Thinking, Fast and Slow is the best-selling 2011 book by Nobel Memorial Prize in Economics Winner Dannial Kahneman which summarizes research that he conducted over decades, often in collaboration with Amos Tversky. It covers all three phases of his career: his early days working on cognitive biases, his work on prospect theory, and his later work on happiness.
Four years ago, a few months before he got re-elected, President Obama read a book on the science of decision-making that he now considers one of his favorites. The book, “Thinking, Fast and Slow,” by Daniel Kahneman, features insights into the pitfalls of human rationality that might just transform how you think about intelligence.
Obama’s recommendation comes alongside nine other books on the president’s list of required reading in the November issue of Wired. Others include “The Power Broker: Robert Moses and the Fall of New York” by Robert A. Caro and “Behind the Beautiful Forevers: Life, Death, and Hope in a Mumbai Undercity” by Katherine Boo.
In “Thinking, Fast and Slow, explores two modes of thinking, which he calls System 1 and System 2. System 1 thinking is gut-driven, instinctual. System 2 is thoughtful, reflective. Too often, Kahneman notes, people’s decision-making gets mired in System 1 when really they should be taking a few seconds to study the problem at hand. Obama’s recommendation seems to suggest that even those of us who aren’t making careful choices in the Oval Office could stand to think more with System 2.
The book’s central thesis is a dichotomy between two modes of thought: “System 1” is fast, instinctive and emotional; “System 2” is slower, more deliberative, and more logical. The book delineates cognitive biases associated with each type of thinking, starting with Kahneman’s own research on loss aversion. From framing choices to people’s tendency to substitute a difficult question for one which is easy-to-answer; the book highlights several decades of academic research to suggest that people place too much confidence in human judgment.
Kahneman covers a number of experiments which purport to highlight the differences between these two thought systems and how they arrive at different results even given the same inputs. Terms and concepts include coherence, attention, laziness, association, jumping to conclusions, and how one forms judgments. The System 1 vs. System 2 debate dives into the reasoning or lack thereof for human decision making, with big implications for market research. The second section offers explanations for why humans struggle to think statistically. It begins by documenting a variety of situations in which we either arrive at binary decisions or fail to precisely associate reasonable probabilities with outcomes. Kahneman explains this phenomenon using the theory of heuristics.