Daniel Kahneman
Reading material
Daniel Kahneman — What I Know
https://fs.blog/daniel-kahneman-what-i-know/
Nobel prize-winning psychologist Daniel Kahneman talks with the Guardian about his pessimistic mother, the delusion of investment bankers and the need for irony.
Human beings cannot comprehend very large or very small numbers.
It would be useful for us to acknowledge that fact.
My main work has concerned judgment and decision-making.
But I never felt I was studying the stupidity of mankind in the third person. I always felt I was studying my own mistakes.
Happiness is complicated.
There are two components. One is strongly genetic; the second is a question of how you feel at any moment. I am pretty content, but I had a very pessimistic mother, and I’ve always been known as a pessimist.
It was always assumed I would be a professor.
I grew up thinking it.
There is a powerful idea that we should want to be richer.
I went to a financial advisor in the States and said: I don’t really want to get richer, but I would like to continue to live like I do. She said: I can’t work with you.
Collaboration is not only more creative, it is more fun.
Amos Tversky, my research partner, and I were better together than on our own. We sort of knew that. Mostly it was extremely pleasant not trying to work everything out yourself.
A sense of irony is essential.
When we wrote our first paper, The Law of Small Numbers, we were laughing all the time we wrote it. A colleague we showed it to said: This is going to change things. I didn’t take him seriously.
Many people now say they knew a financial crisis was coming, but they didn’t really.
After a crisis we tell ourselves we understand why it happened and maintain the illusion that the world is understandable. In fact, we should accept the world is incomprehensible much of the time.
Motives are rarely straightforward.
When the war started my father was chief of research for a company that was part of L’Oréal in Paris. The owner of L’Oréal was also a main funder of the fascist party in France, and antisemitic. But he protected my [Jewish] father during the war when he was taken by the Nazis.
People who wouldn’t even come to your funeral seem to take simple pleasure in the fact that you have won the Nobel prize [for economic sciences], and it makes them feel good about themselves to feel that way. For a while you are spreading joy.
Investment bankers believe in what they do.
They don’t want to hear that their decisions are no better than chance. The rest of us pay for their delusions.
Despite 45 years of work in the field,
I am still inclined to make over-confident predictions.
Economists have a mystique among social scientists because they know mathematics.
They are quite good at explaining what has happened after it has happened, but rarely before. I don’t think of myself as an economist at all.
I enjoy being active but I look forward to the day when I can retire to the internet.
Changing behavior is extremely difficult.
There are a few tips and a few guidelines about how to do that, but anybody who’s very optimistic about changing behavior is just deluded. It’s hard to change other people’s behavior. It’s very hard to change your own. Not simple.
Motivation is complex,
and that people do good things for a mixture of good and bad reasons; and they do bad things for a mixture of good and bad reasons. I think that there is a point to educating people in psychology. It’s to make them less judgmental. Just have more empathy and more patience. Being judgmental doesn’t get you anywhere.
What gets in the way of clear thinking,
is that we have intuitive views of almost everything. So as soon as you present a problem to me, I have some ready made answer. What gets in the way of clear thinking are those ready made answers, and we can’t help but have them.
We have beliefs because mostly we believe in some people, and we trust them.
We adopt their beliefs. We don’t reach our beliefs by clear thinking, unless you’re a scientist or doing something like that. There’s a fair amount of emotion when you’re a scientist as well that gets in the way of clear thinking. Commitments to your previous views, being insulted that somebody thinks he’s smarter than you are. I mean lots of things get in the way, even when you’re a scientist. So I’d say there is less clear thinking than people like to think.
Very quickly you form an impression,
and then you spend most of your time confirming it instead of collecting evidence.
Negotiations is not about trying to convince the other guy.
It’s about trying to understand them. So again, it’s slowing yourself down. It’s not doing what comes naturally because trying to convince them is applying pressure. Arguments, promises, and threats are always applying pressure. What you really want is to understand what you can do to make it easy for them to move your way. Very non-intuitive. That’s a surprising thing when you teach negotiation. It’s not obvious. We are taught to apply pressure and socialize that way.
Independence is the key
because otherwise when you don’t take those precautions, it’s like having a bunch of witnesses to some crime and allowing those witnesses to talk to each other. They’re going to be less valuable if you’re interested in the truth than keeping them rigidly separate, and collecting what they have to say.
Q. As you found, humans will take huge, irrational risks to avoid taking a loss. Couldn’t that explain why so many Penn State administrators took the huge risk of not disclosing a sexual assault?
A. In such a case, the loss associated with bringing the scandal into the open now is large, immediate and easy to imagine, whereas the disastrous consequences of procrastination are both vague and delayed. This is probably how many cover-up attempts begin. If people were certain that cover-ups would have very bad personal consequences (as happened in this case), we may see fewer cover-ups in future. From that point of view, the decisive reaction of the board of the University is likely to have beneficial consequences down the road.
Q. Problems in healthcare quality may be getting worse before they get better, and there are countless difficult decisions that will have to be made to ensure long-term system improvement. But on a daily basis, doctors and nurses and patients are each making a variety of decisions that shape healthcare on a smaller but more tangible level. How can the essence of Thinking, Fast and Slow be extracted and applied to the individual decisions that patients and providers make so that the quality of healthcare is optimized?
A. I don’t believe that you can expect the choices of patients and providers to change without changing the situation in which they operate. The incentives of fee-for-service are powerful, and so is the social norm that health is priceless (especially when paid for by a third party). Where the psychology of behavior change and the nudges of behavioral economics come into play is in planning for a transition to a better system. The question that must be asked is, How can we make it easy for physicians and patients to change in the desired direction?, which is closely related to, Why don’t they already want the change? Quite often, when you raise this question, you may discover that some inexpensive tweaks in the context will substantially change behavior. (For example, we know that people are more likely to pay their taxes if they believe that other people pay their taxes.)
Q:How can I identify my incentives and values so I can create a personal program of behavioral conditioning that associates incentives with the behavior likely to achieve long-term goals?
A. The best sources I know for answers to the question are included in the book Nudge by Richard Thaler and Cass Sunstein, in the book Mindless Eating by Brian Wansink, and in the books of the psychologist Robert Cialdini.