Thinking, Fast and Slow by Daniel Kahneman

I compare the impact of this book to being introduced to someone in the neighborhood you have never met before. Upon having met them you become convinced thereafter that you spot them often. Is it just because I know her that I see her all the time? Thinking, Fast and Slow received a lot of acclaim in 2011 for successfully bringing to non-academics the lifetime of work of Daniel Kahneman in the areas of psychology and behavioral economics. Business writers, journalists and bloggers have already fully embraced it and I have come across references to it in a half dozen other articles over the last two months. Stranger yet, I have read several articles where the author was referencing terms such as anchoring, framing or priming that were discussed in this book. They did not directly reference him but I could not help but believe they were applying aspects of his study to their own subject matter. Is it just because I know these terms now that I recognize Kahneman behind them? The subjects addressed in the book are not new and have been around for decades since Mr. Kahneman and his scholastic partner, Amos Tversky, were passing Sundays together crafting various puzzles to be tested in psychological experiments.

The personal impact of this book was twofold. The first was a feeling of selfish frustration. It is one of those books you wish was published for your eyes only. With so much fascinating content in the area of judgment I found myself wanting to be in sole possession of it, like a secret you want to prevent from getting out. The second effect was the desire to read it again. It is not a difficult text but to truly grasp the concepts requires a second read. While reading it I was often eager to share one of the groundbreaking experiments mentioned in the book only to find myself having trouble deciding where to begin. To truly synthesize the text requires a second review of the material.

The central thesis is that the brain is comprised of two modes of thinking; System 1 and System 2.  Both of which impact humans in how they apply judgment. System 1 operates automatically and quickly - thus the impulsive instinct of the brain. System 2 is the slow, calculated and concentrated thought process. The main premise lies here. We attribute decision making to be done in a conscious, well-thought out manner when in reality we are often not aware that System 1 is really acting in its place. The issue with System 1 is that it is prone to countless, non-rational biases which often impede correct judgment.

The first section of the book introduces what remains the main theme throughout - how previous events, impressions, patterns or emotions affect non-related choices. The System 1 mode of thinking acting in its impulsive manner will quickly and subconsciously rely on the non-related past at the moment of the decision. These inaccurate decisions can also be greatly impacted by how information is presented. The Framing effect - the presentation of identical information in different manners impacts judgment ; The Priming effect - increased sensitivity to past stimuli effect future beliefs; Storytelling - the impact on beliefs, and later judgment, that can be made based on the quality of the story told.

The second section begins to branch out by examining the types of decisions likely to be impacted. He also brings in more real life examples in the areas of finance, project planning and making estimates. He introduces how our ability to properly make estimates is affected by non-related numbers presented prior to the estimate (The Anchoring effect). He brings in another anecdote from when he was planning to write a book with several academics. Their planning was driven almost completely by best-case scenarios of each person. No one considered looking into base cases of other similar type projects and the time required to complete them. In numerous situations like this we ignore or grossly underweight the statistical base case and instead rely on personal experience or very small sample size.

The final section looks more towards judgment within a very human context. He does so by making a clear distinction between two "selves". The "remembering self" and the "experiencing self". How people remember events varies drastically from how they experienced them at the moment they were actually happening. As it should be clear by now, people tend to overweigh recent or specific events when judging how happy they are intrinsically. Our response to pain is no different. When recalling pain we underweight the duration as well as the average pain levels and instead base our judgment of pain on its level when it terminated. In one of the most memorable quotes he describes the two selves in relation to vacationing, an excellent example of the two selves of happiness:

"Tourism is about helping people construct stories and collect memories. The frenetic picture taking of many tourists suggests that storing memories is often an important goal, which shapes both the plans for vacation and the experience of it. The photographer does not view the scene as a moment to be savored but as a future memory to be constructed"

In the end, it is the System 1 which leads to many of the errors humans make in decision making. It is what has received the focus of many of the engaging experiments conducted by Kahneman over the years. However, it is also the system that has allowed humans to survive on earth. We need to active on impulsiveness at times like when we are being chased by a lion. We also need System 1 to survive in today's consumer driven world. You would not be able to make it out of the cereal aisle if System 1 was not guiding you. It recalls back to a story I heard of someone who was in an accident and lost the ability to make System 1-like decisions. He essentially could not function. The success of the book is how it brings to light these errors in judgment. It is up to us to spot them in our own life and apply System 2 when it is needed.