A key step to fixing this problem is to acknowledge that there are different types of information. 

For Housel, when he comes across a piece of information, he finds it useful to bucket it into one of the following eight groups. (Housel is writing in the context of financial information, but his approach may be useful in other contexts.)

1. Useful but expiring 

Take quarterly earnings. They’re useful, but no one cares what Apple’s Q2 2010 earnings were anymore because its usefulness has expired. 

When you come across information you find important, Housel suggests asking: “Will I still consider this important a year from now? Five? Ten?”

If you don’t ask that question, you’ll likely default to thinking that the information will be useful forever, “which is the innocent reason we pay attention to what in hindsight was short-term noise.”

Permanent information teaches you what to do with expiring information. 

For example, knowing that an investment’s price fell may be expiring information. 

But as Housel notes, “knowing the longer history of volatility and its impact on people’s willingness to take risk is permanent information that will be just as valuable in 50 years as it is now.”

Investing is the art of figuring out how and why other people make decisions. 

And something one investor considers noise might be signal to other people. 

If an investor’s job is to understand and predict other people’s actions, then what other people consider signal could be useful to you—even if you think the particular information is silly and irrelevant. 

For example, Housel doesn’t trade. He’s a long-term investor. But long-term investors can be ruined by bubbles, and bubbles are driven by traders. 

Incidentally, “Ignoring information that doesn’t affect you but does affect people whose decisions affect you is most of why politics is so nasty.”

Paleontology is not directly relevant to investing.

But paleontology has insights about how things naturally grow too big for their own good, which is relevant to investing. 

A lot of information can be considered a tiny piece of the broader puzzle that might help you understand why things happen. 

“You rarely use the individual parts, which makes it feel irrelevant. But as a whole it can make the specific information of your field easier to make sense of.”

Every field has interesting and entertaining information that a rational practitioner would call useless.

But a reasonable practitioner might look at that same information and say, “Yes, but it keeps me engaged and that’s useful.”

For Housel: “Examples in investing go by the names of chart porn, FinTwit, CNBC, and many white papers and blogs. I don’t watch CNBC now, but I never would have become interested in investing without teenage exposure to the flashing lights and fist-pounding of its hosts. In that sense it’s some of the most important information I’ve come across.”

The trick is knowing when information is simply entertainment and shouldn’t influence your actions. 

Interest rates rise. 

What next?

That depends on what investors expected before the rise, what they expect to happen next, why they rose, who raised them, the level and kind of debt outstanding, the rise relative to interest rates in other countries, and so on.

Few pieces of information are useful in isolation. 

They’re often part of a broader puzzle where one piece only makes sense if all the pieces are assembled to show the broader picture.

And that picture typically has so many pieces that it makes sense to rely on simple rules that give you a general idea of the landscape.

You know it when you see it. 

This is the rarest type of information.

Media theorist Douglas Rushkoff says on his podcast Team Human that reducing our exposure to the “global information onslaught” can help us become better members of our local communities—and ultimately better citizens.

Sure, we can spend our time watching incendiary YouTube videos. Or reading whichever online writer “stokes our rage the best.”

Alternatively, we can go outside and get to the real work of making our communities as resilient as possible. 

Is it important to know what’s going on in the world?

Yes. 

As Rushkoff points out: “All citizens are activists to a certain extent … our votes matter, and so does direct action when it’s called for.”

But only a tiny fraction of us needs to discuss these issues in public.

The world won’t end because you give your attention to these things.

But for Rushkoff: “our attention is better spent and more urgently needed in the real world that we inhabit with our embodied selves.”

Author and entrepreneur Rolf Dobelli writes in his book The Art of Thinking Clearly that, “We are incredibly well informed, yet we know incredibly little.” 

Earthquake in Indonesia. Attack in Pakistan. Record bonuses for bankers. Man holds daughter captive in a basement for thirty years. Fatal plane crash in Russia. 

Do you really need to know these things?

For Dobelli, the answer is no. 

He notes that in the past twelve months, you’ve probably consumed roughly 10,000 news snippets—as many as thirty each day.

He challenges you to name one of them that has helped you make a better decision related to your business, career, or life in general. Of all the people Dobelli has asked to do this, none have been able to cite more than two useful stories—out of 10,000.

Instead of consuming news, Dobelli suggests reading long background articles and books: “nothing beats books for understanding the world.”

“What is information and how much of it do people need? 

Obviously, information is not the same thing as knowledge, and it is certainly not anything close to what one might mean by wisdom. Information consists of statements about the facts of the world. 

There are, of course, an uncountable number of facts in the world. Facts are transformed into information only when we take note of them and speak of them, or, in the case of newspapers, write about them. By this definition, facts cannot be wrong. They are what they are. 

Statements about facts—that is, information—can be wrong, and often are.

Thus, to say that we live in an unprecedented age of information is merely to say that we have available more statements about the world than we have ever had. This means, among other things, that we have available more erroneous statements than we have ever had.”

- Writer and media theorist Neil Postman in his book Building a Bridge to the 18th Century