What a mastery Daniel Kahneman accomplished by squeezing such an amount of useful knowledge in a single, easy-to-read book. I accept the challenge to sum up my understanding of Thinking, Fast and Slow, in this post for the #neverendingbooklist.
In no more than 300 words
Daniel Kahneman is a renown scholar, behavioral economics specialist, that was awarded the Nobel Prize in Economics in 2002. In Thinking, Fast and Slow, Kahneman compiles the most important breakthrough of behavioral economics and describes their impacts and implication in simple language. Central idea is that the brain is made of two Systems: System 1, that provokes automatic answers and is always operating and System 2, your thinking-self, a little more challenging to use. This split leads people to take sometimes irrational decisions when facing specific situations. Research has documented a number of these situations, across many practical fields, such as Economics, Investments, Healthcare, but also choices related to daily spendings or holiday planning. Kahneman breaks up with the traditional Economics which assume human being as always rational (Econs) and calls for a more complex picture: the situation in which the decision is made influences the way such decision is made. Not patronizing but analyzing, the book illustrates patterns and offers research-backed rational for abnormal behavior. It then introduces systems to reduce biais whenever such behavior results in long term disadvantage. On many occcasions, brain focuses only on the information that are readily available to him, even when such information may be irrelevant to such decision. Another flaw is our propension to “mental accounting”, a silo-type of thinking process. Kahneman reviews the considerable impact of Priming which can be used to substantially orientate your decision making process.
This booked helped me to reframe my vision of how my personal feelings have a direct impact on choices that I was considering rational (investments) and give me ground to develop stronger decision making process.
- Your brain is a two gear engine which performs two singularly different functions: the first one is always on and deals with automatic tasks while the second needs a bit of work to engage and enables you to built up more refine analysis
- Humans are not always rational beings (Econs). Difficulty to engage System 2, the thinking part of the brain, leads to irrational choices under many circumstances. Yet, slower thinking is almost systematically available if we make the conscious effort
- Experience and memory are significantly different processes. Ultimately memory appears indifferent to the notion of time and favors highlights (peaks). This has a profound impact on our life choices
- Whenever assessing a situation, add a simple step. Ask yourself “what is it that I don’t know?” Don’t fall into the focusing illusion that leaves you to consider only the readily available information – (For your brain, “What You See Is All There Is”)
- Rely on checklists or very simplified algorithm for recurring decision making such as investment portfolio reviews
- “It is only a slight exaggeration to say that happiness is the experience of spending time with people you love and who love you” & “The easiest way to increase happiness is to control your use of time”. Keep schedule under tight control and leave plenty of time for who and what you love
Do I recommend this book? Definitely
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