Thinking, Fast and Slow by Kahneman

• Thinking, Fast and Slow is an internationally renowned book written for anyone interested in personal well-being and human development.
• The book gives a schematic explanation of how people can make better choices by describing how our thinking interprets past, future, and present situations in correct and incorrect ways.

‘Thinking, fast and slow’, a New York Times bestseller and multiple prize winner, is a highly praised book that provides us many insights into the human mind. It is seen as a guide to detecting and correcting our biased misunderstandings of the world. We see ourselves as rational thinkers and decision makers, but this book demonstrates how we are subject to many systematic errors, which we are not even aware of or tend to ignore.

The author, Daniel Kahneman, won the Nobel Prize in economics in 2002. Kahneman collaborated with psychologist Amos Tversky until his death in 1996, they together produced a fair amount of the research mentioned in this book. He brings in his own research, as well as that of other renowned experts (psychologists, economists, statisticians). Kahneman (1934) is Eugene Higgins Professor of Psychology Emeritus at Princeton University and Professor of Psychology and Public Affairs Emeritus at Princeton’s Woodrow Wilson School of Public and International Affairs. Kahneman is considered one of the greatest psychologists. He provides new insights into the understanding of risk, cognitive psychology, behavioral economics, the study of well-being and happiness and the analysis of reason and rationality. It is not only an important read for people who want to learn about human behaviour, the findings are valuable to investors, businesses, consumers, teachers, physicians, politicians, marketers and many others.

The book focuses mostly on biases of intuition. Kahneman’s aim is improving the ability to identify and understand errors of judgment and choice, particularly in ourselves, by presenting a view of how the mind works that draws on recent developments in social and cognitive psychology (as opposed to many authors who discuss earlier research). One of these developments is the better understanding of the flaws and wonders of intuitive thought.

The book is mainly about the distinction between fast and slow thinking, which Kahneman refers to as ‘System 1’ and ‘System 2. “Thinking, fast and slow’ is divided into five parts. Parts 1 discusses the basis elements of this two-system approach to judgment and choice. It demonstrates the distinction between System 1 (automatic operations) and System 2 (controlled operations) and how associative memory, the heart of System 1, consistently creates a coherent interpretation of what is happening around us. This automatic process underlies intuitive thinking and explains the heuristics of judgment. Part 2 is about new insights into judgment heuristics and why it is so hard to think statistically in contrary to thinking associatively. Part 3 demonstrates a significant limitation of our mind: the excessive confidence we have in what we believe we know and our inability to acknowledge our ignorance and the uncertainty of the world. We are susceptible to overestimating how much we comprehend about the world and to underestimating the role of chance in events. Parts 4 focuses on the way economics view people and the decisions they make. Unlike economics, psychologists do not consider people as rational beings, due to the features of System 1. Lastly, part 5 regards the distinction between the remembering self and the experiencing self, which have different interests. This relates to our well-being. The two selves in one person are not equally happy.