Table of Contents
Thinking: Fast and Slow by Daniel Kahneman is about the ways in which our automatic patterns of thought can mislead us. But the book is not merely a collection of fallacies of the mind, but a study of the different conditions that can affect how we think, and even, how we remember. Throughout the book, we learn about different ways to help us better identify those situations where a more deliberate, careful mode of thinking should replace automatic and quick thinking.
Introduction
P.4 Purpose : Not to denigrate human intelligence but to show, with more precise language, how our intuitions can deceive us.
P.7 The narrative fallacy: give more weight to stories than base reality. Steve is a meek and tidy soul. Has a need for order and structure. Has little interest in people and a passion for detail. Is Steve more likely to be a farmer or. Librarian? Most would say the latter but that is the narrative fallacy, since there are so few librarians in the US.
P.8 social scientists in the 1970s accepted two basic premises about man, 1) he is mostly rational. 2) when he makes mistakes,it is because emotions got in the way. Kahneman set out to prove that both assumptions were false. People are not mostly rational, and when they do mistakes, it’s not because of emotions, but because design of the machinery of their cognition.
P.8 why are some issues highly salient in the publics mind? The availability heuristic. People pay attention to what the media has been reporting most recently, not what is most important.
P.10 – at first, kahnemans work was criticized, but now it is unanimous: the mind is susceptible to systematic errors.
Chapter 1: The Characters of the Story
P.20- intuition from experience is good but not all people make intuitive judgements from experience (they are inexperienced ) – Enter system 1.
System 1: fast, immediate (I like this) involuntary, effortless
System 1 can think metaphorically, causally, associatively but not statistically (a mode that requires multiple forms of thinking at once) – not accessible to system 1.
Examples: complete phrase “bread and …” Detect hostility in voice. Drive car on empty road. Recognise “meek and tidy soul with a passion for detail” resembles an occupational stereotype.
System 2: slow, deliberate (should I like this?), voluntary, effortful. Operations of system 2 are associated with subjective experience of agency, choice, and concentration.
Examples.fill out a tax form, tell someone your phone number, check the validity of a complex logical argument.
P.21 – system 1 can generate very complex ideas but only system 2 can order them
P.28 – we have many cognitive illusions. The question is whether they can be overcome. Probably not. System 2 would need to put in too much effort to make sure no system 1 errors are made – a tedious, impractical way to live life, but a compromise is possible. Recognise situations where system 1 errors are likely and the stakes are high.
System 1 is a nickname for automatic system
System 2 is a nickname for effortful system.
“This is your system 1 talking. Slow down no let your system 2 take control”
Chapter 2: Attention and Effort
P.31 – “In the unlikely event of this book being made into a film, System 2 would be a supporting character who believes herself to be the hero.
Post idea: System 1 Versus System 2
Done: https://unearnedwisdom.com/system-1-versus-system-2/
Chapter 3: The Lazy Controller
P.40 – to maintain a coherent train of thought and engage in effortful thinking requires self control. the frequent switching of tasks and speeded up mental work are probably not intrinsically pleasurable -we will avoid them when possible. That is how the law of least effort came to be a law. Even without time pressure, the systematic avoidance of sustained effort, by repeatedly checking email or the contents of the fridge, suggests that the mind has an urge to escape the activity.
But thankfully, some types of cognitive work are not so aversive. And people sometimes expend considerable effort for a long time without having to exert willpower – that is what Mihaly Csikszentmihalyi called Flow.
Note: when I write on Hans, I experience this especially.
P.41 – There are 2 forms of effort: concentration on the task and deliberate control of attention. Flow neatly separates the two. playing chess, riding. Motorcycle at 150 miles an hour are effortful but require no exertion of self control when in flow.
P.48 – what makes some people more susceptible to biases of judgement? See book Rationality and the Reflective Mind
Chapter 4: The Associative Machine
P.54 Priming suggests that we don’t know ourselves as well as we think. Simple, common gestures affect how you interpret experiences and how you behave. Nodding while listening to someone makes you more likely to accept what they are saying. Acting calm and smiling makes you feel calm and happy.
P.55 – money priming experiments showed that individuals with money on their mind acted more selfish and were more self reliant.
Chapter 5: Cognitive Ease
P. 66 – Cognitive Strain versus Cognitive Ease.if you want to persuade with text, make sure there is high contrast between background and text, use simple language, use rhymes. If you want to engage system 2 (learn something) read unclear text (cognitive strain). Stocks with easy to pronounce names outperform those with complex names. (KAR vs PXG/RDO)
P. 69 – bad mood,being uncomfortable or unhappy, reduces system 1 thinking (intuition)
P. 70 -pleasant or unpleasant feelings are the basis for recognising coherence. If we feel good about a puzzle, we recognise a coherence in it.
Chapter 6: Norms Surprises and Causes
Chapter 7: A Machine for Jumping to Conclusions
P. 84 Halo effect. You have an impression about someone, colours everything else you think about them. Kahneman allowed cognitive ease to determine how he graded assignments, when he found a student who did well on one question, he became less critical of their answers in subsequent questions. Also known s a general principle:decorrelate error.
The wisdom of crowds shows us that individual accuracy can be less accurate than average observations or predictions of a group, but only if group observations were made independently. If members within the group can influence each other, group becomes less accurate.
P. 87) What you see is all there is (WYSIATI) = Information that cannot be retrieved by you consciously or unconsciously might as well not exist. The brain seeks coherence – if it cannot find a good narrative, it will. Since cognitive ease is necessary for you to believe anything, you must take his shortcut for practical reasons.
WYSIATI – 3 Cognitive biases:
- Overconfidence: Rhetoric > Quality of Evidence
- Framing Effects: 90% Fat
- Base Rate Neglect: Seve the meek and tidy soul.
Chapter 8: How Judgements Happen
P.89) System 2 deals with purposeful questions, whether from abroad or from within. There is no limit to what these questions can be, but they must be specific. System 1 constantly monitors what is happening internally and externally. These basic assessments play an important role in intuitive judgement because they substitute for more difficult – that is the idea behind heuristics and biases.
P. 90) System 1 has been shaped by evolution to provide a continuous assessment of main survival problems. Is everything normal? Is there a threat or a major opportunity? Should I approach or avoid? How are things going? Even though less relevant today in ancestral past, our brains still work this way.
Chapter 9: Answering an Easier Question
P. 97) System 1 substitutes complex questions for simpler ones: You rarely feel stumped. Even if you don’t really understand something, you make conclusions based on a small amount of evidence that you don’t understand. You like some people and dislike others. You feel a stock will succeed. You distrust a stranger. All of this is seamless to you. The experience of life feels a lot more straightforward than it really is.
P.98) How to solve it – George Polya (Book Rec)
Chapter 10: The Law of Small Numbers
P.113) Even professional statisticians, in addition to Kahneman and other psychologists use their judgement to select sample size rather than compute and this results in results that cannot be conclusive. Kahneman called this phenomenon the “law of small numbers.”
Note: If a complex problem cannot be solved by System 2 – System 1 finds a shortcut.
Chapter 11: Anchors
P.128 – “our aim in the negotiation is to get them anchored to this number.”
“Let’s make it clear that if that is their proposal, the negotiations are over. We do not want to start there.”
Chapter 12: The Science of Availability
P.136 “Because of the coincidence of two planes crashing last month, she prefers to take the train. That’s silly the risk hasn’t really changed. It is an availability bias.
“He underestimates the risks of indoor pollution because there are few media stories on them. That’s an availability effect. He should look at the statistics.”
“She’s watching too many spy movies. She’s seeing conspiracies everywhere.”
“The CEO has had many successes in a row. He is now overconfident.”
Chapter 13: Availability, Emotion, and Risk
P.138 – The most influential studies of availability biases were done by Paul Slovic and Sarah Lichtenstein in Eugene. They carried out groundbreaking research on public perceptions of risks, including a survey to consider pairs of causes of death: diabetes and asthma, or stroke and accidents.
For each pair, the participants indicated the more frequent cause and estimated the ratio of the two frequencies. The judgements were compared to health statistics at the time. Here is a sample of these findings.
- Strokes cause -2x deaths than all accidents combined, but 80% of respondents judged accidental death to be more common.”
- Tornadoes were seen as more frequent killers than asthma, although the latter cause 20 times more deaths.
- Death by lightning was judged less likely than death from butlism even though it is 52 times more frequent.
- Death by disease is 18 times as likely as accidental death, but the two were judged about equally likely.
- Death by accidents was judged to be more than 300 times more likely than death by diabetes, but the true ratio is 1:4.
“Estimates of death are warped by media coverage. The coverage is itself biased toward novelty and poignancy. The media do not just shape what the public is interested in, but also are shaped by it. Editors cannot ignore the public’s demands that certain topics and viewpoints receive extensive coverage. Unusual events (botulism) attract disproportionate attention and are consequently perceived as less unusual than they really are. The world in our heads is not a precise replica of reality; our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed.”
Ex( not from book) – Tuberculosis had the same number of deaths as corona per year. Recall Simulacra.
P.142 – The Availability Cascade:
A self-sustaining chain of events which may start form media reports of a minor event and lead to public panic and large scale government action. On some occasions, a media story about a risk catches the attention of a segment of the public, which becomes aroused and worried.
The emotional reaction becomes a story in itself, prompting additional coverage in the media , which in turn produces greater concern and involvement. The cycle is sometimes sped along deliberately b “availability entrepreneurs”, individuals or organizations who work to ensure a continuous flow of worrying news. The danger is increasingly exaggerated as the media compete for attention-grabbing headlines.
“She’s raving about an innovation that has large benefits and no costs. I suspect the affect heuristic”
“This is an availability cascade: a nonevent that is inflated by the media and the public until it fills our tv screens and becomes all anyone is talking about.
P.167
Causes Trump Stats
P. 175
Regression to the mean
Chapter 19: The Illusion of Understanding
P.200
Google’s founders were willing to sell their company for less than 1 million dollars. Buyers thought it was too expensive…
P.201
Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.
P.206
CEO-worship
(They’re only slightly better than chance)
See book “The Halo Effect”
P.207
A study of fortune’s most admired companies finds that over a 20 year period, the firms with the worst ratings went on to earn much higher stock returns than the most admired firms. #
Chapter 20: The Illusion of Validity
P. 212
Billions of shares are traded every day with many people buying each stock and others selling it to them. It is not unusual for more than 100 million shares of a single stock to change hands in one day. Most of the buyers and sellers know that they have the same info. They exchange the stocks primarily because they have different opinions. The buyers think the price is too low and likely to rise while the sellers think the price is too high and likely to drop. The puzzle is why buyers and sellers alike think that the current price is wrong. What makes them believe they know more about what the price should be than the market does? For most of them, that belief is an illusion.
Chapter 21: Intuitions vs Formulas
P. 224
Why are experts inferior to algorithms? One reason which Meehl suspected is that experts try to be clever, think outside the box, and consider complex combinations of features in making their predictions.
Chapter 23: The Outside View
P. 245
Overconfidence
For a number of years, professors at Duke University conducted a survey in which the chief financial officers of large corporations estimated the returns of the Standard & Poor’s index over the following year. The Duke scholars collected 11,600 such forecasts and examined their accuracy. The conclusion was straightforward: financial officers of large corporations had no clue about the short-term future of the stock market; the correlation between their estimates and the true value was slightly less than zero!
When they said the market would go down, it was slightly more likely than not that it would go up. These findings are not surprising. The truly bad news is that the CFOs did not appear to know that their forecasts were worthless.
The authors calculated the confidence intervals that would have reduced the incidence of surprises to 20%. The results were striking. To maintain the rate of surprises at the desired level, the CFOs should have said, year after year, “There is an 80% chance that the S&P return next year will be between –10% and +30%.” The confidence interval that properly reflects the CFOs’ knowledge (more precisely, their ignorance) is more than 4 times wider than the intervals they actually stated.
Social psychology comes into the picture here, because the answer that a truthful CFO would offer is plainly ridiculous. A CFO who informs his colleagues that “there is a good chance that the S&P returns will be between –10% and +30%” can expect to be laughed out of the room. The wide confidence interval is a confession of ignorance, which is not socially acceptable for someone who is paid to be knowledgeable in financial matters. Even if they knew how little they know, the executives would be penalized for admitting it. President Truman famously asked for a “one-armed economist” who would take a clear stand; he was sick and tired of economists who kept saying, “On the other hand…”
Chapter 26: Bernoulli’s Errors
P. 273
Bernoulli observed that most people dislike risk (the chance of receiving the lowest possible outcome), and if they are offered a choice between a gamble and an amount equal to its expected value they will pick the sure thing. In fact a risk-averse decision maker will choose a sure thing that is less than expected value, in effect paying a premium to avoid the uncertainty. Chapter 35: Two Selves
P.380
If the objective is to reduce patients’ memory of pain, lowering the peak intensity of pain could be more important than minimizing the duration of the procedure. By the same reasoning, gradual relief may be preferable to abrupt relief if patients retain a better memory when the pain at the end of the procedure is relatively mild.
If the objective is to reduce the amount of pain actually experienced, conducting the procedure swiftly may be appropriate even if doing so increases the peak pain intensity and leaves patients with an awful memory.
Chapter 36: Life is a Story
P. 388
Amnesic Vacations
Consider the choice of a vacation. Do you prefer to enjoy a relaxing week at the familiar beach to which you went last year? Or do you hope to enrich your store of memories? Distinct industries have developed to cater to these alternatives: resorts offer restorative relaxation; tourism is about helping people construct stories and collect memories.
Chapter 38: Thinking About Life
P.402
Nothing in life is as important as you think it is when you are thinking about it