Thinking, Fast and Slow. Book Summary

Daniel Kahneman

Penguin (3 Nov. 2011)

Book | eBook | Audio

 

About the author

Daniel Kahneman is an Israeli-American psychologist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences (shared with Vernon L. Smith). His empirical findings challenge the assumption of human rationality prevailing in modern economic theory. With Amos Tversky and others, Kahneman established a cognitive basis for common human errors that arise from heuristics and biases, and developed prospect theory.

In 2011, he was named by Foreign Policy magazine to its list of top global thinkers. In the same year, his book Thinking, Fast and Slow, which summarizes much of his research, was published and became a best seller. He is professor emeritus of psychology and public affairs at Princeton University’s Woodrow Wilson School. Kahneman is a founding partner of TGG Group, a business and philanthropy consulting company.

About the book:

“Every author, I suppose, has in mind a setting in which readers of his or her work could benefit from having read it. Mine is the proverbial office watercooler, where opinions are shared and gossip is exchanged. I hope to enrich the vocabulary that people use when they talk about the judgements and choices of others, the company’s new policies, or a colleague’s investment decisions. Why be concerned with gossip? Because it’s much easier, as well as far more enjoyable, to identify and label the mistakes of others than to recognize our own. Questioning what we believe and want is difficult at the best of times, and especially difficult when we most need to do it, but we can benefit from the informed opinions of others. […]

So this is my aim for watercooler conversations: improve the ability to identify and understand errors of judgement and choice, in others and eventually in ourselves, by providing a richer and more precise language to discuss them. In at least some cases, an accurate diagnosis may suggest an intervention to limit the damage that bad judgements and choices often cause.”

Daniel Kahneman is a legend. The Father of Behavioural Science, Princeton Professor and the Noble Prize winner. He profoundly influenced the psychology of judgement and decision-making and was one of the main researchers responsible for the revelation that people are not rational beings. Rather, he proposed that humans are susceptible to a host of heuristics and biases that cloud our daily judgements and decision-making abilities.

In Thinking, Fast and Slow, he summarises his research and teaches us the many ways our mind trick us into making irrational decisions. This is probably one of the best books I’ve ever read, and I would recommend it to anyone who wants to understand better how our mind works and how to optimize our decision-making process.

The book is not easy to read, and you need a lot of mental energy to digest it – so read it SLOW (it took me more than a month to read it!). It’s packed with fantastic (sometimes hard to believe) insights relevant to every aspect of our life. We’ll barely scratch the surface in these notes, so I recommend reading the book. It definitely changes the way you think!

Let’s look at our favourite insights.

Key insights:

The Two Systems: System 1 vs System 2

Kahneman starts the book with the fundamental concept underlying his breakthrough work on human decision-making. He explains that humans have two thinking systems: fast and slow. Fast thinking (or System 1) is a kind of autopilot that is based on our subconsciously learned processes and intuition. Slow thinking (or System 2) requires substantial mental effort and is based on deliberate and conscious choices. Here is how they work:

“Systems 1 and 2 are both active whenever we are awake. System 1 runs automatically and System 2 is normally in comfortable low-effort mode, in which only a fraction of its capacity is engaged. System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions, and feelings. If endorsed by System 2, impressions and intuitions turn into beliefs, and impulses turn into voluntary actions. When all goes smoothly, which is most of the time, System 2 adopts the suggestions of System 1 with little or no modification. You generally believe your impressions and act on your desires, and that’s fine – usually.

When System 1 runs into difficulty, it calls on System 2 to support more detailed and specific processing that may solve the problem of the moment. System 2 is mobilized when a question arises for which System 1 does not offer an answer, as probably happened to you when you encountered the multiplication problem 17×24. You can also feel a surge of conscious attention whenever you are surprised. System 2 is activated when an event is detected that violates the model of the world that System 1 maintains. […] System 2 is also credited with the continuous monitoring of your own behaviour – the control that keeps you polite when you are angry, and alert when you are driving at night. System 2 is mobilized to increased effort when it detects an error about to be made. […] In summary, most of you (your System 2) think and do originates in your System 1, but System 2 takes over when things get difficult, and it normally has the last word.”

Check out this short video where Kahneman explains the two Systems:

Both systems help us to minimize effort and optimize performance. Although our System 1 is pretty efficient in everyday life (and in circumstances where mastery matters – e.g. playing chess), we have to consider that it is prone to biases and heuristics in specified circumstances. So even if we think that we made a rational decision, our System 1 beliefs and biases still drive many of our choices. 

So, our behaviour is determined by these two systems. And although, we can’t prevent all the mistakes when making a decision, a simple awareness of cognitive illusions may help you to slow down and refer to System 2 when you have to make a choice. 

Moreover, System 2 is also in charge of self-control: one of the tasks of system 2 is to overcome the impulses of system 1. 

In the book, Kahneman explains why people often don’t think statistically and logically when making a decision. He summarises all the heuristics and biases he and his research partner Amos Tversky hypothesised, tested and proved. We’ll not go into all of them in these notes but rather cover a few of our favourite ones. So definitely grab the book for more – it’s life-changing reading!

Law of least effort

“A general “law of least effort” applies to cognitive as well as physical exertion. The law asserts that if there are several ways of achieving the same goal, people will eventually gravitate to the least demanding course of action. In the economy of action, effort is a cost, and the acquisition of skill is driven by balance of benefits and costs. Laziness is built deep into our nature.”

Yep. We all are lazy in our essence. Our mind builds mental shortcuts to reduce energy consumption for decision-making. Unfortunately, these shortcuts often turn out to be mental tricks – heuristics and biases that mess up our mental processes and lead us to irrational decisions. For example:

It’s easy to put a TV on to calm an upset child. It’s hard to engage and help the child build self-regulation skills.

It’s easy to give a child a time-out to stop unwanted behaviour. It’s hard to discipline a child and teach him skills to behave differently next time.

It’s easy to have a drink (or two!) after a stressful day. It’s hard to pull up your running pants and go for a run to regain emotional balance.

You get the point. I think it’s an important idea for taking your conscious living (and parenting) to the next level.

P.S.: it’s easy to stay in fixed mindset, believing that your abilities are fixed. It’s hard to be in growth mindset, challenging yourself and putting effort to improve.

WYSIATI

“Jumping to conclusions on the basis of limited evidence is so important to an understanding of intuitive thinking, and comes up so often in this book, that I will use a cumbersome abbreviation for it: WYSIATY, which stands for what you see is all there is.”

What you see is all there is. Our System 1 focuses on the existing evidence and ignores the absent evidence. It facilitates the achievement of coherence and acts as the cognitive ease that causes us to accept something as true. Kahneman invokes WYSIATI to help explain many of the biases of judgment and choice in the book (e.g. overconfidence, framing effect, base-rate neglect).

So here is some actionable advice: don’t lean on information based on impressions or intuitions. Always check the hard data and engage your System 2 for critical thinking. Slow down and dig deeper before making a decision (especially an important one). 

P.S.: I think this idea also helps understand children’s behaviour (e.g. seeing deeper needs beyond a child’s misbehaviour), for making sense of the effects of labelling (with both positive and negative labels) and for helping parents to understand what is really important in parenting to reduce stress. 

Primes that guide us

There are powerful things that influence our decisions and behaviour that we are not even aware of. One of them is priming.

In short, priming is based on a mechanism called the association of ideas. It happens when exposure to one idea makes you more likely to favour a related one. Here are a couple of examples from the book:

• when asked to complete the word SO_P, people who were primed with the word EAT are more likely to complete it as SOUP, whereas people exposed to the word WASH would mostly see SOAP.
• People who were primed with words associated with the elderly walked slower (“the Florida effect”).
• People who were asked to smile (or hold a pencil in their mouth) found the jokes funnier,
• People primed with money were more selfish are less likely to help (although their perseverance in solving a difficult problem was twice higher than other participants primed with non-money related ideas).
• And in this video Kahneman talks about “the honesty box experiment” in one of the British universities (it’s really cool!)

And it is true not only in laboratory conditions. It’s true about you, me and everyone around us. This is how our mind works. Our subjective experience largely consists of the story that our System 2 tells itself about what’s going on. Kahneman adds: 

“Priming phenomena arise in System 1, and you have no conscious access to them.” 

Kind of scary and cool at the same time. 

Recently I saw it in action when I took our older son Max to a local art gallery. He was standing in front of a very abstract painting when a lovely lady approached him with a question: “What do you see here?” And the first thing Max said was: “Avocado!” We had a good laugh about the approaching lunch time LOL. And I saw abstract flowers – primed by a walk in the gallery’s garden!

That made me think that as scientists and marketers can prime our minds, we can also prime our children’s minds. Here are a bunch of ideas from me:

• Setting a good mood in the morning (e.g. family breakfast, uplifting music, energetic dance, reducing morning stress by implementing agile tools, etc.);
• Building a strong family culture (e.g. creating a family manifesto, discussing family values);
• Use bedtime rituals to prime kids for sleep (that’s the most popular tip from sleep experts!);
• Choose an appropriate content your children consume (e.g. my theory is that Tumble Leaf and Superhero movies would impact kids’ behaviour differently);
• Talk about Super Sonic and Lightning McQueen when you need to speed up your walk (tried it yesterday – we had loads of fun with it!);

I guess we can also deliberately prime ourselves for better performance, better mood, and less reactive behaviour.

Power of a good mood

“Another remarkable discovery is the powerful effect of mood on this intuitive performance. The experimenters computed an “intuition index” to measure accuracy. They found that putting the participants in a good mood before the test by having them think happy thoughts more than doubled accuracy. An even more striking result is that unhappy subjects were completely incapable of performing the intuitive task accurately; their guesses were no better than random. Mood evidently affects the operation of System 1: when we are uncomfortable and unhappy, we lose touch with our intuition.

These findings add to the growing evidence that good mood, intuition, creativity, gullibility, and increased reliance on System 1 form a cluster. At the other pole, sadness, vigilance, suspicion, an analytic approach, and increased effort also go together. A happy mood loosens the control of System 2 over performance: when in a good mood, people become more intuitive and more creative but also less vigilant and more prone to logical errors.”

That actually goes together with the research on play and how playful mood affects our creativity. On the other hand, it also proves the point that we need negative and uncomfortable feelings to move forward and grow – they activate our System 2!

The Prospect Theory

Despite being a research psychologist, Kahneman is mostly famous for his contribution to behavioural economics. Namely, for the Prospect Theory. Before Kahneman and Tversky, economists believed that the value of money was the key determinant in explaining why people buy, spend and gamble the way they do. Prospect Theory looked at it from a different perspective:

“Although Amos and I were not working with the two-systems model of the mind, it’s clear now that there are three cognitive features at the heart of prospect theory. They play an essential role in the evaluation of financial outcomes and are common to many automatic processes of perception, judgment, and emotion. They should be seen as operating characteristics of System 1.

• Evaluation is relative to a neutral reference point, which is sometimes referred to as an “adaptation level.” […] Outcomes that are better than the reference point are gains. Below the reference point they are losses.

• A principle of diminishing sensitivity applies to both sensory dimensions and the evaluation of changes of wealth. Turning on a weak light has a large effect in a dark room. The same increment of light might be undetectable in a brightly illuminated room. Similarly, the subjective difference between $900 and $1,000 is much smaller than the difference between $100 and $200.

• The third principle is loss aversion. When directly compared or weighted against each other, losses loom larger than gains.”

In short, prospect theory describes how our decisions are influenced by our attitudes toward risk, uncertainty, loss, and gains. We are more influenced by the possibility of a loss than the prospect of an equivalent gain. 

Although the prospect theory is highly applicable in economics (e.g. trading, insurance, marketing), I think it also explains some of our choices in parenting:

• We sign a five-year-old child up for piano classes, as we are afraid to miss an opportunity for genius development.
• We overschedule the child’s life, as we are scared he’ll fall behind.
• We neglect the benefits of outdoor free play because we are scared to lose a child.

It may also explain how consequences work in discipline ☺

Two Selves (and happiness)

“The experiencing self is the one that answers the question: “Does it hurt now?” The remembering self is the one that answers the question: How was it, on the whole? Memories are all we get to keep from our experience of living, and the only perspective that we can adopt as we think about our lives is therefore that of the remembering self. […]

Confusing experience with the memory of it is a compelling cognitive illusion – and it is substitution that makes us believe a past experience can be ruined. The experiencing self does not have a voice. The remembering self is sometimes wrong, but it is the one that keeps score and governs what we learn from living, and it is the one that makes decisions. What we learn from the past is to maximize the qualities of our future memories not necessarily of our future experience. This is the tyranny of the remembering self.”

This idea is absolutely mind-blowing and crashes all hopes for human rationality ☺ Kahneman talked about the two selves and the cognitive traps around them in his inspirational TED talk:

In short, we have two selves. The “experience self” evaluates outcomes as they happen – it “does the living”. The “remembering self” evaluates the outcome after the event, keeps score and makes the choices. 

Based on his research, Kahneman suggested that our remembering self is guided by the peak-end rule placing more importance on the end of an experience than any other part of it. Moreover, the remembering self also suffers duration neglect – we tend to disregard the length of an experience.

Together with his colleagues, Kahneman ran a “cold-hand” experiment. They asked the participants to hold their hand in cold water (14C) for 60 seconds, and then they were offered a warm towel. In the second part of the experiment, they asked the same participants to hold their hand again for 60 seconds, but then a researcher opened a valve for 30 seconds to allow warmer water to flow into the tub (15C!). They then asked participants to rate how painful the experience was. And – surprise-surprise – they’ve rated the second episode less painful (peak-end rule)! Moreover, when the researchers asked them which episode they would like to repeat for the third trial, 80% of participants opted for the 90 seconds one (duration neglect)! Logically it doesn’t make sense to suffer extra 30 seconds, but that’s how our System 1 makes a mistake!

It’s fascinating how our Remembering Self erases our Experiencing Self’s memory!

The two selves concept applies to how we think about happiness and wellbeing. Kahneman argues that happiness is actually a more complex concept, and while measuring subjective wellbeing, we should consider not only the remembering self but also the experiencing self. In his TED talk, Kahneman says:

“There are several cognitive traps that … make it almost impossible to think straight about happiness… The first of these traps is a reluctance to admit complexity. It turns out that the word “happiness” is just not a useful word anymore, because we apply it to too many different things…

The second trap is a confusion between experience and memory… between being happy in your life, and being happy about your life or happy with your life. And those are two very different concepts, and they’re both lumped in the notion of happiness.

And the third is the focusing illusion, and it’s the unfortunate fact that we can’t think about any circumstance that affects wellbeing without distorting its importance.”

Question for you: are you happy ABOUT your life? Are you happy IN your life?

I think practising mindfulness can actually help us bring more awareness to our experiencing self and enrich our wellbeing.

P.S.: the concept of two selves may explain why siblings may evaluate their childhood differently – all depends on our memories!

Action steps for you:

1. Think about your very own heuristics about parenting. Write the top 3 down and engage your system 2 in evaluating them. 
2. When taking an important decision, try to deliberately engage System 2, testing the beliefs, intuitions and suggestions from your System 1. 
3. Deliberately create more positive memories! Especially when going through a challenging experience.

Quotes from the book: