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Thinking, Fast and Slow by Daniel Kahneman
SO, HOW well do you think people think? How well can they think? Are the errors of judgement people make avoidable with just a bit more care and knowledge? Does this question really matter to anyone other than academic psychologists?
Let me answer the last question first, because the whole book is the answer to the first three questions. It matters to you and me because someone is investing our pension money based on their ability to think and access information.
Someone is making judgements about your health and prescribing remedies based on their ability to think. You are finding solutions that affect your company and your career. You are making decisions that affect your family today and in the future. The fact, now generally accepted, is that our minds are susceptible to identified, systematic errors.
The author, Daniel Kahneman, received the Noble Prize for Economics in 2002 for his work on judgement and decision making. His aim in this book is to present a view of how the mind works, based on the keenest insights from cognitive and social psychology.
Our mental life is described by a metaphor of two systems simply called System 1 and System 2.
System 1 operates automatically and quickly, requiring hardly any effort on our part and over which we generally have no voluntary control. We orient ourselves to the source of a sudden sound, or complete the phrase “bread and…” and drive a car on an empty road without applying our minds to the matter. This is System 1.
In contrast multiplying 17 X 24, and similar mental activities requiring effort are the business of System 2. Unfortunately a main characteristic of System 2 is laziness - a reluctance to invest more effort than is strictly necessary.
While we are awake, System 1 and 2 are active, with System 1 running automatically and System 2 normally in a low effort, comfortable mode.
You cannot turn off System 1 - that is why you cannot see a word on a page and not read it, and System 2 often has to be forced into action as when reading a dense book. As a person becomes more skilled in a task, the effort demanded of System 2 diminishes.
This is the “thinking, fast and slow” of the title.
The thoughts and actions that System 2 believes it has chosen are often guided by System 1. If you have recently seen the word EAT, you are temporarily more likely to complete the word fragment SO_P as SOUP rather than SOAP.
The opposite would happen if you had just seen the word WASH. This priming phenomenon – the influencing of an action by an idea - is known as the ideomotor effect.
The effect can also be seen in areas where we would expect our System 2 to function with no reference to System 1, such as at the voting station. Here, thoughtful people believe they are engaging in a deliberate act that reflects their values and their assessments of policies.
A study of voting patterns in precincts of Arizona in 2000 showed that the support for propositions to increase the funding of schools was significantly greater when the polling station was in a school than when it was in a nearby location.
The influence of System 1 was observed in the office kitchen of a British university. Members used an “honesty box” to fund the tea and coffee to which they helped themselves during the day.
For a period of 10 weeks a banner was placed above the price list, with no explanation, with a flower one week and eyes that appeared to be looking directly at the observer on alternative weeks. During the week when the eyes were displayed contributions to milk were 70 pence per liter versus 15 pence when the flowers were displayed.
A primary function of System 2 is to monitor and control thoughts and actions suggested by System 1. That is why people who are cognitively busy (System 2) are more likely to make selfish choices, use sexist language, and make superficial judgements in social situations (System 1.)
Individuals who are uncritical of their intuitions (System 1) tend to, for example, seek immediate gratification. An experiment showed that 63% of the “intuitive” respondents say they would prefer to get $3 400 this month rather than $3 800 next month.
Only 37% of those who are shown to be non-impulsive have the same short-sighted preference for receiving a smaller amount immediately.
The laziness of System 2 favours “cognitive ease” and therefore favours messages printed on high quality paper that maximise the contrast between the character and the background and make reading easier.
Similarly, Oppenheimer reported in an article titled Consequences of Erudite Vernacular Utilized Irrespective of Necessity that couching familiar ideas in pretentious language is taken as a sign of poor intelligence and low credibility.
If a message is in verse it is more likely to be taken as truth and is more memorable due to its cognitive ease.
Aphorisms were judged more insightful when they rhymed than when they did not. Consider these pairs for veracity and memorability: Woes unite foes, vs Woes unite enemies, or A fault confessed is half redressed, vs A fault admitted is half redressed.
System 1 is gullible and biased to believe. System 2 is in charge of doubting and unbelieving, but System 2 is sometimes busy, and often lazy.
One consequence of such insights - and there are literally hundreds - described carefully, but succinctly in the book, is the pernicious illusion of skill. In the same way as we succumb to optical illusions we succumb to cognitive illusions, except that the cognitive type can cost us far more.
A simple test for any skill is persistent achievement. Even a casual tennis player can serve superbly once, but only a talented player can do this consistently.
In a study of the investment outcomes of 25 wealth advisers to the very wealthy for each of eight consecutive years, Kahneman came to a shocking conclusion that correlates with numerous other studies of “expert skill” .
Intending to identifying persistent skills and the consistent achievement of better returns for their clients year after year, Kahneman found the average correlation to be 0.01, in other words zero. The results resembled what one would expect from a dice-rolling contest, not a game of skill.
The illusion of skill is not a fraud. The first lesson is that errors in prediction are inevitable as the world is unpredictable.
This 450-page book (notes excluded) of densely printed text is a veritable treasure trove of solid insights into how we think and make decisions.
If the size is off-putting, that is just the laziness of System 2 kicking in - go with the System 1 quick decision to buy it and read it. You will be enriched, and you will be so glad you expended the effort required of System 2.
Readability: Light ----+ Serious
Insights: High +---- Low
Practical: High -+--- Low
* Ian Mann of Gateways consults internationally on leadership and strategy.
SO, HOW well do you think people think? How well can they think? Are the errors of judgement people make avoidable with just a bit more care and knowledge? Does this question really matter to anyone other than academic psychologists?
Let me answer the last question first, because the whole book is the answer to the first three questions. It matters to you and me because someone is investing our pension money based on their ability to think and access information.
Someone is making judgements about your health and prescribing remedies based on their ability to think. You are finding solutions that affect your company and your career. You are making decisions that affect your family today and in the future. The fact, now generally accepted, is that our minds are susceptible to identified, systematic errors.
The author, Daniel Kahneman, received the Noble Prize for Economics in 2002 for his work on judgement and decision making. His aim in this book is to present a view of how the mind works, based on the keenest insights from cognitive and social psychology.
Our mental life is described by a metaphor of two systems simply called System 1 and System 2.
System 1 operates automatically and quickly, requiring hardly any effort on our part and over which we generally have no voluntary control. We orient ourselves to the source of a sudden sound, or complete the phrase “bread and…” and drive a car on an empty road without applying our minds to the matter. This is System 1.
In contrast multiplying 17 X 24, and similar mental activities requiring effort are the business of System 2. Unfortunately a main characteristic of System 2 is laziness - a reluctance to invest more effort than is strictly necessary.
While we are awake, System 1 and 2 are active, with System 1 running automatically and System 2 normally in a low effort, comfortable mode.
You cannot turn off System 1 - that is why you cannot see a word on a page and not read it, and System 2 often has to be forced into action as when reading a dense book. As a person becomes more skilled in a task, the effort demanded of System 2 diminishes.
This is the “thinking, fast and slow” of the title.
The thoughts and actions that System 2 believes it has chosen are often guided by System 1. If you have recently seen the word EAT, you are temporarily more likely to complete the word fragment SO_P as SOUP rather than SOAP.
The opposite would happen if you had just seen the word WASH. This priming phenomenon – the influencing of an action by an idea - is known as the ideomotor effect.
The effect can also be seen in areas where we would expect our System 2 to function with no reference to System 1, such as at the voting station. Here, thoughtful people believe they are engaging in a deliberate act that reflects their values and their assessments of policies.
A study of voting patterns in precincts of Arizona in 2000 showed that the support for propositions to increase the funding of schools was significantly greater when the polling station was in a school than when it was in a nearby location.
The influence of System 1 was observed in the office kitchen of a British university. Members used an “honesty box” to fund the tea and coffee to which they helped themselves during the day.
For a period of 10 weeks a banner was placed above the price list, with no explanation, with a flower one week and eyes that appeared to be looking directly at the observer on alternative weeks. During the week when the eyes were displayed contributions to milk were 70 pence per liter versus 15 pence when the flowers were displayed.
A primary function of System 2 is to monitor and control thoughts and actions suggested by System 1. That is why people who are cognitively busy (System 2) are more likely to make selfish choices, use sexist language, and make superficial judgements in social situations (System 1.)
Individuals who are uncritical of their intuitions (System 1) tend to, for example, seek immediate gratification. An experiment showed that 63% of the “intuitive” respondents say they would prefer to get $3 400 this month rather than $3 800 next month.
Only 37% of those who are shown to be non-impulsive have the same short-sighted preference for receiving a smaller amount immediately.
The laziness of System 2 favours “cognitive ease” and therefore favours messages printed on high quality paper that maximise the contrast between the character and the background and make reading easier.
Similarly, Oppenheimer reported in an article titled Consequences of Erudite Vernacular Utilized Irrespective of Necessity that couching familiar ideas in pretentious language is taken as a sign of poor intelligence and low credibility.
If a message is in verse it is more likely to be taken as truth and is more memorable due to its cognitive ease.
Aphorisms were judged more insightful when they rhymed than when they did not. Consider these pairs for veracity and memorability: Woes unite foes, vs Woes unite enemies, or A fault confessed is half redressed, vs A fault admitted is half redressed.
System 1 is gullible and biased to believe. System 2 is in charge of doubting and unbelieving, but System 2 is sometimes busy, and often lazy.
One consequence of such insights - and there are literally hundreds - described carefully, but succinctly in the book, is the pernicious illusion of skill. In the same way as we succumb to optical illusions we succumb to cognitive illusions, except that the cognitive type can cost us far more.
A simple test for any skill is persistent achievement. Even a casual tennis player can serve superbly once, but only a talented player can do this consistently.
In a study of the investment outcomes of 25 wealth advisers to the very wealthy for each of eight consecutive years, Kahneman came to a shocking conclusion that correlates with numerous other studies of “expert skill” .
Intending to identifying persistent skills and the consistent achievement of better returns for their clients year after year, Kahneman found the average correlation to be 0.01, in other words zero. The results resembled what one would expect from a dice-rolling contest, not a game of skill.
The illusion of skill is not a fraud. The first lesson is that errors in prediction are inevitable as the world is unpredictable.
This 450-page book (notes excluded) of densely printed text is a veritable treasure trove of solid insights into how we think and make decisions.
If the size is off-putting, that is just the laziness of System 2 kicking in - go with the System 1 quick decision to buy it and read it. You will be enriched, and you will be so glad you expended the effort required of System 2.
Readability: Light ----+ Serious
Insights: High +---- Low
Practical: High -+--- Low
* Ian Mann of Gateways consults internationally on leadership and strategy.
