Thinking, Fast and Slow

 

Back in 1994, Massimo Piattelli-Palmarini, Director of the Institute of San Raffaele in Milan, Italy, wrote a charming little book about common cognitive distortions called Inevitable Illusions. It is probably the very first comprehensive summary of behavioral economics intended for general audience. In it, he predicted that the two psychologists behind behavioral economics - Amos Tversky and Daniel Kahneman - would win the Nobel prize. I didn't disagree with the sentiment, but wondered how in the world were they going to get it since these two were psychologists and there is no Nobel prize in psychology. I didn't think there was much chance of them winning the Nobel Prize in economics. I was wrong and Piattelli-Palmarini was right. Kahneman won the Nobel prize in Economic Sciences. (Tversky unfortunately prematurely passed away by this time.) Just as Steve Jobs who was not in the music industry revolutionized it, the non-economists Kahneman and Tversky have revolutionized economic thinking. I have known Kahneman's work for quite some time and was quite excited to see that he was coming out with a non-technical version of his research. My expectations for the book were high and I wasn't disappointed.

Since other reviewers have given an excellent summary of the book, I will be brief in my summary but review the book more broadly.

The basis thesis of the book is simple. In judging the world around us, we use two mental systems: Fast and Slow. The Fast system (System 1) is mostly unconscious and makes snap judgments based on our past experiences and emotions. When we use this system we are as likely to be wrong as right. The Slow system (System 2) is rational, conscious and slow. They work together to provide us a view of the world around us.

So what's the problem?Read more ›

When you come late to the party, writing the 160th review, you have a certain freedom to write something as much for your own use as for other readers, confident that the review will be at the bottom of the pile.

Kahneman's thesis is that the human animal is systematically illogical. Not only do we mis-assess situations, but we do so following fairly predictable patterns. Moreover, those patterns are grounded in our primate ancestry.

The first observation, giving the title to the book, is that eons of natural selection gave us the ability to make a fast reaction to a novel situation. Survival depended on it. So, if we hear an unnatural noise in the bushes, our tendency is to run. Thinking slow, applying human logic, we might reflect that it is probably Johnny coming back from the Girl Scout camp across the river bringing cookies, and that running might not be the best idea. However, fast thinking is hardwired.

The first part of the book is dedicated to a description of the two systems, the fast and slow system. Kahneman introduces them in his first chapter as system one and system two.

Chapter 2 talks about the human energy budget. Thinking is metabolically expensive; 20 percent of our energy intake goes to the brain. Moreover, despite what your teenager tells you, dedicating energy to thinking about one thing means that energy is not available for other things. Since slow thinking is expensive, the body is programmed to avoid it.

Chapter 3 expands on this notion of the lazy controller. We don't invoke our slow thinking, system two machinery unless it is needed. It is expensive. As an example, try multiplying two two-digit numbers in your head while you are running. You will inevitably slow down.Read more ›