Death of a guru: A fan’s tribute to Nobel-winning literary icon Kahneman
Thinking Fast And Slow, and Noise, that he co-wrote, are among my top five of all time. Nobel Laureate. Best-selling author.
Psychologist who never taught an economics class, but had a tremendous impact on the study of economics and finance. That’s not all. His influence was far wider, in fields ranging from sports to organ donation.
There have been obituaries from people who knew him and worked with him. But this is a fan’s tribute. His writings introduced me to new worlds.
His work was about fallacies in human thinking and judgement. And that covers just about every area of human endeavour. It is nearly impossible to summarize even a few points from his work in this piece.
The short point: we are far less rational than we think we are. Human evolution has ensured that our brains are wired for efficiency in survival, not necessarily for truth and rationality. We take many sub-conscious short-cuts to reduce cognitive load, and end up thinking ‘fast’, using System 1, as Kahneman calls it, most of the time.
Thinking ‘slow’ when we look at data, and analyzing it properly before coming to conclusions is done, but rarely. This results in many systematic biases. For example, once an incident has happened, or known—say, a poll result—we tell ourselves that we always knew how this would turn out.
This is hindsight bias. Most of us think that we are above average in almost every field, which is a statistical impossibility. This is why we refuse to look at, or ignore, statistical probability or averages, when undertaking any new venture.
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