Cognitive scientist Daniel Kahneman wrote the popular science book Thinking, Fast and Slow in 2011. One key idea of the book is that there are two ways to think: “System 1” is quick, instinctive, and emotional, while “System 2” is slower, more deliberate, and more logical.
The book starts with Kahneman’s own study on loss aversion and goes on to explain the rational and irrational reasons or triggers that cause each type of thinking and how they work together. The book gathers research from over 30 years to suggest that people put too much faith in human judgment. It does this by looking at things like framing decisions and how people tend to change a hard question to an easy one.For the first book, Kahneman did his own study, often with Amos Tversky. This gave him more knowledge to write the second book. It talks about different parts of his career, like his early work on cognitive errors, his work on prospect theory and happiness, and his time in the Israel Defense Forces.
The book won the National Academies Communication Award in 2012 for best creative work that helps the public understand topics in behavioral science, engineering, and health. It was also a New York Times bestseller. There are concerns about the reliability of some priming studies mentioned in the book because of the psychological replication problem.
Two Systems
Kahneman talks about two different ways that the brain makes thoughts in the first part of the book:
System 1:
Quick, automatic, regular, emotional, automatic, stereotypic, unconscious. Here are some things that system 1 can do, in order of how hard they are to do:
find out that one item is farther away than another find the source of a certain sound
Fill in the blanks: “war and…”
Show disgust when you see a horrible picture
figure it out 2+2 =?
read a billboard’s writing
Drive a car on a road that doesn’t have anyone else on it.
If you’re good at chess, think of a good move.
read and understand simple words
System 2
System 2 is slow, hard, not very often, rational, calculated, and aware. Here are some examples of what system 2 can do:
get ready to run; look at the clowns at the circus; look at someone at a loud party;
Find the woman with gray hair.
See if you can name a sound.
maintain a walking speed that is faster than normal
figure out if a certain action is acceptable in a social setting, count the number of “As” in a text, or give someone your phone number.
Find a tight parking spot and compare the prices and features of two washing machines.
Find out if a complicated line of thinking is valid.
figure it out
Kahneman talks about a number of studies that are meant to look at the differences between these two ways of thinking and how they can come up with different outcomes even when given the same information. Some ideas and terms are consistency, attention, laziness, association, jumping to conclusions, WYSIATI (What you see is all there is), and how people make decisions. The debate between System 1 and System 2 is about the logic (or lack thereof) behind how people make decisions. This has big effects on many fields, such as law and market research.
Also read: Sunshine State of Mind: How to Achieve?
Heuristics and biases
Heuristics in making decisions and judgments and Cognitive bias are the main articles.
According to the second part, people have trouble thinking statistically. It starts by listing a number of cases in which we either make binary choices or fail to connect outcomes with probabilities that make sense. Kahneman uses the idea of heuristics to explain this effect. In their 1974 piece called Judgment Under Uncertainty: Heuristics and Biases, Kahneman and Tversky first wrote about this subject.[8]
Kahneman says that System 1 thinking means connecting new information with old patterns, or thoughts, instead of making new patterns for every new event. For instance, a child who has only seen shapes with straight sides might think that a circle is an octagon when they see it for the first time. As a legal metaphor, a judge who can only use heuristics would only be able to think of similar cases from the past when faced with a new dispute. They would not be able to think about what makes this case special. This idea not only explains the problem with statistics, but it also explains why people are biased.
Anchoring
The “anchoring effect” is the name for the way that numbers that don’t mean anything can affect you. When showed bigger or smaller numbers, people in the experiment gave bigger or smaller answers.When asked if Gandhi was more than 114 years old when he died, for example, most people will give a much more accurate answer than when asked if Gandhi was more or less than 35 years old. Experiments show that irrelevant knowledge has a big effect on people’s behavior, even when they are not aware of it.
Availability
The availability heuristic is a mental trick that people use when they decide how likely something is to happen based on how quickly they can think of examples. “If you can think of it, it must be important,” is what the availability heuristic says. People have a more accurate idea of how bad the results of an action are when those consequences are actually available. That is, the effects we think are more important the easier they are to remember. This rule can be useful sometimes, but the chances of something happening in real life are usually not the same as the frequency at which it comes to mind.
Fallacy of conjunction
It’s common for System 1 to switch out a hard question for an easier one. “The Linda problem,” which Kahneman calls their “best-known and most controversial” experiment, had people imagine a young, single, vocal, and smart student named Linda who cared a lot about social justice and discrimination. They asked which was more likely: that Linda works as a bank teller or that she works as a bank teller and is an active feminist. A lot of people said “feminist bank teller” was more likely than “bank teller,” which goes against the rules of chance. It’s more likely that the first option is true since all female bank tellers work as bank tellers. In this case, System 1 asked the simpler question, “Is Linda a feminist?” instead of the work qualifier. Another way to look at it is that the people who answered the question added an unspoken cultural meaning that the other answer suggested an exclusive or that Linda was not a feminist.
Optimism and loss aversion
The “pervasive optimistic bias” that Kahneman talks about “may well be the most important of the cognitive biases.” As a result of this bias, we have the false impression that we are in charge of our lives.
A natural experiment shows how common one kind of unrealistic confidence is. The planning fallacy is when people overestimate the benefits of a project and underestimate the costs. This makes them start projects that are dangerous. On average, redoing an American kitchen in 2002 cost $38,769, but that’s what people thought it would cost.
Kahneman comes up with the idea of “What You See Is All There Is” (WYSIATI) to explain overconfidence. People who believe this idea say that when our minds make choices, they mostly think about things we already know about. It does not often think about Known Unknowns, which are things that it knows are important but does not know anything about. Lastly, it doesn’t seem to be aware of the idea of Unknown Unknowns, which are unknown events that don’t seem to have any significance.
He says people don’t think about how complicated things are and that what they know about the world comes from a few, obviously unrepresentative views. Also, the mind doesn’t usually think about the part of chance, so it thinks that something in the future will be like something that happened in the past.
Also read: Rewire the thinking: Powerful Mindset Exercises to Cultivate Happiness
Framing
Framing is the situation in which options are shown. In the experiment, people were asked if they would choose surgery if the “survival” rate was 90% and if they would choose surgery if the death rate was 10%. Even though the case wasn’t different, the first way of putting it made people more open to it.
Sunk Cost
People tend to “throw good money after bad” and keep investing in projects with low chances of success that have already used up a lot of resources. They don’t think about the odds that an extra investment will pay off. Part of the reason for this is to avoid guilt.
Overconfidence
Part III, sections 19–24 of the book is all about having too much faith in what your mind thinks it knows. It seems to say that people usually think they know more about the world than they really do, and that chance plays a big part in that. This has to do with the overconfidence that comes from knowing too much about something after the fact, like how we understand how something happened or how it grew. Nassim Nicholas Taleb has an effect on Kahneman’s ideas about being too sure of yourself.
Choices
In this part, Kahneman goes back to economics and adds to his important work on Prospect Theory. He talks about how problems are often dealt with on their own and how, when other reference points are taken into account, the choice of that reference point (called a frame) has a big impact on the result. This part also tells you how to avoid some of the problems that come with System 1 thinking.
Theory of prospects
To fix the mistakes he saw in Daniel Bernoulli’s standard utility theory, Kahneman came up with prospect theory, which is what got him the Nobel Prize.[13] Kahneman says that the Utility Theory is based on logical assumptions about how people usually make decisions that don’t match up with their real choices or take cognitive biases into account.
As an example, people are loss-averse, which means they will do more to avoid losing something than to win something. One more example is that the value people put on a change in probability (like the chance of winning something) depends on the starting point. For example, people seem to value a change from 0% to 10% (from impossible to possible) more than a change from, say, 45% to 55%. And they value a change from 90% to 100% (from possibility to certainty) the most. Traditional utility theory says that all three changes lead to the same rise in utility, but this still happens. In line with loss-aversion, the first and third ones are ranked differently when the event is about losing something instead of winning something. This is because reducing the chance of losing something is more important than reducing the chance of winning something.
After the book came out, the Journal of Economic Literature wrote an article talking about its parts that deal with prospect theory[14] and looking at the four main ideas that it is based on.
Two selves
In the fifth part of the book, new information suggests that there are two selves: the “experiencing self” and the “remembering self.” Kahneman suggested a different way to measure pain or happiness that took samples from each moment and added them up over time. Kahneman defined this kind of happiness as “experienced” happiness and linked it to a different “self.” He said this was different from the “remembered” well-being that the polls were trying to find out. He found that these two ways of measuring happiness were not the same.
Life as a story
The author’s most important discovery was that the remembering self doesn’t care how long a good or bad event lasts. What it does instead is rate an event based on its high point or low point and how it ends. The patient came to their final decision based on their remembering self.
“Odd as it may seem,” Kahneman says, “I am my remembering self, and the experiencing self, who does my living, is like a stranger to me.”
Experienced well-being
In the 1990s, Kahneman was the first person to study happiness. Then, most study on happiness came from polls about how satisfied people were with their lives. The author wasn’t sure that life satisfaction was a good way to measure happiness because they had studied memories that weren’t always accurate. Instead, he came up with a question that focused on the well-being of the experienced self. The author said “Helen was happy in the month of March” if she spent most of her time doing things she would rather keep doing than stop, not too much time in situations she wanted to avoid, and not too much time in a state where she wouldn’t want to keep doing or stop doing the thing either way.
Thinking about life
Kahneman says that focusing on a big event in your life, like getting married or getting a new car, can give you a false idea of how valuable it really is. This “focusing illusion” revisits earlier ideas of substituting difficult questions and WYSIATI.
Suggested reading:
https://en.wikipedia.org/wiki/Thinking,_Fast_and_Slow