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Review: Thinking, Fast and Slow

books Updated: Feb 17, 2012 19:30 IST

Gautam Chikermane, Hindustan Times
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Thinking, Fast and Slow

Daniel Kahneman

Allen Lane

Rs 499 pp 499

When I tweet, my mind works at high speed. I read or see something, process it quickly, capture a link and send a 140-character opinion. All this happens within minutes, sometimes less. As I write this review, I not only read the book, but also about the writer and the subject for latest data or trends, I masticate my words, pull them out one by one to make them fit accurately. Tweeting is like breathing, somewhat unconscious; writing involves deep breathing, highly conscious.

My tweeting belongs to what 2002 Economics Nobel laureate Daniel Kahneman, in Thinking, Fast and Slow, calls System 1 (thinking fast, unconscious, intuitive, effortless); while my writing moves to System 2 (thinking slow, conscious, deductive, laborious).

We like to believe that System 2 — what Kahneman calls “lazy” — is what runs our lives. Not true. If a bat and a ball cost $1.10, Kahneman asks, and the bat costs $1 more than the ball, what is the price of the ball? Think about this question — the answer lies further down in this review. Accordingly, the book focuses on the more glamorous, high-profile, sought-after System 1 rather than the slower, pondering, and more accurate System 2.

For a long time, psychologists and economists believed in reason. Consumers were rational beings and would always act in their best interests. The entire stream of ‘efficient markets’ theory, for instance, rests on reason and legendary investor Warren Buffett has been termed an ‘aberration’. But it is largely System 1 that is our mind’s master. Not always do we act in what seems to be in our best interest — the chief investment officer of a mutual fund buying Ford shares simply because “they know how to make cars”; choosing to follow a career that gives us greater joy than money; loss aversion that prevents us from selling a stock whose price has fallen.

“Most impressions and thoughts arise in your conscious experience without your knowing how they got there,” Kahneman writes. In a stream of such day-to-day actions, he leads us to experiments that show the relationships between cognitive control and intelligence. Those with greater self control as children, for instance, are less likely to take drugs and have substantially higher scores on intelligence tests.

Coming back to the question above, if your answer was 10 cents, you think like more than half of Harvard, MIT and Princeton students and 80% of America’s less selective universities. You think like some of the top accounting and consultancy firm executives. You also think like I do. And all of us are wrong.

If the ball costs 10 cents the total cost would be $1.20 (10 cents for the ball, $1.10 for the bat). The correct answer is 5 cents. What did we do wrong? We gave the intuitive, System 1 answer, without checking if it was correct (thus the ‘laziness’) and “our System 2 endorsed an intuitive answer that it could have rejected with a small investment of using System 2 effort”.

I’d put my money on the fact that this book is very likely to be one of the best non-fiction books of 2012.