Thinking Fast and Slow

Daniel Kahneman “Thinking Fast and Slow,” 2011, Farrar, Straus & Giroux, 446pp.


Daniel Kahneman is a Professor of Psychology Emeritus at Princeton University. He received the 2002 Nobel Prize in Economic Sciences for his pioneering work with Amos Tversky on decision-making: Human irrationality is their great theme. The two discovered “systematic errors in the thinking of normal people”: errors arising not from the corrupting effects of emotion, but built into our evolved cognitive machinery.

This book explains our brain as containing two fictitious characteristics: the intuitive, fast-thinking, effortless System 1 and the effortful and slower System 2 which, although lazy, monitors System 1. These two characteristics are sometimes labeled as Humans (system 1) who act in the real world and Econs (system 2) who live in the land of theory. The two selves are the experiencing self, which does the living, and the remembering self, which keeps score and makes the choices. The labels of System 1 and System 2 are widely used in psychology and have been integral in the developing field of behavioral psychology. Our System 1 inclines us to jump to conclusions with scant evidence, it is not prone to doubt, it suppresses ambiguity and spontaneously constructs stories that are as coherent as possible; this trait is so predominant that the author has labeled it as WYSIATI (What You See Is All There Is). System 2 is capable of doubt, because it can maintain incompatible possibilities at the same time. However this is harder work than just sliding into certainty with scant evidence. Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.

My Notes:

Pg. 21: In rough order of complexity, here are some examples of the automatic activities that are attributed to System 1, all require little or no effort:
• Detect that one object is more distant than another.
• Orient to the source of a sudden sound.
• Complete the phrase “bread and…”
• Detect hostility in a voice.
• Answer to 2 + 2 =?
• Drive a car on an empty road.
• Understand simple sentences.
• Recognize that a “meek and tidy soul with a passion for detail” resembles an occupational stereotype (a librarian for instance).

The capabilities of System 1 include innate skills that we share with other animals. We are born prepared to perceive the world around us, recognize objects, orient attention, avoid losses, and fear spiders. Other mental activities become fast and automatic through prolonged practice.


Pg. 22: The highly diverse operations of System 2 have one feature in common: they require attention and are disrupted when attention is drawn away. Some examples:
• Brace for the starter gun in a race.
• Focus on the voice of a particular person in a crowded and noisy room.
• Look for a woman with white hair.
• Search memory to identify a surprising sound.
• Monitor the appropriateness of your behavior in a social situation.
• Count the occurrences of the letter “a” in a page of text.
• Compare two washing machines for overall value.
• Check the validity of a complex logical argument.

Pg. 69: Mood evidently affects the operation of System 1: when we are uncomfortable and unhappy, we lose touch with our intuition. When in a good mood, people become more intuitive and more creative but also less vigilant and more prone to logical errors. A good mood signals that the environment is safe.

Pg. 90: System 1 has been shaped by evolution to provide a continuous assessment of the main problems that an organism must solve to survive: How are things going? Is there a threat or a major opportunity? Is everything normal? Should I approach or avoid? The questions are perhaps less urgent for a human in a city environment than for a gazelle on the savannah, but we have inherited these neural mechanisms and they have not been turned off.

Pg. 97: A remarkable aspect of your mental life is that you are rarely stumped. The normal state of your mind is that you have intuitive feelings and opinions about almost everything that comes your way. You like or dislike people long before you know much about them; you trust or distrust strangers without knowing why.

Pg. 118: The truth is that small schools are not better on average than large schools; they are simply more variable because they are smaller. The best and the worst will be the smaller schools as these will be the outliers.

Pg. 182: Regression to the mean: Usually the best golfer one day will be less successful the next, the same with baseball, basketball, financial advisers, etc. The best explanation of these successes is that the person was unusually lucky that day or year, but this explanation lacks the causal force that our minds prefer. Imagine a business commentator announcing that “the business did better this year because it had done poorly last year.”

Pg. 199: The halo effect contributes to coherence because it inclines us to match our view of all the qualities of a person to our judgment of one attribute that is particularly significant. If we think a baseball pitcher is handsome and athletic, for example, we are likely to rate him better at throwing the ball, too. Halos can also be negative.

Pg. 218: The idea that the future is unpredictable is undermined every day by the ease with which the past is explained. Our tendency to construct and believe coherent narratives of the past makes it difficult for us to accept the limits of our forecasting ability. Everything makes sense in hindsight, a fact that financial pundits exploit every evening as they offer convincing accounts of the day’s events. Research suggests that to maximize predictive accuracy, final decisions should be left to formulas, especially in low-validity environments. Intuition will work accurately only in an environment that is sufficiently regular to be predictable and the user has had an opportunity to learn these regularities through prolonged practice (think 10,000 hours).

Pg. 281: Kahneman and Tversky showed that people making decisions under uncertain conditions do not behave in the way that economic models have traditionally assumed; they do not “maximize utility.” The two then developed an alternative account of decision making, one more faithful to human psychology, which they called “prospect theory.” (It was for this achievement that Kahneman was awarded the Nobel.) Loss aversion is one of their most important discoveries: losses have twice the psychological impact on a person as gains.

Pg. 293: The Endowment Effect. Prospect theory suggests that the willingness to buy or sell an item depends on the reference point—i.e., whether or not you own the item. If you own it, you consider the pain of giving up the item; if not, you consider the pleasure of getting it. The values are unequal because of loss aversion: giving up an item is more painful than getting an equally good item is pleasurable. The decision weights that people assign to outcomes are not identical to the probabilities of these outcomes which are contrary to the economist’s expectation principle.

Pg. 301: The brains of humans and other animals contain a mechanism that is designed to give priority to bad news. This mechanism improves the animal’s odds of living long enough to reproduce. No comparably rapid mechanism for recognizing good news has been detected.

Pg. 390: We are made up of two selves: our experiencing self and our remembering self. Odd as it may seem, we are our remembering self, and the experiencing self (who does our living) is like a stranger to us.

Pg. 397: The satiation level beyond which experienced well-being no longer increases is a household income of about $75,000 in high-cost areas (it could be less in areas where the cost of living is lower) The average increase of experienced well-being associated with incomes beyond that level was precisely zero. [I do not believe this at all].
“Planning fallacy”: our tendency to overestimate benefits and underestimate costs, and hence foolishly to take on risky projects. In 2002, Americans remodeling their kitchens, for example, expected the job to cost $18,658 on average, but they ended up paying $38,769.