Book Review: Thinking, Fast and Slow

June 12, 2017

In an ideal world, when faced with a decision, we’d start with a complete set of facts and end with a perfectly rational answer. But facts don’t automatically lead to a reasoned solution—we make irrational decisions all the time without even realizing it. In Thinking, Fast and Slow, the 2011 best-selling book by Daniel Kahneman (a Nobel Prize-winning founder of the field of behavioral economic, and subject of Michael Lewis’s The Undoing Project) explores how human brains really work—and what we can do to make better decisions.

Answer the Right Question

When confronted with a particularly difficult problem, our brains often simply opt to answer an easier one instead. Kahneman calls this “affect heuristic” or “substitution.” The danger arises when the intuitive answer, though it seems easy, is wrong. In fact, it may not even be apparent that the question was hard and demanded more thought to come to a correct solution.

Don’t Fall Victim to “The Law of Small Numbers”

Human brains are amazing at recognizing patterns. This was critical when our prehistoric ancestors hunted on the savannah, but it can create problems for us today when we attempt to predict future outcomes. “When we detect what appears to be a rule,” Kahneman writes, “we quickly reject the idea that the process is truly random.” This could put you in danger of assuming the pattern will repeat in the future—instead of realizing future outcomes are not guaranteed. 

Fast or Slow

Kahneman identifies two kinds of thinking, which he calls “System 1” and “System 2.”

System 1 is fast and intuitive. We use it when driving on a long stretch of highway or doing a simple math equation (3 + 3). System 1 can provide an answer quickly, and it’s often correct. But it also can lead to wrong answers because it relies so heavily on past experiences.

System 2 is slower and more analytic and requires concentration. This system is at work when you’re solving a difficult math equation (17 x 24) or checking the logic of an argument. It will likely lead to a more reasoned answer, but because it takes so much time and effort, it’s not possible to use it in every situation.

How to Think

So what can we do to balance making decision speedily and rationally? “Learn to recognize situations in which mistakes are likely,” Kahneman writes, “and try harder to avoid significant mistakes when the stakes are high.” Pick up a copy of Kahneman’s book to learn more.