Thinking, Fast and Slow

[Originally posted at OnEnsemble.org as "Recent book reviews – July 2013"]

Thinking, Fast and Slow
Daniel Kahneman
pub. 2011, 499p
source: LAPL

What a wonderful book! Thinking, Fast and Slow is essentially a massive collection of all of Kahneman’s thoughts on psychology and decision-making, with references to his own lifetime of research and the full historical record of ground-breaking experiments. He frames the topic with the (purely imaginary) concept of two systems of brain function; System 1 is the intuitive, reactionary brain and System 2 is the contemplative, logical brain. In themed chapters with titles like, “Attention and Effort” and “Intuitions vs Formulas”, he shows where each of these two systems excels and where they fail. He makes recommendations for how to recognize when a problem might trigger an inappropriate response from either system, and thus how to resist our bias toward poor decisions in these circumstances. Long, but well worth the read!

As you become skilled in a task, its demand for energy diminishes. Studies of the brain have shown that the pattern of activity associated with an action changes as skill increases, with fewer brain regions involved. … Laziness is built into our nature.

(on “priming”) In an experiment that became an instant classic, the psychologist John Bargh and his collaborators asked students at New York University — most aged eighteen to twenty-two — to assemble four-word sentences from a set of five words (for example, “finds he it yellow instantly”). For one group of students, half the scrambled sentences contained words associated with the elderly, such as Florida, forgetful, bald, gray or wrinkle. When they had completed that task, the young participants were sent out to do another experiment in an office down the hall. That short walk was what the experiment was all about. The researchers unobtrusively measured the time it took people to get from one end of the corridor to the other. As Bargh had predicted, the young people who had fashioned a sentence from words with an elderly theme walked down the hallway significantly more slowly than the others.

Other primes were much more subtle, including the presence of an irrelevant money-related object in the background, such as a stack of Monopoly money on a table, or a computer with a screen saver of dollar bills floating in water.

Money primed people become more independent than they would be without the associative trigger. They persevered almost twice as long in trying to solve a very difficult problem before they asked the experimenter for help, a crisp demonstration of increased self-reliance. Money-primed people are also more selfish: they were much less willing to spend time helping another student who pretended to be confused about an experimental task. When an experimenter clumsily dropped a bunch of pencils on the floor, the participants with money (unconsciously) on their mind picked up fewer pencils. In another experiment in the series, participants were told that they would shortly have a get-acquainted conversation with another person and were asked to set up two chairs while the experimenter left to retrieve that person. Participants primed by money chose to stay much farther apart than their nonprimed peers (118 vs. 80 centimeters). Money-primed undergraduates also showed a greater preference for being alone.

• Strokes cause almost twice as many deaths as all accidents combined, but 80% of respondents judged accidental death to be more likely.
• Tornados were seen as more frequent killers than asthma, although the latter cause 20 times more deaths.
• Death by lighting was judged less likely than death from botulism even though it is 52 times more frequent.
• Death by disease is 18 times more likely as accidental death, but the two were judged about equally likely.
• Death by accidents was judged to be more than 300 times more likely than death by diabetes, but the true ratio is 1:4.

The social norm against stereotyping, including the opposition to profiling, has been highly beneficial in creating a more civilized and more equal society. It is useful to remember, however, that neglecting valid stereotypes inevitably results in suboptimal judgments. Resistance to stereotyping is a laudable moral position, but the simplistic idea that the resistance is costless is wrong. The costs are worth paying to achieve a better society, but denying that the costs exist, while satisfying to the soul and politically correct, is not scientifically defensible. Reliance on the affect heuristic is common in politically charged arguments. The positions we favor have no cost and those we oppose have no benefits. We should be able to do better.

“On many occasions I have praised flight cadets for clean execution of some aerobatic maneuver. The next time they try the same maneuver they usually do worse. On the other hand, I have often screamed into a cadet’s earphone for bad execution, and in general he does better on his next try. So please don’t tell us that reward works and punishment does not, because the opposite is the case.

This was a joyous moment of insight, when I saw in a new light a principle of statistics that I had been teaching for years. The instructor was right — but he was also completely wrong! His observation was astute and correct: occasions on which he praised a performance were likely to be followed by a disappointing performance, and punishments were typically followed by an improvement. But the inference he had drawn about the efficacy of reward and punishment was completely off the mark. What he had observed is known as regression to the mean, which in that case was due to random fluctuations in the quality of the performance.

Julie is currently a senior in a state university. She read fluently when she was four years old. What is her grade point average (GPA)?

…

1. Start with an estimate of average GPA.
2. Determine the GPA that matches your impression of the evidence.
3. Estimate the correlation between your evidence and GPA.
4. If the correlation is .30, move 30% of the distance from the average to the matching GPA.

Step 1 gets you the baseline, the GPA you would have predicted if you were told nothing about Julie beyond the fact that she is a graduating senior. In the absence of information, you would have predicted the average. Step 2 is your intuitive prediction, which matches your evaluation of the evidence. Step 3 moves you from the baseline toward your intuition, but the distance you are allowed to move depends on your estimate of the correlation. You end up, at step 4, with a prediction that is influenced by your intuition but is far more moderate.

The conclusion is straightforward: the decision weights that people assign to outcomes are not identical to the probabilities of these outcomes, contrary to the expectation principle. Improbably outcomes are overweighted — that is the possibility effect. Outcomes that are almost certain are underweighted relative to actual certainty.

…I will call it denominator effect… When I think of the small urn (10 marbles, 1 red), I see a single red marble on a vaguely defined background of white marbles. When I think of the larger urn (100 marbles, 8 red), I see eight winning red marbles on an indistinct background of white marbles, which creates a more hopeful feeling.

Women who have a mate spend less time alone, but also much less time with friends. They spend more time making love, which is wonderful, but also more time doing housework, preparing food, and caring for children, all relatively unpopular activities. And of course, the large amount of time married women spend with their husband is much more pleasant for some than for others. Experienced well-being is on average unaffected by marriage, not because marriage makes no difference to happiness but because it changes some aspects of life for the better and others for the worse.

In part because of these findings I have changed my mind about the definition of well-being. The goals that people set for themselves are so important to what they do and how they feel about it that an exclusive focus on experienced well-being is not tenable. We cannot hold a concept of well-being that ignores what people want. On the other hand, it is also true that a concept of well-being that ignores how people feel as they live and focuses on how they feel when they think about their life is also untenable. We must accept the complexities of a hybrid view, in which the well-being of both selves is considered.

Daniel Gilbert and Timothy Wilson introduced the word miswanting to describe bad choices that arise from errors of affective forecasting.

Although Humans are not irrational, they often need help to make more accurate judgments and better decisions, and in some cases policies and institutions can provide that help. These claims may seem innocuous, but they are in fact quite controversial. As interpreted by the important Chicago school of economics, faith in human rationality is closely linked to an ideology in which it is unnecessary and even immoral to protect people against their choices. Rational people should be free, and they should be responsible for taking care of themselves. Milton Friedman, the leading figure in that school …

For behavioral economists, however, freedom has a cost, which is borne by individuals who make bad choices, and by a society that feels obligated to help them. The decision of whether or not to protect individuals against their mistakes therefore presents a dilemma for behavioral economists.