Thinking – Fast and Slow

An amazing book by Daniel Kahneman on how we think and how we think we think! What makes the book great is the fact that it uses examples and anecdotes that are truly counter-intuitive for the first time. He has summarized almost all of his research that he did over 20 years and got him the Nobel Prize.

Two systems – Kahneman argues that we have two kinds of brains. Let’s call them System 1 and System 2. System 1 is where all the intuitive thinking and knee-jerk reactions come from. The interesting part is that this area of your brain is working all the time – beyond your realization. So the next time you think that you are acting greedily – it might not be in-grained in your nature. It could be your System 1 playing a huge part in you doing so because of your surroundings. He extends this idea and goes into the exciting world of priming – How minor perturbations to the environment can affect your behavior. His research shows that (as an example) people are more likely to believe in written words when they are in bold font, when they are written in simple words and even when they have a musical rhyme to them. (Woes unite foes against Woes unite enemies). Even thoughts that are easy to recollect are deemed more believable. This is the realm of “cognitive ease”. System 2 is where all the logical stuff goes on. So if you are asked to multiply 17 and 24 your System 1 would be stuck (unless you are one of those Human calculators!).

Amazingly, our System 2 relies a lot on System 1 and this is the cause of many cognitive biases/errors. This does not mean System 1 is all that bad. Remember the fact about – Laugh for sometime every-day.  Kahneman shows that this is true because of System 1. So when people are asked to hold pencils between their teeth in such a way that they smile – the show positivity when shown some pictures/videos. Holding it the other way – rubber between teeth – so that it makes you frown results in negative thoughts with same pictures/videos. However, we ought to train System 2 to be more self-sufficient and reliable – to not trust System 1 (intuition) all the time. If all this seems trivial consider this –

“People are more likely to solve problems/puzzles when they are written in small font – making it difficult to read. Why?”

Because difficulty in reading strains your brain and System 2 takes over. Once in action you would not be very likely to give the intuitively obvious answer straight-away. By virtue our System 2 is lazy! So lesson drawn – Moderate stress during exams is good! Get those System 2 horses running before the big exam!

“I’m in a very good mood today, and my System 2 is weaker than usual. I should be extra careful.”

On the other hand, your system 1 is happy when you are at ease – “Cognitive ease leads to positive emotion”. He shows that people are more likely to invest in stocks that have pronounceable ticker symbols – and such stocks do well in IPO’s. That has been tested statistically and it is indeed amazing! Other thing that System 1 is very good at doing is finding an explanation for anything that is a major event. Stock market movements and NEWS are often related everyday – NNT pointed this out very beautifully in his book Black Swan – How such events are random, consequential and unpredictable. Yet, almost always we seem to give explanations for this – the so called market gurus have made this a BIG business! All those CNN news can actually make you dumber (as Taleb pointed out). 

Kahneman calls this “associative cognition”, however I think this is more a fallacy that (I hope) can be corrected by training! Although it is true that an even will have a cause, System 1 will accept the most possible and intuitive cause – something that is easy to relate to, easy to explain but by no means the correct one. Worse still, deeming this explanation unbelievable is the Job of System 2. However, most of us just don’t use it. As Robert Shiller (I think) points out, unlearning stuff is important too! Something’s just don’t fit in to regular explanation framework and we should learn with it. The problem is – where do we draw the line? Be an oracle or an ignorant guy?

Making a good first impression – Yes! The age old saying is true. Kahneman studies this in the context of the halo effect. Traits which might be both positive and negative are interpreted depending on the notion we have about the person. So making a good impression would not only help you but it would transform your negative traits into good one. An intelligent – illustrious – stubborn guy is better that a stubborn – intelligent - illustrious guy. Order matters! Sadly we might not control that always!

“The sequence in which we observe characteristics of a person is often determined by chance. Sequence matters, however, because the halo effect increases the weight of first impressions, sometimes to the point that subsequent information is mostly wasted.”

Also, next time you ask someone for advice (which one to choose), do not give them your opinion first!

More on System 1 – Kahneman argues that System 1 is your intuitive brain and many times beyond your control. For example - Evaluating people as attractive or not is a basic assessment. You do that automatically whether or not you want to, and it influences you. He talks about Mental Shotgun – how a train of exogenous thoughts may cloud your judgment. As an example -

Evaluate (as quickly as possible) if the following statements are literally true.

Some roads are snakes.

Some jobs are snakes.

Some jobs are jails.

Were you slow with the 1 and 3 statements? Probably because they might be true metaphorically and that made you stop – even though it was out of context and your mind meandered to a different question.

Taking this a step further the concept of Heuristics and their ability to bias our answers was one of the most interesting parts of the book. As he puts it –

“The normal state of your mind is that you have intuitive feelings and opinions about almost everything that comes your way. You like or dislike people long before you know much about them; you trust or distrust strangers without knowing why; you feel that an enterprise is bound to succeed without analysing it. Whether you state them or not, you often have answers to questions that you do not completely understand, relying on evidence that you can neither explain nor defend.”

The heuristics and bias approach simple means that you (your system 1) always needs to have an answer. Sadly, you always rephrase a difficult question with a substitute one – something that you think is an easier one to answer.

“We concluded that people must somehow simplify that impossible task, and we set out to find how they do it. Our answer was that when called upon to judge probability, people actually judge something else and believe they have judged probability. System 1 often makes this move when faced with difficult target questions, if the answer to a related and easier heuristic question comes readily to mind.”

For guys who have read – Polya (How to solve it) this might seem painful! Polya says - “If you can’t solve a problem, then there is an easier problem you can solve: find it”. But despair not! This is not the System 2 heuristic. Rather this is the System 1 heuristic – which is often in your sub-conscious mind and may be wrong more than often.

This is pretty much the first part of his book. He later digs deeper into this interesting study. Hopefully, it will change the way we think – maybe make the System 2 less lazy and System 1 less ambitious! 

This is a very good book to read. Also read Black Swan - one of the book that inspired Kahneman!