Thinking Fast and Slow | Daniel Kahneman | Book Review
By K M Tejkiran
Reading a book written by a trained psychologist who won the Nobel memorial prize in economics will pique anyone’s interest. In “Thinking fast and slow”, Daniel Kahneman chronicles the ground-breaking work that he and Amos Tversky have done in behavioural economics. Economists had always assumed human beings to be rational agents, but the duo showed innumerable instances where humans are not. With carefully designed experiments they had demonstrated the inherent cognitive biases that we carry with us. Understanding them will be crucial to make our decisions more robust.
Kahneman starts his book with an interesting preface. He says that the main aim of this book is to provide the reader with insights about “water cooler talk”. The more you think about it, gossip at the water cooler brings out a good number of our cognitive biases. We talk about the person who can do no wrong (the Halo effect), we talk about why we hate that co-worker and so on. Kahneman puts forward the motivation to understand these biases straight away — Just by merely naming a bias makes us aware of it and we can think of ways to avoid falling under the decision-making traps.
Some of the traps that Kahneman identified have become common language and have cemented their place in professional parlance, like “loss aversion”. However, to understand the underlying cause behind the biases, the author persuades us to understand how the mind functions. He comes up with two terms — System 1 and system 2 as different segments of the mind. System 1 is the intuitive part of the mind — for example, going back home from school does not require any effort. We hardly spend any time thinking about the route. System 2 is the part of the mind that is rational, and conscious. When you multiply 197 times 248 it is system 2 at work (unless you are Shakuntala Devi, of course). This explains the title — System 1 thinks fast, you are not even aware of the process that is happening, but its results are there for us to see. System 2 thinks slow, and you are aware of when you command it to work for you.
The intuitive nature of system 1 gives rise to several biases that we fall prey to. Talking about loss aversion again, we can imagine how we feel about a mutual fund that we have invested in to generate an 8% rise in value versus another case where the fund increases in value by 10% and then corrects to 8%. Although booking profits will put us in the exact same position, we feel differently about the path taken. In another example, think about polarizing characters. Fans worship their idol and detractors find something to criticise all the time. With analytical rigour, academic prowess, and sound research Kahneman tells us why “haters gonna hate” and vice-versa.
The book also introduces another dimension — the experiencing self and the remembering self and how biases creep in here as well. For example, consider the lives of two hypothetical humans. “A” is born middle class but gradually accumulates wealth to become a millionaire, has a satisfying personal life and passes away at 65. “B” lives the exact same life as “A”, accomplishes and experiences everything “A” has up to 65. However, the fortunes of B change at 65 — loses wealth and goes back to the middle class. B lives life this way until 70 and passes away. A large majority of us would choose to have A’s life rather than B’s. In fact, the decision would be mostly the same even if we said B lives life as a millionaire until 67. Kahneman describes his experiments in this area, how the two selves and the two systems interact with one another to result in intuitive but wrong decision making. Of course, in this example, we assume money makes both A and B happy, without getting into the debate of whether money results in happiness.
The examples are just teasers for what is in store for someone who reads the book. And this is one of the instances where the movie not only matches up to the teaser but beats your expectations. At each step of the way Kahneman either describes his experiments or gives extremely relatable examples of the cognitive biases that he describes, the reader understands the context and the problem very clearly. Together, Daniel Kahneman and Amos Tversky have done an immense amount of research that broke new grounds. Thinking Fast and Slow is a non-academic account of their research and conclusions. Non-academic does not mean that you can breeze through the book. Although Kahneman has articulated his thoughts brilliantly, it is not a light read. Reading speeds vary from person to person, but if you are a person who is proud of your speed, prepare to be surprised. However, the time spent reading the book is worth it and more. Make no mistake, a slow read does not mean a dull read. Kahneman takes shots at “experts” (like political analysts, for example) for failing to provide adequate results. He has a very professor-ish sense of humour that makes the book lively.
At the beginning of the book, the author cautions the reader against feeling despondent about the traps and biases in decision making. He focuses only on the areas where we humans go wrong in intuitive decision making. At times, he does mention where intuition is right and how sometimes making some decision with System 1 instantaneously has advantages over a time-taking System 2 response. The book does not say that we make the wrong decision all the time — we make good decisions and conclusions too, but we need to be aware of the pitfalls of intuition and guard against its disadvantages. With that in mind, Thinking Fast and Slow will enrich the reader. The readers will be equipped with the tools to make water-cooler talk without letting it affect the opinions they form and the decisions they make.
