“Thinking, Fast and Slow” (Daniel Kahneman, 2011) is book about decision-making and behavioral economics.
It completely changed how I approach life and work by giving me helpful ways to think about human tendencies, biases, errors in judgment, and cognitive energy.
Here's (some of) what I learned.
Kahneman says that there are two primary mental "operating systems”.
There are some common patterns in how humans make decisions.
In how we use available information, assess risk and value, and balance between past, present, and future.
Tl;dr each system serves a key function but can also lead us astray (neither is perfect).
Ultimately, the brain is designed to conserve energy, whenever possible.
Many of our mental shortcuts are the result of evolution and adaptation. We're hard-wired to find shortcuts.
Until fairly recently, economists assumed that people were rational agents who coolly optimized for self-interest.
The premise is obviously ridiculous.
People make emotional decisions and fall for 'cognitive illusions' all the time (myself included!).
The key insights =
It turns out that we do so in consistent, predictable ways.
- Humans evolved for survival: Food, status, safety, affiliation etc.
- Our brain is a recent design. We're still a relatively ~new species.
Humans contain two operating systems: System 1 and System 2. These are universal modes of thinking. They are :
Agents with their individual abilities, limitations and functions."
- System 1 = "fast"
- System 2 = "slow"
System 1 is instinctive, unconscious, designed for pattern recognition. It is confident and intuitive.
It is the evolutionary survival aspect of our brain.
It kicks in first, by default.
It helps us perceive the world, recognize objects, approximate distances and recoil from danger. By maintaining simple models of the world, System 1 automatically makes metaphors and associations.
It sees situations and thinks "I know this, I can handle it".
System 2 is deliberate, conscious, and designed for complex thinking. It enables deeper analysis and is capable of experiencing doubt.
It is a more recent part of our brain.
By comparison, it requires deliberate energy.
It is more cognitively demanding and fatiguing.
It fuels comprehensive analysis and complex reasoning. But it consumes a lot of glucose along the way (the brain loves sugar 🍰).
To be human is to use both.
The two systems exist in constant dialogue.
The brain seeks to conserve cognitive effort, when possible.
- When we’re hungry, distracted or tired, we make worse decisions
- It’s hard to hold multiple conflicting thoughts simultaneously
Thus, our thinking falls into paths of least resistance. So we're vulnerable to System 1's shortcuts.
Kahneman writes :
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... You generally believe your impressions and act on your desires, and that is fine - usually."
The key word = usually.
Metaphors and associations usually help us make sense of the complex world. They help preserve our valuable (and limited) brain-juice.
But our default mode of thinking comes with risks:
- We jump to conclusions
- We rationalize away facts that don’t fit a narrative
- We slip into selective attention (or denial)
In a way, this is human nature. Similar to the characters in Battlestar Galactica, humans make decisions emotionally, and justify them rationally.
It's frustrating, but also totally relatable.
It's easier to spot other people's mistakes than it is to acknowledge our own.
What's the impact?
If you accept these claims, the world starts to look different.
For me, TFAS changed how I think about habits, marketing, design, memory, public policy etc.
It gave me a language to describe anchoring effects, loss aversion, and defaults. And a way to think about overconfidence - the tendency to overestimate our abilities and odds of success.
Once you have names for these things, you start to recognize them everywhere.
Caveat: TFAS is long and written in kind of a dry, academic style. But it's full of powerful ideas - most of which continue to stick with me today.
The best part of reading it?
Realizing that humans are wildly irrational creatures.
The worst: Realizing that I'm an idiot too.
Did you read this book?
What did you think?
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