For my first real book selection, I have chosen a book that I think is a new fundamental part of my thinking that will come up again and again in future analyses: Daniel Kahneman's "Thinking Fast and Slow". In this post I will discuss some of the ideas I found most interesting and how I plan on applying them to my life. If you have not read it, I recommend to every thinking person: skim section one and carefully read the remaining four. For a brief sales pitch, see my Goodreads review: https://www.goodreads.com/review/show/3422865381
This book reflects decades of psychology research; no summary will do justice to the original. I have selected what I think are some of the most interesting ideas along with how I intend to apply them to my life in italics. A couple key ideas are omitted as I intend to cover them when I read their original source.
Part 1 - system one and two
This part distinguishes Systems 1 and 2.
System 1: the fast, automatic, intuitive thinking that determines a picture of a screaming woman is angry.
System 2: the slow, deliberate, “logical” (has reasons) thinking that performs calculations or any other conscious thinking.
PArt 2 - Heuristics and Biases
Consider a study of kidney cancer reveals its incidence is lowest in rural, sparsely populated areas. We naturally associate these as causes for the low rates. In reality, longer studies showed that the cause of this finding was simply that being in a sparsely populated area made it easier for sample variation to show a high or low amount. The interesting part is that the sparsely populated part probably did not immediately strike you as relevant. Don't let your system 1 thinking discard information as irrelevant.
It is believed that 40% of psychological studies have a negative result only because their sample size is too low and so they fail to achieve statistical significance. Researchers ought to choose sample size with statistics, not intuition.
Anchoring is a priming effect where someone is shown a number and presumes it to be reasonable, future negotiations and decision making now take that in account and tend to gravitate towards that. Decide what you think is reasonable before hearing a salesman's opinion.
Availability bias: things that come easily to mind are believed to be more likely. They mistake plausible for probable. Participants selected an earthquake causing an American tsunami to be greater odds than just an American tsunami.
Availability cascade (halo effect): proneness to thinking something is all good or all bad leading to incorrect extrapolation off initial information.
Base Rates: Study participants read of a guy who would be a perfect candidate for a librarian. When guessing their profession, they failed to take into account that few males are librarians. Don't forget base rates.
Don't assume people will learn from stats, give them representative cases to help them understand. I will try to implement this in my explanations.
In a series of events, unlikely results are likely followed by one that will revert to the mean. A random number 0 to 100, 6 is achieved, next one is likely to be closer to mean 50. Punishing poor performance is not as good as rewarding good performance. Reversion to the mean can provide an illusion that the opposite is true.
Part 3 - overconfidence
Replacing human judgement with a formula is almost always a good idea. Decide in advance what weight to give each factor (such as an application vs an interview) in a decision.
You can only trust experts when they operate in a sufficiently predictable environment and when they are able to receive clear feedback quickly. (That's not very many of them)
Entrepreneurs tend to have delusional confidence regarding their businesses because they can picture how it would succeed but its hard to picture the many ways it could fail (recall mistaking plausible for probable). They also tend to neglect their competition. Kahneman proposes a pre-mortem session strategy to prepare yourself for failure of a business instead of being blinded. Read chapter 24 for more details.
Clinicians who were “absolutely certain” of a diagnosis were wrong 40% of the time. Experts who admit their uncertainty are more likely to lose business to competitors. Don't seek out and choose bullshitters, measured confidence, although less comforting is actual advice.
Part 4 - decision making
Expected utility value is not how people make decisions. Choosing between
a) 50% between 1 and 4 million dollars
b) certain 2 million dollars
If their bank account is $1M or lower people likely double for certain whereas if it is $4M people prefer to take the gamble to keep their wealth. The first case shows us that people are willing to pay a premium for certainty.
When dealing with possible gains, people are risk averse and prefer the for sure option but when dealing with losses they are risk seeking and prefer to gamble.
Losses register psychologically as twice the weight of an equal gain.
Kahneman gave a few multiple choice questions and was able to show that the average reader (including yours truly) would act according to a risk policy that flips and flops between sure gains and risk taking to avoid loss. He then showed a summary that showed my choices in each scenario led to the lowest total expected outcome! His solution is that you should pick a risk policy and stick with it. If offered a coin toss of win 150 lose 100, if you always accept, then over the course of your life it will bring net benefit. Either always or never buy the extended warranty etc.
People overweigh highly improbable events and so:
they become risk seeking when it's regarding gains, potentially rejecting a favourable settlement.
they become risk averse when the improbable event would be devastating, accepting an unfavourable settlement.
The endowment effect states that people prefer things they already have. They randomly gave people a chocolate bar or a mug but majority did not want to trade for the other option.
People putt better to avoid a bogey than to achieve a birdie.
People avoid closing a “mental account” which results in a loss. They don’t want to end their shift until they made a days earnings. Cab drivers make more on rainy days so they clock out earlier and stay longer on sunny days when you’d make more money doing the opposite.
Part 5 - the two selves
The experiencing self: the consciousness that lives through every moment of your life and experiences things as they happen to you, real-time. It cannot remember, only experience.
The remembering self: the self composed of experiences and memories that grows and changes as new experiences occur. It can only remember, not experience.
In an experiment, people placed one hand in very cold water for a minute and the other in the same, and then moderately cold water for an extra 30 seconds. When asked which they'd prefer to repeat, they chose the later, effectively volunteering the extra 30 seconds of discomfort. This is because our minds register the intensity of the worst part and the ending with equal weight, greatly neglecting duration.
Most breakups are "like a symphony with a screeching sound at the end--the fact that it ended badly does not mean it was all bad.
Duration Neglect: People rated a 60 year life of great joy to be more "desirable" than 60 years of great joy and 5 years of moderate joy. Try to evaluate happiness in absolute terms not relative, taking into account duration. The best way to control happiness is to control your use of time so you can find more time to do things you like.
People asked how many dates they had been on in the last month then how happy are they with their life correlated their answers. Evaluating the big picture cannot be done in a single instance.
Nothing in life is as important as you think when you are thinking about it.
A fancy car will only make you happy in relation to how much you think about your car. If it's something you don't think about often, it won't bring you much happiness.
This book has taught me so much about the way our minds take shortcuts and how those can lead to making ourselves less happy or successful than we ought to be. It urges us to put our confidence in probability and make logical decisions. Perhaps most importantly, it exposes, quantitatively, how we set ourselves up for misery with unfitting lifestyles and shortchange ourselves of life satisfaction by not employing proper methods of reflection.
Let's consider an interesting thought experiment from part 5: what percentage of the original cost would a vacation be worth to you if you wouldn't remember it or have any photos of it? Many might say that the vacation would be meaningless, worth almost nothing... but what if we reverse the scenario? Now, you will be entering a painful surgery where either way they will give you a drug at the end and you won't remember anything. You will be awake unless you choose to pay for an expensive anesthetic. All of a sudden our intuition switches and we'd be happy to fork over any amount of money. Paradoxically, in one case we do not provide much weight to the experiencing self and in the other, we consider it with the upmost importance. I think that somewhere in the mix between the paradox shown above and duration neglect may lie the answer to why the West, as a society, fails to appreciate its blessings.
Warning: philosophical rambling ahead, if that's not your cup of tea, feel free to skip to the next section.
I do not think that the West can claim it has a monopoly over the greatest life experiences. I think it can only claim the most consistent standard of living. Something of this nature would be impossible to appreciate without consideration of duration. The memory of waking up every day free of struggle, should be a much greater treasure than even the most euphoric episodes.
In North America, people spend unusual amounts of time pursuing highlight-reel memories such as vacations, extravagant dinners, parties, adrenaline etc. but no single or few events, no matter how amazing can make a difference in the overall quality of life (calculated as a sum of all good and bad experiences). Perhaps the old adage is mistaken and it's not the little things in life, it's the longer things in life that matter. This might not seem like ground breaking news--obviously longer things matter more. But it means that perhaps buying a fancy car could make you happy... provided you also buy posters and set reminders on your phone so that you think about it often. Better yet, take an interest in the maintenance and upkeep so that it stays in the back of your mind and becomes part of you, you'll then be proud that it's a suped-up convertible.
Let's return to the discussion of the experiencing self vs the remembering self. Consider whether there is a moral equivalence to every state of being for someone with severe dementia/memory loss? Even without memory of it, it is clear that a flourishing person engaging in creative activities and enjoying rich cuisine is obviously far superior to the classic drudgery of a prototypical asylum. I think that the vacation paradox reveals that we treat our own experiencing selves like a dementia patient left to boredom in the asylum--we don't advocate for that self's best interest in the way we would for a relative with memory loss. This is a meaningful blindness holding us back from achieving our best life.
This provides a strong reasoning for why we should care about a "quantitatively good life". A reasonable solution to this is to adopt everyday habits (to account for duration neglect) that are inherently enjoyable (to account for the asylum problem). Another recommendation would be to design your life so you spend as little time as possible doing obligatory things you don't want to do. Perhaps, don't set yourself up with a long commute or maybe invest in a delivery groceries subscription--whatever it looks like for you. Of course, my intention is not to discredit the highlight-reel experiences that we are often proud and nostalgic of, I am simply urging for more consideration of quantitative quality of life. As the modern world keeps us intensely busy, finding time for these sorts of things can be challenging so I will end this segment with a quote:
Discipline equals freedom