Thinking, Fast and Slow – By Daniel Kahneman – Book Assessment
In 2002, Daniel Kahneman received the Nobel in financial science. What made this uncommon is that Kahneman is a psychologist. Specifically, he’s one-half of a pair of psychologists who, starting in the early 1970s, got down to dismantle an entity long dear to financial theorists: that arch-rational determination maker known as Homo economicus. The other half of the dismantling duo, Amos Tversky, died in 1996 on the age of 59. Had Tversky lived, he would certainly have shared the Nobel with Kahneman, his longtime collaborator and pricey friend.
Human irrationality is Kahneman’s great theme. There are essentially three phases to his career. In the first, he and Tversky did a collection of ingenious experiments that revealed twenty or so “cognitive biases” — unconscious errors of reasoning that distort our judgment of the world. Typical of those is the “anchoring effect”: our tendency to be influenced by irrelevant numbers that we occur to be uncovered to. (In a single experiment, as an illustration, skilled German judges had been inclined to provide a shoplifter an extended sentence if they had just rolled a pair of dice loaded to provide a high number.) In the second phase, Kahneman and Tversky showed that people making choices below unsure circumstances do not behave in the way in which that economic fashions have traditionally assumed; they do not “maximize utility.” The 2 then developed an alternative account of determination 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 part of his profession, primarily after the death 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 many key experiments concerned a deliberately prolonged colonoscopy.
“thinking fast and slow book summary, Quick and Gradual” spans all three of these phases. It’s an astonishingly rich book: lucid, profound, stuffed with intellectual surprises and self-help value. It is persistently entertaining and steadily touching, particularly when Kahneman is recounting his collaboration with Tversky. (“The pleasure we present in working collectively made us exceptionally affected person; it’s a lot simpler to try for perfection if you end up never bored.”) So spectacular is its vision of flawed human reason that the New York Instances columnist David Brooks lately declared that Kahneman and Tversky’s work “can be remembered hundreds of years from now,” and that it is “a crucial pivot point in the best way 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 specialists, are prone to an exaggerated sense of how well we understand the world — so Kahneman reminds us. Surely, he himself is alert to the perils of overconfidence. Regardless of all of the cognitive biases, fallacies and illusions that he and Tversky (together with different researchers) purport to have discovered in the previous couple of decades, he fights shy of the bold claim that people are fundamentally irrational.
Or does he? “Most of us are healthy more often than not, and most of our judgments and actions are appropriate more often than not,” Kahneman writes in his introduction. Yet, just a few pages later, he observes that the work he did with Tversky “challenged” the thought, orthodox amongst social scientists in the 1970s, that “persons are usually rational.” The 2 psychologists discovered “systematic errors within the thinking of normal individuals”: errors arising not from the corrupting effects of emotion, however constructed into our advanced cognitive machinery. Although Kahneman draws only modest policy implications (e.g., contracts should be stated in clearer language), others — perhaps overconfidently? — go a lot further. Brooks, for example, has argued that Kahneman and Tversky’s work illustrates “the bounds of social coverage”; specifically, the folly of government action to combat joblessness and switch the financial system around.