Daniel Kahneman, the psychologist who won the Nobel Prize in economics for finding fault with that discipline—and in the process, with our brains—has died at the age of 90.
The Princeton professor helped show that people use shortcuts to make decisions or make judgments. Some shortcuts embedded in our minds, which are often useful, but which sometimes lead us to what he called “systemic and severe errors.” Humans were not rational robots, as some classical economic theories assumed, but rather something more limited and fallible. His work launched what is now known as behavioral economics.
The core of his research occurred in the seventies in collaboration with the psychologist Amos Tversky, when both coincided at the Hebrew University of Jerusalem. The beginning, in 1972, was a series of intuitions that Tversky left written on a piece of paper: “People predict by making up stories. People predict very little and explain everything. People live under uncertainty, whether they like it or not (…). Man is a deterministic instrument thrown into a probabilistic universe.” From there, the two friends launched a handful of now-famous articles—among the most cited in the discipline—which demonstrated many of their ideas and earned them the Nobel Prize. Tversky had died and did not receive it, but Kahneman assumed it was shared in an interview with The New York Times: “I feel like it is a joint award. “We were twinned for more than a decade.”
Kahneman has been a rare intellectual in these times dominated by rotundity: he was cautious. As Michael Lewis tells it in his magnificent book about the friendship of the two psychologists, Undoing mistakes (Debate), Kahneman was a brilliant guy in the eyes of anyone except himself. He was insecure. He doubted everything. This attitude has its advantages: the collaboration with Tversky was born because Kahneman detected a problem in a dominant theory while listening to the former at a conference. It is no coincidence that his great contributions are negative knowledge: he found flaws in economic rationality and in our minds. But his temper also had a price: Kahneman doubted himself. That's why he needed the brave Tversky, as he himself explained: “It was gratifying to feel like Amos, smarter than almost anyone. There was something liberating about being arrogant.”
Kahneman's impact was multiplied by his popularity: he brought a lot of valuable ideas to the general public.
He wrote a best-selling book, Think fast, Think slow (Debate). His stories and experiments are a marvel of intelligence. Like this famous enigma: «A town has two hospitals. In the large one, 45 babies are born a day and in the small one, 15. In general, 50% of births are girls, but the percentages vary every day. Which hospital will record the most days when 60% of babies are girls? In the big one, in the small one, or in both the same?
Most people answer the same. This is what one of those shortcuts that Kahneman discovered tells us. But the correct answer is the small hospital (its births are a smaller sample and therefore with more variance). In 1971, Kahneman and Tversky showed that even professional statisticians answered incorrectly when they thought quickly. They called the phenomenon the belief in the law of small numbers, which is the title of their first article, a bombshell disguised as a joke. A pillar of statistical science is the law of large numbers, but it is called that for a reason: it only holds for large samples. Kahneman and Tversky discovered that our brain ignores this and applies it (mis) to small numbers.
Kahneman's work leaves a trail of similar notions. Such as regression to the mean (an extraordinary result is usually followed by a normal one), loss aversion (why does it hurt more to lose 100 euros than we enjoy gaining it?), or the illusion of focus (nothing in life is as important as you think it is when you're thinking about it).
They are a kind of compressed intelligence pills – in maxims, examples and stories – that have helped millions of people to, in essence, think better.
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