Thinking, Fast and Slow – By Daniel Kahneman – Book Evaluation
In 2002, Daniel Kahneman gained the Nobel in financial science. What made this unusual is that Kahneman is a psychologist. Specifically, he is one-half of a pair of psychologists who, starting within the early 1970s, got down to dismantle an entity lengthy dear to financial theorists: that arch-rational decision maker often known as Homo economicus. The other half of the dismantling duo, Amos Tversky, died in 1996 at the age of 59. Had Tversky lived, he would certainly have shared the Nobel with Kahneman, his longtime collaborator and expensive friend.
Human irrationality is Kahneman’s great theme. There are basically three phases to his career. Within the first, he and Tversky did a series of ingenious experiments that revealed twenty or so “cognitive biases” — unconscious errors of reasoning that distort our judgment of the world. Typical of these is the “anchoring impact”: our tendency to be influenced by irrelevant numbers that we occur to be uncovered to. (In a single experiment, for example, skilled German judges have been inclined to present a shoplifter a longer sentence if they had just rolled a pair of cube loaded to present a high number.) In the second part, Kahneman and Tversky showed that individuals making decisions underneath unsure situations do not behave in the best way that economic fashions have traditionally assumed; they do not “maximize utility.” The 2 then developed an alternate account of decision making, one more faithful to human psychology, which they called “prospect theory.” (It was for this achievement that Kahneman was awarded the Nobel.) Within the third section of his profession, mainly after the dying of Tversky, Kahneman has delved into “hedonic psychology”: the science of happiness, its nature and its causes. His findings in this space have proved disquieting — and not just because one of the key experiments concerned a deliberately extended colonoscopy.
“thinking fast and slow audiobook summary, Fast and Slow” spans all three of those phases. It is an astonishingly rich book: lucid, profound, full of intellectual surprises and self-help value. It is persistently entertaining and frequently touching, particularly when Kahneman is recounting his collaboration with Tversky. (“The pleasure we found in working collectively made us exceptionally affected person; it is much easier to try for perfection when you are never bored.”) So impressive is its imaginative and prescient of flawed human reason that the New York Instances columnist David Brooks recently declared that Kahneman and Tversky’s work “shall be remembered hundreds of years from now,” and that it’s “a crucial pivot level in the way in which we see ourselves.” They are, Brooks mentioned, “just like the Lewis and Clark of the mind.”
Now, this worries me a bit. A leitmotif of this book is overconfidence. All of us, and especially consultants, are liable to an exaggerated sense of how well we perceive the world — so Kahneman reminds us. Surely, he himself is alert to the perils of overconfidence. Despite all of the cognitive biases, fallacies and illusions that he and Tversky (together with different researchers) purport to have discovered in the last few decades, he fights shy of the bold claim that humans are essentially irrational.
Or does he? “Most of us are wholesome most of the time, and most of our judgments and actions are appropriate most of the time,” Kahneman writes in his introduction. But, just a few pages later, he observes that the work he did with Tversky “challenged” the concept, orthodox among social scientists within the 1970s, that “people are typically rational.” The two psychologists discovered “systematic errors within the thinking of regular individuals”: errors arising not from the corrupting effects of emotion, however built into our advanced cognitive machinery. Although Kahneman draws only modest policy implications (e.g., contracts should be said in clearer language), others — maybe overconfidently? — go much further. Brooks, for instance, has argued that Kahneman and Tversky’s work illustrates “the boundaries of social coverage”; specifically, the folly of government motion to fight joblessness and turn the economic system around.