Wednesday, March 14, 2012

Mind games

Picture this: you’re on your way to a movie and you lost some money. There are high chances that you’ll still buy the ticket thinking of it as a minor dent in your decent-by-any-standards back account. However, if you lose the ticket you might think of it as double the charge and you might very well skip the movie. Both the situations look similar but they are not. According to his dazzling book Thinking, Fast and Slow, Daniel Kahneman, a 2002 Noble laureate in Economics, your brain’s ‘System 2’ was at work in the former situation while ‘System 1’ was activated in the latter one.

System 1 is what stimulates our intuitions and our basic thinking automatically. While System 2 prods us to go beneath the surface and demands concentration. Aided by stupendous examples, Kahneman sets out to explain his hypothesis in an engaging manner. Sample this: “tired and hungry judges tend to fall back on the easier default position of denying requests for parole”. That begs the obvious question: If we know very well that System 2 is what drives the all-important decisions, why do we rely on the unreliable System 1? The answer is that System 2 is lazy. We don’t usually prefer to burn our grey cells when System 1 has something to offer to us readily.

Divided into five parts with the two Systems as the recurring theme Thinking, Fast and Slow can easily be titled as Psychoanalysis For Dummies. There’s absolutely no human tic that Kahneman leaves out in this 500-page monument for human brain. Here are a few names that he invented to describe the cognitive illusions a human is usually prone to: “illusion of validity,” “availability bias,” “endowment effect,” “anchoring” among many others. Illusion of validity means that what we perceive as a skill that we excel in is actually not very useful. Kahneman posits that at the heart of it a stock broker and a dart-throwing chimp have nothing much to distinguish. Availability bias alludes to the basic human tendency to evaluate a situation on the basis of past knowledge, which will be exaggerated. Traveling by train because there have been a couple of air crashes in the recent past is an example.

Endowment effect can be used to define situations where we attach higher significance/cost to things that we own than when they are owned by someone else. A common example is of selling stocks that are trading higher than the ones in the red. After all, losses loom larger than gains. Anchoring can be best explained through the following example, “If you consider how much you should pay for a house, you will be influenced by the asking price. The same house will appear more valuable if its listing price is high than if it is low.” Kahneman coins an abbreviation WYSIATI (What You See Is All There Is) for our Pavlovian reflex of focusing on existing evidence and ignoring absent evidence.

Will these terms help us curb our natural instincts is debatable but at least Kahneman, a Princeton University professor, makes sure that we have something to address retrospectively and probably avoid in the future. Thinking, Fast and Slow might resemble Malcolm Galdwell’s Blink, a book on intuition, but Kahneman combines his superb knowledge of behavioural economics and psychoanalysis to produce something monstrously original. It’s almost like watching David Lynch’s Mullholand Drive where your intellectual toolkit is reduced to nothing in no time. The reader is bound to have lot of gotcha moments. Here’s one, “The odds that “the odds of survival one month after surgery are 90%” is more reassuring than the equivalent statement that “mortality within one month of surgery is 10%.””

The chapter on “base rate concept” according to which we presume a lot of things without ever delving deeper into the missing pieces of the jigsaw puzzle, is the book’s major triumph. The book is a strong recommendation just for the way it exposes all the latent flaws within a human. When we witness an accident but someone else is already helping the victim we feel relieved of responsibility and get on with our usual work.

If there’s a problem with the book it has to be the glaring omission of the name of Sigmund Freud. In the 32 pages of endnotes, there’s not a single reference to the man deemed to be a one-man industry in the field of psychology in the first half of twentieth century. Freud may be regarded as a quack for his Oedipus Complex findings, which an experimental scientist like Kahneman will readily dispel as hallucinations. Still, Kahneman should have given Freud’s fancy theories a patina of respect. Apart from that, Thinking, Fast and Slow is an astonishingly brilliant book.


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