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Daniel Kahneman on thinking ‘Fast And Slow’: How We Aren’t Made For Making Decisions
“We’re not in control because our preferences come from a lot of places that we don’t know about and, second, there are really some characteristics of the way a mind works that are incompatible with perfect decision-making. In particular, we have a very narrow view of what is going on and that narrow view - we take decisions as if that were the only decision that we’re facing. We don’t see very far in the future. We are very focused on one idea at a time, one problem at a time and all these are incompatible with full rationality as economic theory assumes it.”— Fast And Slow’: Pondering The Speed Of Thought, October 27, 2011 (transcript)
“Take for example the study out of the National Academy of Sciences, which found that Israeli parole judges — known for turning down parole applications — were more likely to award parole in cases they heard immediately after taking a meal break.
“Presumably they are hungry, but certainly they are tired, they’re depleted,” Kahneman says of the judges’ state when they are a few hours away from a meal. “When you’re depleted, you tend to fall back on default actions, and the default action in that case is apparently to deny parole. So yes, people are strongly influenced by the level of glucose in the brain.”
The implications of such a study are tremendous: If democratic society is based on people making decisions, what does it mean when all it takes to influence those decisions is a little bit of glucose?”
— Robert Siegel interview with Daniel Kahneman, ‘Fast And Slow’: Pondering The Speed Of Thought, NPR, October 27, 2011
“Crucial policy decisions are often based on statistical inferences, but as Mr. Kahneman notes, we “pay more attention to the content of messages than to information about their reliability.” The effect is “a view of the world around us that is simpler and more coherent than the data justify.”
One major effect of the work of Messrs. Kahneman and Tversky has been to overturn the assumption that human beings are rational decision-makers who weigh all the relevant factors logically before making choices. When the two men began their research, it was understood that, as a finite device with finite time, the brain had trouble calculating the costs and benefits of every possible course of action and that, separately, it was not very good at applying rules of logical inference to abstract situations. What Messrs. Kahneman and Tversky showed went far beyond this, however. They argued that, even when we have all the information that we need to arrive at a correct decision, and even when the logic is simple, we often get it drastically wrong. (…)
This “conjunction fallacy” (like the focusing illusion) illustrates a broader pattern—of human reasoning being distorted by systematic biases. To understand one source of such errors, Mr. Kahneman divides the mind into two broad components. “System 1” makes rapid, intuitive decisions based on associative memory, vivid images and emotional reactions. “System 2” monitors the output of System 1 and overrides it when the result conflicts with logic, probability or some other decision-making rule. Alas, the second system is a bit lazy—we must make a special effort to pay attention, and such effort consumes time and energy.
You can get an idea of the two-system distinction by trying to solve this simple problem, from the work of the psychologist Shane Frederick: “If it takes 5 machines 5 minutes to make 5 widgets, how many minutes does it take 100 machines to make 100 widgets?” The answer “100 minutes” leaps to mind (System 1 at work), but it is wrong. But a bit of reflective thought (by System 2) leads to “five minutes,” the right answer.
The divided mind is evident in other situations where we are not as “rational” as we might assume. Most people require a larger expected outcome to take a risk when a sure thing is available as an alternative (risk aversion), and they dislike losses much more than they like gains of equivalent size (loss aversion). These now-commonplace concepts are central to prospect theory, perhaps the most influential legacy of Messrs. Kahneman and Tversky.
Mr. Kahneman notes that we harbor two selves when it comes to happiness, too: one self that experiences pain and pleasure from moment to moment and another that remembers the emotions associated with complete events and episodes. The remembering self does not seem to care how long an experience was if it was getting better toward the end—so a longer colonoscopy that ended with decreasing pain will be seen later as preferable to a shorter procedure that involved less total pain but happened to end at a very painful point. Complications like this should make us wary of letting simplistic measures of happiness determine national policy and social goals.
Mr. Kahneman stresses that he is just as susceptible as the rest of us to the cognitive illusions he has discovered. He tries to recognize situations when mistakes are especially likely to occur—such as when he is starting a big project or making a forecast—and then act to rethink his System 1 inclinations. The tendency to underestimate the costs of future projects, he notes, is susceptible to taking an “outside view”: looking at your own project as an outsider would. To avoid overconfidence, Mr. Kahneman recommends an exercise called the “premortem,” developed by the psychologist Gary Klein: Before finalizing a decision, imagine that, a year after it has been made, it has turned out horribly, then write a history of how it went wrong and why. (…)
Mr. Kahneman’s stated goals are minimalist: to “enrich the vocabulary that people use” when they talk about decisions, so that his readers benefit from his work at the “proverbial watercooler, where opinions are shared and gossip is exchanged.”
— Christopher F. Chabris, Why the Grass Seems Greener, WSJ.com, Oct 22, 2011 (Illustration source)
Daniel Kahneman is Israeli-American psychologist and Nobel laureate, notable for his work on the psychology of judgment, decision-making, behavioral economics and hedonic psychology.
See also:
☞ Daniel Kahneman: The Marvels and the Flaws of Intuitive Thinking
☞ Dean Buonomano on ‘Brain Bugs’ - Cognitive Flaws That ‘Shape Our Lives’
☞ Daniel Kahneman: How cognitive illusions blind us to reason, The Observer, 30 October 2011
☞ Daniel Kahneman on the riddle of experience vs. memory
☞ The irrational mind - David Brooks on the role of emotions in politics, policy, and life
☞ The Argumentative Theory: ‘Reason evolved to win arguments, not seek truth’
☞ A risk-perception: What You Don’t Know Can Kill You
