Daniel Kahneman’s Thinking, Fast and Slow is an important book, well deserving of its Wikipedia page. Kahneman, along with his late partner Amos Tversky, won the Nobel Prize in Economic Sciences even though the pair are psychologists. They have a genius for creative experimentation. The book is a high-level summation of their research, along with more information about Kahneman’s other work. It is well-written, engaging, and a devastating critique of the rational actor model for human behavior. Finishing this, one cannot help but question all those tidycharts in Economics 101 and 102. Humans simply are not wired in ways that many social scientists assume.
Kahneman argues that humans have two basic systems for processing information, fast and slow. The fast system is good at snap judgments, identifying threats, making linkages, and is emotional. The slow system is methodical, analytic, and deliberative. After demonstrating how these two systems operate, Kahneman walks us through the many ways that they shape decision-making. We over-fear loss, are unduly optimistic, are susceptible to anchoring effects, and basically cannot think statistically. Sprinkled throughout the text are many examples and exercises that demonstrate our all too human failings.
Thinking, Fast and Slow may seem a bit reminiscent of a text-book, idea following idea following idea. Accordingly, it is best digested slowly. Economic consequences, unsurprisingly, readily leap to mind when considering many of the examples. We have difficulty pricing things consistently, for example, and often throw good money after bad when we making a poor investment.
The book is much more than economics. Kahneman’s lessons have valuable implications for education. Most directly, financial literacy could be taught giving students a much stronger understanding of statistical thinking.
More substantial innovation, however, might be possible, ranging from encouraging students to frown (it engages system 2 thinking) to re-configuring grading systems to provide more effective means of motivation. I am sure that the right group of educators in the right environment with the right incentives could do much with these ideas. And knowing how many have read Kahneman’s work and how keen we all are on improving student learning, I am optimistic that news ways of applying behavioral economics in a learning environment are already taking place.