Thinking, Fast and Slow was published in 2011 by Daniel Kahneman, the Eugene Higgins Professor of Psychology Emeritus at Princeton University and winner of the Nobel Prize in Economics. The book involves psychology and economics, as it deals with how we can manage our minds by understanding its subgroups.
Kahneman’s system involving psychology is that the way we think and act are conducted mainly by two systems - System 1 and System 2. System 1, described by Kahneman, is emotional, instinctive, and rapid. On the other hand, System 2 is logical, involves well-thought out facts, and takes time to work. Much of Kahneman’s research in Thinking, Fast and Slow was conducted by himself and Amos Tversky, which earned him the Nobel Prize in 2002. In the introduction of the book, Kahneman makes it apparent that “Much of the discussion in this book is about biases of intuition,” as part 2 is devoted entirely to heuristics and biases, while part 1 discusses Systems 1 and 2. Part 3 of the book discusses confidence, while part 4 focuses on choices. The fifth section includes the reflections of Kahneman on how Systems 1 and 2 affect individuals, and it also includes his own reflections about psychology.
Part 1, “Two Systems,” Kahneman begins by stating what is obvious: System 2, “slow thinking,” mainly involves tasks that are “deliberate, effortful, and orderly,” as one of System 2’s benchmarks is intentional mental effort (20). Kahneman provides definitions for Systems 1 and 2 when he describes that System 1 “operates automatically and quickly, with little or no effort and no sense of voluntary control,” while “System 2 allocates attention to the effortful mental activities that demand it, including complex computations. The operations of System 2 are often associated with the subjective experience of agency, choice, and concentration” (20-21). Kahneman also makes it apparent that humans do indeed have limits - he makes fun of the phrase “pay attention” because there is only so much attention that can be allocated before mental exhaustion and fatigue will set in. The limits of human psychology is well described by the “Invisible Gorilla” experiment, in which viewers of a film, which shows black and white basketball players passing a ball to each other, were instructed to “count the number of passes made by the white team, ignoring the black players” (23). Because the task, Kahneman acknowledges, is difficult, viewers are entirely engrossed. Halfway through the task, “a woman wearing a gorilla suit appears, crosses the court, thumps her chest, and moves on” (23). When asked about the woman in the gorilla suit, half of them don’t recall her existence due to their being so engrossed in their task. Interestingly enough, “the viewers who fail to see the gorilla are initially sure that it was not there - they cannot imagine missing such a striking event” (24). Kahneman then discusses illusions, such as the Muller-Lyer illusion, which further reveals our fallabilities as human beings, which becomes even more appropriate when he discusses attention and effort. Kahneman describes that when it comes to dealing with tasks that involve a lot of effort by System 2, people would “normally avoid mental overload by dividing our tasks into multiple easy steps, committing intermediate results to long-term memory or to paper rather than to an easily overloaded working memory” (38). Kahneman then delves into system 2, as well as how it can be “lazy” at times due to lapses in judgement. For instance, Kahneman asks on page 44, “A bat and ball cost $1.10. The bat costs one dollar more than the ball. How much does the ball cost?” While some people will say that the ball costs $0.10 and the bat costs $1.10, they are making a mistake, for the correct answer is $0.05 and $1.05. This phenomena is known as intuitional bias, as many incorrect answers are given out due to little deliberation on the part of System 2. Kahneman then talks about priming, as well as how it involves associative memory - for instance, when an audience was asked to say the first thing they would think about, many gave predictable answers when the word asked was DAY. Furthermore, when “banana” was mentioned right next to “vomit,” it took a moment for the audience to attach the two together cognitively, as bananas generally have positive connotations, while vomit is firmly rooted to negative ones. Kahnemen eventually comes to another cognitive bias, WYSIATI (What You See Is All There Is). This phenomena is self-explanatory, and can be summed up by a quote Kahneman provides: “‘They made that big decision on the basis of a good report from one consultant. WYSIATI - what you see is all there is. They did not seem to realize how little information they had’” (88). Kanheman discusses other topics in part 1, such as prototypes, more cognitive illusions, and heuristics.
In Part 2, “Heuristics and Biases,” Kahneman analyzes precisely those things - heuristics and biases. They begin with the anchoring effect, which can be seen in the following scenario: a student can be asked one of two questions. The first question is, “Was Gandhi younger or older than 144 years when he died?” The second question is, “How old was Gandhi when he died?” Chances are, people gave higher estimates for Gandhi’s death in response to the first question. The availability heuristic, detailed by Kahnemn, mainly involves “the number of instances retrieved” from memory and from “the ease with which they come to mind” (132). The availability heuristic can be noted in the decrease in confidence people generally feel after they are told to describe the benefits of a certain action, as once they run out of ideas they realize that it might not be entirely worth it. Another example of the availability heuristic is detailed by Paul Slovic, an expert who “probably knows more about the peculiarities of human judgement of risk than any other individual” (140). He describes how mortality rates for every event can be described in a myriad of ways, and each way causes a certain level of anxiety. And since many policies make assumptions about human nature, they can influence real human events. Another example of the availability heuristic involves the pervasiveness of the fear of terrorism - even though terrorist attacks are basically nonexistent in America, people fear them when they do happen, since when it does occur the media and major news companies can be depended on to feature it on their major headlines. Kahneman then discusses a fictional “Linda” to illustrate substitution bias. Linda, as described in the experiment, is “thirty one years old, single, outspoken, and very bright. She majored in philosophy. As a student, she was deeply concerned with issues of discrimination and social justice, and also participated in antinuclear demonstrations” (156). When the participants, in a later version of the experiment, were asked whether or not Linda is likelier to be a bank teller or a bank teller who is active in the feminist movement, “85% to 90% of undergraduates at several major universities chose the second option, contrary to logic” (158). Kahneman describes how the second option was less likely to be than the first option - utilizing a Venn diagram, it can be assumed that Linda is likelier to meet a single criteria than the same criteria with another. Kahneman also notes, with some humor, that when he told the class with “some indignation” that they had made an elementary error, “someone in the back row shouted, ‘So what?’ and a graduate student who made the same error explained … ‘I thought you just asked for my opinion’” (158). That is, the substitution heuristic is when a person chooses the option that seems to make more intuitive sense than the other ones, even if the law of probability is against it. Kahneman then notes of the “regression to the mean,” which occurs not because of overconfidence or even high pressure, but misplaced expectations - athletes are placed on magazines only after doing exceptionally well, which involves some luck, which is unfortunately fickle, especially over long periods of time. Furthermore, after performing extremely well, performers will feel nervous, as they want to replicate their previous performance one more time, which leads to a flawed performance. Kahneman then discusses the framing effect, which involves how a person’s response to a request or task is impacted by how it is presented. For instance, if a person needs a surgery to have a higher quality of life, the surgery can be presented to them in two ways - either in terms of survival or mortality. If a person undergoing heart surgery is told that the mortality rate is 10%, they are less likely to undergo the surgery than if they had been instructed that the survival rate is 90%.
In the third section, “Overconfidence,” Kahneman describes the issue of overconfidence. He begins by talking about the costs of hindsight, which is a delusion in which a person believes they saw something coming when it hit them. This can have negative side effects, as “We are prone to blame decision makers for good decisions that worked out badly and to give them too little credit for successful moves that appear obvious only after the fact” (203). Kahneman states that if a patient dies when the doctor performs a low-risk operation, the court will view the doctor as negligent, despite the fact that it may not even have been the doctor’s fault - even if an operation is relatively safe, there is no complete guarantee of safety. The doctor, say, could have performed the operation hundreds of times successfully, and if the operation has a mortality rate of 1%, it does make sense in the big picture. Later, when discussing how “professionalism” is in many cases overrated, Kahneman gives a great statistic about finance on Wall Street: “On average, the shares that individual traders sold did better than those they bought, by a very substantial margin: 3.2 percentage points per year, above and beyond the significant costs of executing the two trades” (213). Even the best stock pickers rely somewhat on luck, not just their skill, as the stock market is volatile, and the next time a crisis will occur is difficult to predict, as demonstrated in the following quote: “few stock pickers, if any, have the skill needed to beat the market consistently, year after year” (214). Kahneman describes that the true marker of success for traders isn’t a few miraculous years, but consistent profitable margins. As Kahneman continues to describe how reliable the experts are, he grants them most of their validity, but warns that “on the way to near perfection some mistakes are made with great confidence” (243). Kahneman then warns of the “planning fallacy,” which is mainly entrenched in overly optimistic forecasts of the future. To name an example, in 2002 American homeowners expected a remodeling of their kitchens to cost an average of $18,658, but they ended up paying $38,769, more than double of what they had in mind. Kahneman tells the audience that the planning fallacy can be effectively dealt with if a reference point is adopted, as well as using information to adjust the baseline as the situation adjusts. When discussing capitalism, Kahneman describes how most people feel they are above average, which is obviously ludicrous, and how many corporate leaders do use WYSIATI to make their judgements, with obviously disastrous results. When professors at Duke University conducted research on chief financial officers of large companies, they found that they were massively overconfident - “When they said the market would go down, it was slightly more likely than not that it would go up,” which is more than a little ironic (261).
In the fourth section, “Choices,” Kahneman focuses on prospect theory as well as biases people make when making decisions. He starts the section off by criticizing the Swiss scientist Daniel Bernoulli, who stated that the utility of 20 ducats to someone who has 100 ducats is identical to that of 20 ducats to someone who has 200 ducats. While Kahneman admits that Bernoulli was correct when it came to percentage points, it was inaccurate when it came to things like gambling, for people are very loss-averse. For instance, he describes on page 283: “You are offered a gamble on the toss of a coin. If the coin shows tails, you lose $100. If the coin shows heads, you win $150 … Would you take it?” Kahneman accurately states that when it comes to which choice to take, the recipient must “balance the psychological benefit of getting $150 against the psychological cost of losing $100” (283). When it came to the results, the hypothesis of loss-aversion was clearly defended, for most people would prefer not to take the gamble at all. After discussing the endowment effect, which is closely related to loss-aversion in that “the response to a loss is stronger than the response to a corresponding gain,” Kahneman discusses how loss aversion could in fact be useful in everyday life, in that it promotes stability and consistency (293). That is, “Loss aversion is a powerful conservative force that favors minimal changes from the status quo in the lives of both institutions and individuals,” which “helps us keep us stable … it is the gravitational force that holds our life together near the reference point” (305). Kahneman continues to rare events, as well as inconsistencies in logic regarding it. Kahneman states that when it comes to how people make judgements, they tend to “overestimate the probabilities of unlikely events,” which leads them to “overweight unlikely events in their decisions” (324). While this is accurate, it also does occur in the opposite direction - some people underweight unlikely events, so if they are unlucky and do run into issues, they are horrified and in shock. For the rest of the fourth section, Kahneman discusses more about risk-taking and framing, which have already been discussed earlier.
In the fifth and last section, “Two Selves,” Kahneman discusses human life in general. To begin, he states that life isn’t like a story, as seen in the fact that there are complications. For instance, “We feel pity for a man who died believing in his wife’s love for him, when we hear that she had a lover for many years and stayed with her husband only for his money. We pity the husband although he had lived a happy life” (387). Right afterwards, Kahneman gives another example involving a scientist whose theory has been debunked after his death; the reader still feels some compassion for the scientist, even though he never had to live to experience the debunking firsthand. Kahneman then discusses an interesting scenario, in which a person is told that they could go on a vacation, but at the end of it, all technological evidence of their trip will be destroyed, and they will be mind-wiped. As planned, many people became upset upon hearing this prospect, as “the limitation of memories greatly reduces the value of the experience,” though some others said they would utilize the opportunity to engage in hedonistic pleasure (389). Kahneman then discusses experienced well-being, which is different from objective well being. A person can experience well-being despite the fact that they may be miserable objectively. For instance, an ignorant person who lives a mediocre life may feel satisfied, though many people will point out the deficits in their lifestyle. On the contrary, those who have meaningful lives may experience terrible feelings, downplaying what they have to be grateful for, as described with Franz Kafka in The Human Predicament by David Benatar. Kahneman’s chapter on experienced well-being can be summarized in the following quote: “‘The objective of policy should be to reduce human suffering … Dealing with depression and extreme poverty should be a priority’” (397). Kahneman then writes in his conclusion of his hypothesis of two selves and two systems, which he enumerated in great detail for much of his book.
Personal thoughts:
Thinking, Fast and Slow is a fantastic read, for there is an abundance of definitions, examples, and statistics to support Kahneman’s organized claims. Thinking, Fast and Slow has a high likelihood of changing the way you view the world, for it explores how humans think, as well as common mistakes and issues the mind faces during its existence. While the book can be a little dry at times, it is for the most part an engaging read due to the multitude of examples presented, many which are relatable to most people. Kahneman’s expertise in his subject is seen throughout the book, especially when he discusses his partnership and friendship with Amos Tversky and his satisfying teaching career at Princeton.
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