January 18, 2012

Thinking, Fast and Slow’s basic idea is helpful, if not terribly startling: Acts of human cognition can be pictured as falling along a continuum from intuition (which is fast and fun) to logic (which is slow and tiring). Snap judgments work well enough much of the time, especially by avoiding paralysis through analysis. Not surprisingly, fast thinking is susceptible to various shortcomings, as Kahneman has shown over the decades via countless experiments of the kind in which psychology majors pick up a spare ten bucks. 

If Kahneman’s basic finding—you can fool a lot of the people a lot of the time—wasn’t so obvious already to those who aren’t economists, a reader might sometimes wonder about his methodology. For example:

You are offered a choice between two bets, which are to be played on a roulette wheel with 36 sectors:

Bet A: 11/36 to win $160, 25/36 to lose $15

Bet B: 35/36 to win $40, 1/36 to lose $10

Five minutes’ slow thinking with Microsoft Excel shows that the expected payoff per spin of Bet A is $38.47 versus $38.61 for Bet B. I don’t know which generous wager the sophomores preferred, but my intuition in either case is that I want to party at that casino. 

Most of the experiments recounted in Thinking, Fast and Slow aren’t as prima facie silly, but Kahneman, a literal-minded soul, often seems to miss the fundamental point of why his subjects fall for his little hoaxes so often:

Steve is very shy and withdrawn, invariably helpful but with little interest in people or in the world of reality. A meek and tidy soul, he has a need for order and structure and a passion for detail.

Is Steve more likely to be a librarian or a farmer?

Wrong! Kahneman scoffs at your intuition: “Did it occur to you that there are more than 20 male farmers for each male librarian in the United States?” 

Did it occur to Kahneman that anybody who isn’t trying to deceive us would have added, “So, Steve’s just not cut out for his life of slopping hogs” or the like? As con men, conjurors, and comedians demonstrated long before Kahneman, most people trust in the speaker’s good faith. They play along and try to guess what is being implied. So it’s easy to pull the rug out from under us.

Heck, in their less arrogant moments, most economists realize that the idea of the rational agent is just a handy conceptual device. Perhaps the secret of Kahneman’s success is that he took the economists seriously enough to write papers for economics journals documenting that humans aren’t really homo economicus. He’s the economists’ house heretic.



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