I have a love-and-hate relationship with this book.
First of all, this book is NOT for light reading. I enjoyed how the author started with a clear distinction between the two systems in our brains. One is fast, automatic, and doesn’t require energy but can be biased; the second is lazy and slow, but is the one we need to perform mental calculations and has the ability to re-program the first system. The book then builds up to explain how we make judgments and develop biases and overconfidence.
The middle part of the book, however, was infused with serious and advanced topics that I lost a little bit of the earlier excitement. It was a struggle to read in some parts. Yes, it needs system 2 for you to read a good chunk of the book! If you read it slowly (pun intended), I think there is SO MUCH to appreciate and reflect on what the author has put together. It’s not the type of book that you would read and finish in one sitting.
Favourite chapter
The book has 38 chapters (and I swear, each can be its own book) but my favourite chapter was easily Chapter 17 – “Regression to the Mean”. This topic was very interesting for me mainly because of recent personal events (cough* availability heuristic). Everything essentially converges back to the middle. Statistically speaking, tall parents will have shorter children and vice versa, amazing sales results will be followed by poor results and vice versa. My husband uses a different phrase quoted from somewhere else: “Law of averages”.
Top three quotes from the book
The first one is about WYSIATI (aka “What you see is all there is”) and the dangers around our brains’ love for a good story despite the limited information we have.
“At work here is the powerful WYSIATI. You cannot help dealing with the limited information you have as if it were all there is to know. You build the best possible story from the information available to you, and if it is a good story, you believe it. Paradoxically, it is easier to construct a coherent story when you know little, when there are fewer pieces to fit into the puzzle. Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.”
Daniel Kahneman, “Thinking, Fast and Slow”, p201
The author also talks a lot about loss aversion and how we, like animals, fight harder to prevent losses than to achieve gains, which can lead to sunk cost fallacy.
“For most people, the fear of losing $100 is more intense than the hope of gaining $150… You can measure the extent of your aversion to losses by asking yourself a question: What is the smallest gain that I need to balance an equal chance to lose $100? For many people the answer is $200, twice as much as the loss. The ‘loss aversion ratio’ has been estimated in several experiments and is usually in the range of 1.5 to 2.5.”
Daniel Kahneman, “Thinking, Fast and Slow”, p284
Lastly, the peak-end rule concept was very interesting. People rate experiences based on the “peak” (how good was the best part or how bad was the worst part) and the “end” (how the experience ended and not necessarily the average or duration of the experience). Both the peak and the end will dictate how we remember an experience.
“Confusing experience with the memory of it is a compelling cognitive illusion – and it is the substitution that makes us believe a past experience can be ruined. The experiencing self does not have a voice. The remembering self is sometimes wrong, but it is the one that keeps score and governs what we learn from living, and it is the one that makes decisions. What we learn from the past is to maximize the qualities of our future memories, not necessarily of our future experience. This is the tyranny of the remembering self.”
Daniel Kahneman, “Thinking, Fast and Slow”, p381
Would I recommend it?
Absolutely. I learnt a great deal and there is seriously SO MUCH to learn from this book. I’d give this a rating of 4.8 out of 5 because of the great deal of complexity the author went into and the intriguing concepts I picked up in this book. The -0.2 is because of the very small font and spacing in the text, and some parts went over the top especially when the author talks about “less is more” in an earlier chapter.