Thinking fast and slow: Conclusions

Following the schedule of our Reading Calendar

In this conclusion, system 2 is presented as “fictious Econs, who live in the land of theory” while system 1 is “real human beings”. However, the the real, experiencing self is both system 1 and system 2. Most of this final chapter is a development of that idea: humans are both system 1 and system 2.

This final chapter works more like a “future research” ending remarks on an academic journal paper than applications for living a better life, which is a pity.

Two selves

The main bias here is how we neglect duration and value more “a short period of intense joy over a long period of moderate happiness” which lead us to make unwise decisions on how to live our live, missing opportunities for a long happy period if there might be a poor ending. However, the stories we tell ourselves about our lives also matter, so any policy aiming at improving the citizens of a country wellbeing should consider both.

Econs and Humans

Here Kahneman discusses the idea of rationality itself and point out how divergent is the common sense interpretation of rationality versus the idea of it that economists have. Here lies the more relevant contributions of Kahneman’s work: to point out how mislead economics is and all the different things that need to be considered in order to make economics a little more realistic, considering real human beings and not mathematical abstractions.

Let me quote Kahneman on the subject:

“I often cringe when my work with Amos is credited with demonstrating that human choices are irrational, when in fact our research only showed that Humans are not well described by the rational-agent model”

That doesn’t mean that humans do not need any help and our decisions are perfect. In the following pages, things get a little more interesting as Kahneman gets political and states how a libertarian vision of human beings, as put forward by the Chicago School of Economics is basicly flawed, as it is based in such a limited and non realistic view of rationality.

Instead a behavioral school of economics will point out of the need of a state regulation to equalize mistakes people make due to the biases described in the book. The Chicago School of Economics does not face such a problem, because they believe in a mythical rational human being that can’t be found in the real world.

Kahneman is not completely clear about his own beliefs, but he seems to favor some sort of “nudge” program in which citizens are nudged to take the “best option” for them by making it the default.  Therefore the state has two main roles against biases: first to guarantee that “best options” are offered by default and second to protect humans from con artists that may use biases in order to exploit our weaknesses.

This is a very relevant dicussion, a key one, and I wish that Kahneman had devoted more time to it, instead of bugging us to death with lab experiments.

Two Systems

Here Kahneman develops the main idea of this conclusion, how humans are very complex and fascinating mixture of system 1 and system 2, and gives a more fair description of system 1 and how our intuition, besides of being a source of biases, is also the responsible of lots of things we do rightly and effortlessly. However sometimes it does very wrong things, and we have to be aware of it.

This section looks mostly like a way of distancing himself from Gigerenzer view of “bounded rationality”, done in a oblique way stating that “the heuristic answer is not necessarily simpler or more frugal” playing with Gigerenzer’s paper (and book) “Fast and Frugal Heuristics”.

When considering the applications of all this knowledge in our daily life, Kahneman is -fortunately- very realistic. It is very difficult to change the way System 1 behaves. We have to put a lot of effort into it.

The main mechanism for detect such biases is simple, we have to recognize that our mind is trying a shortcut to solve a very complex problem, slow down and bring on System 2 to make a more detailed analysis of the problem.

But this is not easy, as  Kahneman states:

Except for some effects that I attribute mostly to age, my intuitive thinking is just as prone to overconfidence, extreme predictions and the planning fallacy as it was beofre I made a study of these issues.

And this is because:

The voice of reason may be much fainter than the loud and clear voice of an erroneous intuition, and questioning your intuitions is unpleasant when you face the stress of a big decision. More doubt is the last thing you want when you are in trouble.

Other tools than can helpful

  • Organizations making decisions instead of indidivuals, as they have to think and process decisions more slowly
  • To have  a richer language so we can label errors and biases in a more detailed manner.

Like humans beings, this book is a peculiar mix of system 1 and system 2, good, helpful intuitions on how humans see the world, and boring academic discussions that are only relevant to other academics. It is not the best book I’ve ever read, and certainly not the most entertaining one, but I’ve learned quite a lot things about how other people and myself take decisions and analyze the world, and overall I am happy to have read it.

 

 

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