Customer Reviews

Thinking, Fast and Slow

5 star:		(8)
4 star:		(2)
3 star:		(2)
2 star:		(0)
1 star:		(0)

 

 

I have to admit that I wasn't really aware of Kahneman's work before I bought this book. Back in 2002, I was shocked to hear that there was a Nobel prize in Economics given out for someone showing that humans aren't rational investors. "Duh" I thought. Psychologists have known that for decades. Well, it turns out the guy who won that Nobel prize was a psychologist- Kahneman.

This book, written at the end (or just about) of his career, is a reflection back on a life's worth of research. Part biography (including his research partner Amos Tversky), part lecture, part research book, it makes for a good read. The chapters are all short, focused, and aimed at a broad audience yet contain some data for researchers. They also end with two or three quotes that illustrate the point of the chapter. Time and again, we're hit over the head with the difference between System 1 of the mind (unconscious, intuitive, biased, fast) versus System 2 (conscious, logical, lazy, slow). In a nutshell, most people believe that System 2 dominates our thoughts and behaviors. Kahneman goes to great lengths to show that this is often not the case.

Taking a broadly evolutionary perspective, he views System 1 as a background integrator of data that's concerned with survival-level issues. It often steers the thinking of System 2, which is costly and thus lazy. System 1 works well enough often enough for System 2 to only really kick in under consciously important circumstances. Certainly, psychology has revealed dozens of ways in which our unconscious mind can exert shockingly large influences on our behavior in contrast to our conscious perceptions and ideas. That's hardly surprising, and in that regard, I found the book a little stale and repetitive. Which isn't surprising given that it documents research starting in the 70s.

One of the reasons it gets five stars is that it is packed with enough amusing examples and anecdotes that only the most jaded psychologist would not enjoy reading through the chapters. Even though I was aware that many of the examples were tests of my System 1 vs. 2, I still fell into some of the common System 1 traps. Which is an intentional move by the author. To his credit, he follows some of the research he preaches by making the story personal to the reader, using their own surprised thoughts at their performance and the dominance of their System 1 to cause the reader to change the way they think about their mind. It's a great illustration of using science to teach science, something that I can't help but enjoy.

And that's ultimately what's so satisfying about this book. Because it's big, and often belabors similar points, I was tempted to give it four stars. But given its writing/teaching style, the theories it presents, and the evidence for them, this book deserves five stars. Because it is pretty hard to read it and not come away with a different perspective on one's mind and how one thinks. And that's a pretty cool thing for any book to accomplish!

Investors are often criticized for making irrational decisions, as if it were possible through hard work and discipline to reach some kind of idealized rational state. According to psychologist and Nobel laureate Daniel Kahneman, author of Thinking, Fast and Slow, it doesn't quite work that way. People can be trained to make more thoughtful decisions but, ultimately, the anatomical structure and evolutionary history of the human brain calls the shots. And that brain tells us to make quick, intuitive judgments with identifiable biases. Our more reflective processes, more often than not, line up to support these judgments.
If this sounds familiar, it should. In 2005, Malcolm Gladwell published the bestseller Blink: The Power of Thinking Without Thinking. Gladwell wrote detailed case studies about intuitive judgments. On rare occasions, such as the case of a chess master with several thousand hours of training, intuitions can be remarkably accurate. At other times, when we use physical traits like a square jaw to judge a politician's leadership capabilities, they are just plain dumb.
But, Thinking, Fast and Slow is a much richer book than Blink. Kahneman has written the organized, referenced big brother of Blink and other books like Freakonomics by Steven Levitt and Stephen Dubner and Moneyball by Michael Lewis. All of these titles owe their existence to the intellectual framework developed by Kahneman and others.
The author, who has spent five decades studying the way we make decisions, is seen as a pioneer in the field of behavioural finance. He was the first psychologist to be awarded the Nobel Memorial Prize in Economics for his co-authorship, with Amos Tversky, of Prospect Theory. Among the insights derived from Prospect Theory is loss aversion, where people overweight losses in their decision-making.
To help readers better understand the complex interplay between our slower, reflective processes and our quick, intuitive processes, Kahneman writes about two systems: System 1 and System 2. System 1 is described as uncontrolled, effortless, associative, unconscious and skilled. When you see a photo of an angry person's face, System 1 generates an automatic response ' something like, 'Yikes!' System 2 is controlled, effortful, deductive and slow. It goes to work when you are presented with a problem like, 'What is 34 times 13?'
Through MRIs and measurements of pupil dilation during mental tasks, researchers have physical evidence of fundamentally different processes at work. And, over the years, a sizeable body of research has developed about biases, heuristics and decision errors. One of the most common patterns is that we substitute an easy question for a hard one. When asked what we think of a politician, we substitute the question, 'Does she look like a leader?' System 1 comes up with a quick answer: 'Of course she does!' System 2 would have to perform a difficult analysis to provide the real answer: 'What are her policies on various issues and how do they compare with those of her rivals?' Since System 2 tries to conserve energy, the System 1 substitution takes place, and then System 2's supporting points are brought in after the fact. It is completely lame and we all do it.
If the value of a book were measured in 'Aha!' moments, Thinking, Fast and Slow would represent a tremendous bargain. At $34 retail (and you will almost certainly pay less than that), each 'Aha!' costs about 17 cents. Examples: 'Aha! So that's why mega-projects routinely come in wildly over-budget.' Or, 'Aha! That's why it's harder to putt for birdie than for par.' Or, 'Aha! That's why CEOs of businesses facing losses often take high-risk, capital-destroying gambles.' Or, 'Aha!, that's why caps on civil liabilities favour large companies over small ones.'
One note of caution about Thinking, Fast and Slow: it is dense and it requires you to think. The author has gone to heroic lengths to make it readable, but each chapter requires thoughtful participation, often beginning with a word problem or exercise. The effort, however, is worthwhile. Unless you are a researcher in experimental psychology and know the content already, it will probably change the way you think. But it won't make you rational.

Dr. Daniel Kahneman is one of the world's greatest living psychologists, Professor Emeritus at Princeton University, and a winner of the Nobel prize for Economics.

Thinking Fast and Slow is the summary of a lifetime of his groundbreaking research on the nature of the human mind. It is destined to become a timeless classic alongside Dr. Robert Cialdini's Influence: The Psychology of Persuasion.

Dr. Kahneman labels the approximately 95% of the mind that is unconscious `System 1'; and the approximately 5% of the mind that is conscious `System 2'.

« System 1 operates automatically and quickly, with little or no effort and no sense of voluntary control. System 2 allocates attention in the effortful mental activities that demand it. The operations of System 2 are often associated with the subjective experience of agency, choice, and concentration.

When we think of ourselves, we identify with System 2, the conscious, reasoning self that has beliefs, makes choices, and decides what to think about and what to do. Although System 2 believes itself to be where the action is, System 1 effortlessly originates impressions and feelings that are the main sources of the beliefs and deliberate choices of System 2. "

"In the unlikely event of this book being made into a film, System 2 would be a supporting character who believes herself to be the hero. The defining feature of System 2, in this story, is that its operations are effortful, and one of its main characteristics is laziness, a reluctance to invest more effort than is strictly necessary. As a consequence, the thoughts and actions that System 2 believes it has chosen are often guided by the figure at the center of the story, System 1."

Or as Dr. David Eagleman summarizes in `Incognito: The Secret Lives of the Brain': "The first thing we learn from studying our own circuitry is a simple lesson: most of what we do and think and feel is not under our conscious control. The conscious you is the smallest part of what's transpiring in your brain. Your consciousness is like a tiny stowaway on a transatlantic steamship, taking credit for the journey without acknowledging the massive engineering underfoot."

Dr. Kahneman explains that "System 1 continuously monitors what is going on outside and inside the mind, and continuously generates assessments of various aspects of the situation without specific intention and with little or no effort. These `basic assessments' play an important role in intuitive judgement." Most of our beliefs and choices originate here.

System 1 is active and always on. System 2 is too weak to be always on, so it is selectively re-active:

"The often-used phrase `pay attention' is apt: you dispose of a limited budget of attention that you (System 2) can allocate to activities, and if you try to go beyond your budget, you will fail. Intense focusing on a task can make people effectively blind even to stimuli that normally attract attention. The most dramatic demonstration was offered by Christopher Chabris and Daniel Simons in their book The Invisible Gorilla. They constructed a short film of two teams passing basketballs, one team wearing white shirts, the other wearing black. The viewers of the film are instructed to count the number of passes made by the white team, ignoring the black players. This task is difficult and completely absorbing. Halfway through the video, a woman wearing a gorilla suit appears, crosses the court, thumps her chest, and moves on. The gorilla is in view for 9 seconds. About half the people who see the video do not notice anything unusual. It is the counting task and the instruction to ignore one of the teams that causes the blindness. The gorilla study illustrates two important facts about our minds: we can be blind to the obvious, and we are also blind to our blindness."

"Both self-control and cognitive effort are forms of mental work (by System 2). People who are simultaneously challenged by a demanding cognitive task and by a temptation are more likely to yield to the temptation (e.g. eating junk food).

People who are cognitively busy are also more likely to make selfish choices, use sexist language, and make superficial judgments in social situations. A few drinks have the same effect, as does a sleepless night. An effort of will or self-control is tiring; if you have to force yourself to do something, you (System 2) are less willing or less able to exert self-control when the next challenge comes around. The phenomenon has been named `ego depletion.'"

Dr. Kahneman goes on to offer explanations of numerous limitations and vulnerabilities of our minds, including `cognitive ease', `confirmatory bias', `narrative fallacy', the `halo effect', the `anchoring effect', the `mere exposure effect', the `affect heuristic', stereotyping and `priming':

"A sentence that is printed in a clear font, or has been repeated, or has been primed, will be fluently processed with `cognitive ease'. Hearing a speaker when you are in a good mood also induces cognitive ease. Conversely, you experience cognitive strain when you read instructions in a poor font, or in faint colors, or worded in complicated language, or when you are in a bad mood, or even when you frown.

REPEATED EXPERIENCE or CLEAR DISPLAY or PRIMED IDEA or GOOD MOOD = EASE = FEELS FAMILIAR or FEELS TRUE or FEELS GOOD or FEELS EFFORTLESS

When you feel strained you are more likely to be vigilant and suspicious, invest more effort in what you are doing, feel less comfortable and make fewer errors, but you also are less intuitive and less creative than usual." You are more creative when you are relaxed, when your conscious mind (System 2) is not exerting itself (cf. Carl Honore's `In Praise of Slow').

"Good mood, intuition, creativity, gullibility and increased reliance on System 1 form a cluster. At the other pole, sadness, vigilance, suspicion, an analytical approach and increased effort go together."

Whereas Malcolm Gladwell focused on the strength and successes of System 1 in his bestseller `Blink: The Power of Thinking without Thinking', Kahneman also points out the ways in which our intuition can lead us astray:

"Finding `causal' connections is part of understanding a story and is an automatic operation of System 1. All the (news) headlines do is satisfy our need for coherence: a large event is supposed to have consequences, and consequences needs `causes' to explain them. We have limited information about what happened on a day, and System 1 is adept at finding a coherent `causal' story that links the fragments of knowledge at its disposal." All we ever experience are effects, but we automatically project `causes' behind them, usually inaccurately.

"The psychologist Daniel Gilbert wrote an essay `How Mental Systems Believe,' in which he developed a theory of believing and unbelieving that he traced to the 17th century philosopher Spinoza. Gilbert proposed that understanding must begin with an attempt to believe it: you must first know what the idea would mean if it were true. Only then can you decide whether or not to `unbelieve' it. Belief is an automatic operation of System 1, which involves the construction of the best possible interpretation of the situation. `Unbelieving' is an operation of System 2.

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. Indeed there is evidence that people are more likely to be influenced by empty persuasive messages, such as commercials, when they are tired and depleted.

The confirmatory bias of System 1 favours uncritical acceptance of suggestions and exaggerations of the likelihood of extreme and improbable events." (e.g. religious beliefs or the likelihood of violent crime).

"In `The Black Swan' Nassim Taleb introduced the notion of a `narrative fallacy' to describe how flawed stories of the past shape our views of the world and our expectations for the future. The explanatory stories that people find compelling are simple; are concrete rather than abstract; assign a larger role to talent, stupidity and intentions than to luck; and focus on a few striking events that happened rather than on the countless events that failed to happen."

And "the sequence in which we observe characteristics of a person is often determined by chance. Sequence matters, however, because the `halo effect' increases the weight of first impressions."

"In his penetrating book The Halo Effect, Philip Rosenzweig shows how the demand for illusory certainly is met in popular genres of business writing, consistently exaggerating the impact of leadership style. Imagine that business experts are asked to comment on the reputation of the CEO of a company. The CEO of a successful company is likely to be called flexible, methodical and decisive. Imagine that a year has passed and things have gone sour. The same executive is now described as confused, rigid, and authoritarian. Because of the halo effect, we get the causal relationship backward: we are prone to believe that the firm fails because its CEO is rigid, when the truth is that the CEO appears to be rigid because the firm is failing. This is how illusions of understanding are born."

And "an `anchoring effect' occurs when people consider a particular value for an unknown quantity before estimating that quantity: the estimates stay close to the number that people considered. If you are asked whether Gandhi was more than 114 years old when he died, you will come up with a much higher estimate of his age at death than you would if the anchoring question referred to death at 35. If you consider how much you should pay for a house, you will be influenced by the asking price. The same house will appear more valuable if its listing price is high than if it is low, even if you are determined to resist the influence of this number."

"The famed psychologist Robert Zajonc dedicated much of his career to the study of the link between the repetition of an arbitrary stimulus and the mild affection that people eventually have for it. This `mere exposure effect' does not depend on the conscious experience of familiarity. In fact, the effect does not depend on consciousness at all: it occurs even when repeated words or pictures are shown so quickly that the observers never become aware of having seen them. They still end up liking the words or pictures that are presented more frequently. System 1 responds to impressions of events of which System 2 is unaware. Indeed, the mere exposure effect is actually stronger for stimuli that the individual never consciously sees."

"The dominance of conclusions over `arguments' is most pronounced where emotions are involved. The psychologist Paul Slovic has proposed an `affect heuristic' in which people let their likes and dislikes determine their beliefs about the world. In the context of attitudes, System 2 is more of an apologist for the emotions of System 1 than a critic of those emotions - an endorser rather than an enforcer. Its search for information and arguments is mostly constrained to information that is consistent with existing beliefs, not with an intention to examine them." (cf. Dr. Daniel Dennett's Breaking the Spell).

"One of the basic characteristics of System 1 is that it re-presents categories as norms and prototypical exemplars. This is how we think of horses, refrigerators, and New York police officers; we hold in memory a re-presentation of one or more `normal' members of each of these categories. When the categories are social, these re-presentations are called stereotypes. Some stereotypes are perniciously wrong, but the psychological facts cannot be avoided: stereotypes, both correct and false, are how we think of categories."

"Studies of priming effects have yielded discoveries that threaten our self-image as conscious and autonomous authors of our judgments and our choices (cf. Dr. Gerald Zaltman's How Customers Think). Our vote should not be affected by the location of the polling station, for example, but it is. We now know that the effects of priming can reach into every corner of our lives.

The idea of money primes individualism: a reluctance to be involved with others, to depend on others, or to accept demands from others. Living in a culture that surrounds us with reminders of money may shape our behaviour and our attitudes in ways that we do not know about and of which we may not be proud. Some cultures provide frequent reminders of respect, others constantly remind their members of God, and some societies prime obedience by large images of Dear Leader. The feeling that `Big Brother is Watching' leads to a reduction in spontaneous thought and independent action. Reminding people of their mortality increases the appeal of authoritarian ideas." What Dr. George Lakoff calls the `Strict Father' model.

Thinking Fast and Slow is a brilliant treatise that goes far beyond Malcolm Gladwell's `Blink'. It will change the way you see human nature. Five stars!

"And He shall not judge by the sight of His eyes,
Nor decide by the hearing of His ears;
But with righteousness He shall judge the poor,
And decide with equity for the meek of the earth;
He shall strike the earth with the rod of His mouth,
And with the breath of His lips He shall slay the wicked." -- Isaiah 11:3-4 (NKJV)

Economists have long favored describing people according to a standard of highly rational, financially maximizing thought. Those with a little more imagination realized that money isn't everything and allowed for personal preferences to play a role in assigning value. Behavioral psychologists, such as Professor Kahneman, have been poking big holes in the economic models in recent decades so that the rational economic person perspective increasingly looks more like tattered cheesecloth than anything you would want to wear in public.

In Thinking, Fast and Slow, Professor Kahneman presents the results of many decision-making experiments to shed light on how decisions are typically made, what influences those decisions, and how the decisions could be improved. If you haven't read about these experiments, I'm sure you'll be fascinated. Most are presented in a way that allows you to test your own mental processes and to see how your reactions compare to what most people do. That adds to the fun.

Some of the more interesting findings are that we are more heavily affected by peak experiences, memories of how things ended, and whether we "won" or "lost" than we are by the economics or hedonic pleasure of something. Further, we're likely to be so overly optimistic that we won't see the cliff until we are launched head over heels over it.

I'm sure that somewhere in this book you'll find a chapter or two that will highlight something that bothers you about your own decision making, and you'll come away with some good ideas for how to do better next time.

The book's main drawback is that Professor Kahneman is perhaps a little more offended by peoples' inability to appreciate statistics and to do math in the right context than he might be. That section was a bit too long and precious.

I especially enjoyed the conclusions where a lot of standard assumptions about how to accomplish things are politely, but firmly, challenged.

Bravo, Professor Kahneman!

Best book I ever read. Insightful, this book is a must to understand how the mind can lead in wrong ways. Should have a 6th star.

This book is a readable, entertaining intellectual exercise by a Nobel prize winning economist/psycologist, Daniel Kahneman.

He has made me examine how I approach problem solving in my work and in my life.

The book is brilliantly written, comprehensible by a layman, but intellectually challenging enough to keep me interested til the last page.

I rarely recommend books and never write reviews. But in the case of "Thinking, Fast and Slow" I have done both!

This book is important reading for anyone who considers themselves to be entirely rational. If you think that you make decisions based on careful and reasoned thinking, you need to think again. Kahneman has alerted us to the entirely human sport of jumping to conclusions and then hanging onto them in the face of the evidence. Apart from being a compendium of his extensive research it is well written for the lay reader. Great reading!

Given the number and quality of the reviews of this book that have already appeared, there really is not much (if anything) I can contribute'except to explain what I have learned from Daniel Kahneman and why I think this is one of the most important books published during the past decade.

These are the questions that Daniel Kahneman has answered for me:

o How to balance intuitive judgment with rational and emotional judgment?

o What elevates self-esteem? How? What lowers it? How?

o How to balance my memory-focused self with my experience-focused self?

o When is a 'nudge' (such as Richard Thaler and Cass Sunstein describe in their eponymous book) in my best interests? When is it not? What to consider when making that determination?

o To what is my intuitive judgment most vulnerable? Why? How to protect it from exploitation? And what about rational and emotional judgment?

o In terms of my personal development (e.g. stimulating and nourishing my mind, increasing the capabilities of my brain), to what extent can 'fast' and 'slow' thinking contribute to that process?

o Which biases are beneficial? Why? Which are not? Why? How best to determine which are which?

o To what extent do organizations (or at least teams) resemble individuals in terms of 'fast' and 'slow' thinking insofar as making correct decisions is concerned?

o Finally, why ' more often than not ' is making haste slowly well-advised?

Thank you, Daniel Kahneman!

Those who share my high regard for this book are urged to check out Gerald Edelman's Bright Air, Brilliant Fire: On The Matter of The Mind and Guy Claxton's Hare Brain, Tortoise Mind: How Intelligence Increases When You Think Less.

Reading this book confirms in my mind why many of us rush to make critical decisions before we have even had a chance to think them through. A good number of us are guilty of confusing the power of intuition with the process of logic when it comes to making important lifestyle choices that involve assuming risk in key areas involving money. Risk or the chance of losing is seen as a phenomenon that is too often measured on personal experiences (System I) and not our need to think things through in a rational fashion(System II). Consequently, we get snookered by a number of emotional deceptions that reflect an unhealthy reliance on statistic averages either in the present or the past. Trusting in questionable pre-conditions such as the Halo Effect, Hawthorne Effect, sudden trends and surges, easy answers, self-indulgence, tunnel vision, faulty research, limited personal experiences, and glossing over potential errors are all problems that limit our ability to make wise choices as to when to limit or expand our risk exposure. There is a school of thought out there that suggests that risk is really only the figment of an over-active mind that has not logically processed the opportunity from any number of angles. After all, we are the ones in control of whether the perception of risk works for or against us. Case in point is how many of us decide to invest in the stock market: we make ourselves losers by buying into overheated markets that are already starting to cool because we are uninformed as to how trading actually works. This risk here is really only our own stupidity in disguise. Nobel laureate psychologist Daniel Kahneman has done a thorough job in laying out in easy-to-follow language and helpful examples where the human race gets itself into trouble when it tries to act impulsively on incomplete information and knowledge. Lest we forget, emotional and intellectual misinformation works both ways. We can lose out on big gains just as easily as suffering big losses because we fixated on a very small factor such as risk without entertaining other considerations. This book is worth reading just to remind us that while we have the capacity to respond to demands on our lives immediately, that doesn't mean that we should act accordingly.

This is a good book, with a lot of insight for sure. The author offers great examples to illustrate his points and these are relevant, and on the whole, useful. My issue with this book is that, after a while, it becomes a bit of a tedious read. Questions like "would you rather have 5$ today if your mood was mediocre because you just had a stellar glass of chardonay or 15$ if your dog had previously had an epileptic seizure and you had a mild cold." Ok, this is an exaggeration, but there are so many of these types of scenarios that I found myself losing interest in the topic. It's not that the material is bad, or even that it is poorly written. Only that for the layman who just wants a good read it can be, well, a bit boring.
The book is at its best when Kahneman describes real world circumstances and explains our mind rational (or irrationality) for their outcomes. These certainly provide real insights into how the simple mechanisms of our brains (he refers to this as system 1) operate. He contrasts this with our system 2, which is the more rational, though lazy system of thinking. Yet as the book unfolds, he uses these systems to examine very minute operations of these systems that eventually wore me down until I just wanted to activate my system 1 and flip on mindless cable TV.