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THINKING, FAST AND SLOW by Daniel Kahneman

Key insights from “THINKING, FAST AND SLOW by Daniel Kahneman”

Thinking, fast and slow explains how decisions are made, why certain judgment errors are so common and how we can improve ourselves.

Daniel Kahneman, PhD, won the nobel prize in Economics in 2002 for his important contribution in psychology & behavioral economics.

  1. Our behavior is determined by two different systems — one automatic and the other considered

These two characters are the impulsive, automatic, intuitive System 1, and the thoughtful, deliberate, calculating System 2. System 1 is the part of our brain that operates intuitively and suddenly, often without our conscious control. You can experience this system at work when you hear a very loud and unexpected sound. What do you do? You probably immediately and automatically shift your attention toward the sound. That’s System 1. System 2 is what we think of when we visualize the part of the brain responsible for our individual decision-making, reasoning and beliefs. It deals with conscious activities of the mind such as self-control, choices and more deliberate focus of attention.

2. Our lazy mind can lead us to errors and affect our intelligence

A bat and ball cost $1.10. The bat costs one dollar more than the ball. How much does the ball cost?

The price that most likely came to your mind, $0.10, is a result of the intuitive and automatic System 1, and it’s wrong! Take a second and do the math now.

Do you see your mistake? The correct answer is $0.05. What happened was that your impulsive System 1 took control and automatically answered by relying on intuition. But it answered too fast. Usually, when faced with a situation it can’t comprehend, System 1 calls on System 2 to work out the problem, but in the bat-and-ball problem, System 1 is tricked. It perceives the problem as simpler than it is, and incorrectly assumes it can handle it on its own. The issue the bat-and-ball problem exposes is our innate mental laziness. When we use our brain, we tend to use the minimum amount of energy possible for each task. This is known as the law of least effort. Because checking the answer with System 2 would use more energy, our mind won’t do it when it thinks it can just get by with System 1.

3. We are not always in conscious control of our thoughts and actions.

What do you think when you see the word fragment “SO_P”? Probably nothing. What if you first consider the word “EAT”? Now, when you look again at the word “SO_P,” you would probably complete it as “SOUP.” This process is known as priming.

We’re primed when exposure to a word, concept or event causes us to summon related words and concepts. If you had seen the word “SHOWER” instead of “EAT” above, you probably would’ve completed the letters as “SOAP.” Such priming not only affects the way we think but also the way we act. Just as the mind is affected by hearing certain words and concepts, the body can be affected as well. A great example of this can be found in a study in which participants primed with words associated with being elderly, such as “Florida” and “wrinkle,” responded by walking at a slower pace than usual.

4. The mind makes quick choices, even when it lacks enough information to make a rational decision.

Imagine you meet someone named Ben at a party, and you find him easy to talk to. Later, someone asks if you know anybody who might want to contribute to their charity. You think of Ben, even though the only thing you know about him is that he is easy to talk to. In other words, you liked one aspect of Ben’s character, and so you assumed you would like everything else about him. We often approve or disapprove of a person even when we know little about them.

Our mind’s tendency to oversimplify things without sufficient information often leads to judgment errors. This is called exaggerated emotional coherence, also known as the halo effect: positive feelings about Ben’s approachability cause you to place a halo on Ben, even though you know very little about him.

5. We struggle to understand statistics and make avoidable mistakes because of it.

How can you make predictions on whether certain things will happen?

One effective way is to keep the base rate in mind. This refers to a statistical base, which other statistics rely on. For example, imagine a large taxi company has 20 percent yellow cabs and 80 percent red cabs. That means the base rate for yellow taxi cabs is 20 percent and the base rate for red cabs is 80 percent. If you order a cab and want to guess its color, remember the base rates and you will make a fairly accurate prediction. We should therefore always remember the base rate when predicting an event, but unfortunately this doesn’t happen. In fact, base-rate neglect is extremely common.

One of the reasons we find ourselves ignoring the base rate is that we focus on what we expect rather than what is most likely. For example, imagine those cabs again: If you were to see five red cabs pass by, you’d probably start to feel it’s quite likely that the next one will be yellow for a change. But no matter how many cabs of either color go by, the probability that the next cab will be red will still be around 80 percent — and if we remember the base rate we should realize this. But instead we tend to focus on what we expect to see, a yellow cab, and so we will likely be wrong.

6. We remember events from hindsight rather than from experience

Our minds don’t remember experiences in a straightforward way. We have two different apparatuses, called memory selves, both of which remember situations differently. First, there is the experiencing self, which records how we feel in the present moment. It asks the question: “How does it feel now?” Then there is the remembering self, which records how the entire event unfolded after the fact. It asks, “How was it on the whole?” The experiencing self gives a more accurate account of what occurred, because our feelings during an experience are always the most accurate. But the remembering self, which is less accurate because it registers memories after the situation is finished, dominates our memory.

For an example of this dominance of the remembering self, take this experiment, which measured people’s memories of a painful colonoscopy. Before the colonoscopy, the people were put into two groups: the patients in one group were given long, rather drawn-out colonoscopies, while those in the other group were given much shorter procedures, but where the level of pain increased towards the end.

You’d think the most unhappy patients would be those who endured the longer process, as their pain was endured for longer. This was certainly what they felt at the time. During the process, when each patient was asked about the pain, their experiencing self gave an accurate answer: those who had the longer procedures felt worse. However, after the experience, when the remembering self took over, those who went through the shorter process with the more painful ending felt the worst.

7. Adjusting the focus of our minds can dramatically affect our thoughts and behaviors.

Our minds use different amounts of energy depending on the task. When there’s no need to mobilize attention and little energy is needed, we are in a state of cognitive ease. Yet, when our minds must mobilize attention, they use more energy and enter a state of cognitive strain. These changes in the brain’s energy levels have dramatic effects on how we behave.

In a state of cognitive ease, the intuitive System 1 is in charge of our minds, and the logical and more energy-demanding System 2 is weakened. This means we are more intuitive, creative and happier, yet we’re also more likely to make mistakes. In a state of cognitive strain, our awareness is more heightened, and so System 2 is put in charge. System 2 is more ready to double-check our judgments than System 1, so although we are far less creative, we will make fewer mistakes.

You can consciously influence the amount of energy the mind uses to get in the right frame of mind for certain tasks. If you want a message to be persuasive, for example, try promoting cognitive ease. One way to do this is to expose ourselves to repetitive information. If information is repeated to us, or made more memorable, it becomes more persuasive. This is because our minds have evolved to react positively when repeatedly exposed to the same clear messages. When we see something familiar, we enter a state of cognitive ease.

Cognitive strain, on the other hand, helps us succeed at things like statistical problems. We can get into this state by exposing ourselves to information that is presented to us in a confusing way, for example, via hard-to-read type. Our minds perk up and increase their energy levels in an effort to comprehend the problem, and therefore we are less likely to simply give up.

8. The way probabilities are presented to us affects our judgment of risk

The way we judge ideas and approach problems is heavily determined by the way they are expressed to us. Slight changes to the details or focus of a statement or question can dramatically alter the way we address it.

For example, people will consider a rare event as more likely to occur if it’s expressed in terms of relative frequency rather than as a statistical probability. In what’s known as the Mr. Jones experiment, two groups of psychiatric professionals were asked if it was safe to discharge Mr. Jones from the psychiatric hospital. The first group were told that patients like Mr. Jones had a “10 percent probability of committing an act of violence,” and the second group were told that “of every 100 patients similar to Mr. Jones, 10 are estimated to commit an act of violence.” Of the two groups, almost twice as many respondents in the second group denied his discharge.

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