There have been many good books on human rationality and irrationality, but only one masterpiece. That masterpiece is Daniel Kahneman’s Thinking, Fast and Slow.
So says William Easterly, writing in the Financial Times. Having just finished this book, I would add that not only is it a masterpiece, it is an eminently readable and comprehensible masterpiece. Easterly again:-
He achieves an even greater miracle by weaving his insights into an engaging narrative that is compulsively readable from beginning to end. My main problem in doing this review was preventing family members and friends from stealing my copy of the book to read it for themselves.
Galen Strawson, in the Guardian, describes the themes of the book:-
An outstandingly clear and precise study of the ‘dual-process’ model of the brain and our embedded self-delusions. We apprehend the world in two radically opposed ways, employing two fundamentally different modes of thought: “System 1” and “System 2”. System 1 is fast; it’s intuitive, associative, metaphorical, automatic, impressionistic, and it can’t be switched off. Its operations involve no sense of intentional control, but it’s the “secret author of many of the choices and judgments you make” and it’s the hero of Daniel Kahneman’s alarming, intellectually aerobic book. System 2 is slow, deliberate, effortful. Its operations require attention. System 2 takes over, rather unwillingly, when things get difficult. It’s “the conscious being you call ‘I'”, and one of Kahneman’s main points is that this is a mistake. You’re wrong to identify with System 2, for you are also and equally and profoundly System 1. Kahneman compares System 2 to a supporting character who believes herself to be the lead actor and often has little idea of what’s going on.
Easterly points out that:-
In Kahneman’s words, System 1 is “indeed the origin of much that we do wrong” but it is critical to understand that “it is also the origin of most of what we do right – which is most of what we do”. The “marvels” of System 1 include an ability to recognise patterns in a fraction of a second, so that it will “automatically produce adequate solutions to challenges”. An even more remarkable accomplishment is “expert intuition”, in which after much practice a trained expert, such as a doctor or a firefighter, can unconsciously produce the right response to complex emergencies.
Kahneman is one of the fathers of the field of cognitive biases, and most of the book is indeed spent on the mistakes made by System 1. We get probability and uncertainty terribly wrong, usually leading to overconfidence and mistaken decisions. We react to identical situations differently depending on what is already on our minds. Even worse, we don’t know what we don’t know.
As Galen says:-
We think we’re smart; we’re confident we won’t be unconsciously swayed by the high list price of a house. We’re wrong. We’re also hopelessly subject to the “focusing illusion”, which can be conveyed in one sentence: “Nothing in life is as important as you think it is when you’re thinking about it.” Whatever we focus on, it bulges in the heat of our attention until we assume its role in our life as a whole is greater than it is. Another systematic error involves “duration neglect” and the “peak-end rule”. Looking back on our experience of pain, we prefer a larger, longer amount to a shorter, smaller amount, just so long as the closing stages of the greater pain were easier to bear than the closing stages of the lesser one.
As Oliver Burkeman writes in the Guardian:-
The biggest challenge this posed was to economists, most of whom assumed that people were basically rational and selfish and acted in their own best interests. The work that won Kahneman the Nobel showed otherwise. As Richard Thaler, another leading light in the revolution that became known as behavioural economics, told an interviewer, Kahneman and Tversky’s research meant that “rationality was fucked”. Kahneman, on the other hand, likes to say that you’d need to study economics for years before you’d find his research surprising: it didn’t surprise his mother at all.
I have to agree to some extent with Easterly one very minor reservation:-
Kahneman’s endorsement of “libertarian paternalism” contains many good ideas for nudging people in the right direction, such as default savings plans or organ donations. But his case here is much too sweeping, because it overlooks everything the rest of the book says about how the experts are as prone to cognitive biases as the rest of us. Those at the top will be overly confident in their ability to predict the system-wide effects of paternalistic policy-making – and the combination of democratic politics and market economics is precisely the kind of complex and spontaneous order that does not lend itself to expert intuition.
However, I would wholeheartedly agree with Easterly’s final paragraph:-
But I hope that [this] one quibble does not deter readers because this is one of the greatest and most engaging collections of insights into the human mind I have read. Kahneman’s book will help you Think Slow about what Thinking Fast gets very wrong, and what it gets very right.
It’s no understatement to say that this might be one of the most important books you read for some time.