Acharya Prashant explains that the tendency to take things personally arises from taking one's own 'personhood' too seriously. He argues that the first problem is not how we react to external events, but the belief in the reality of the person we think we are. This person is largely a collection of accidental factors such as gender, religion, background, and biological traits like IQ, which are not chosen by the individual. The ego creates a fictitious sense of agency, claiming doership over these random occurrences to maintain a sense of central importance.