The first time I encountered the name “Daniel Kahneman” was in a behavioral economics class, where we were introduced to his seminal 1979 Econometrica paper on “prospect theory.” Initially, I pigeonholed him as an economist—a label he might not dispute, given his significant contributions to the interdisciplinary field of experimental economics, which bridges psychology and economics and has been instrumental in the development of behavioral economics.
However, Daniel Kahneman is perhaps more a psychologist than an economist. The recent Freakonomics podcast episode, “The Men Who Started a Thinking Revolution (Update),” features an interview with journalist Michael Lewis about his 2016 book The Undoing Project, which offers a high-level exploration of Kahneman’s impact on our understanding of ourselves.
Some brilliant highlights from the podcast:
Michael Lewis
There aren’t many people in the world who write excellent books that also get turned into excellent films. Among them is this guy …
Michael LEWIS: My name is Michael Lewis and I just think of myself as a writer.
For context, Moneyball (2011)—a six-time Academy Award nominee directed by Bennett Miller and starring Brad Pitt—was based on Lewis’s 2003 book of the same name. Adam McKay’s The Big Short (2015), which depicts Wall Street maneuvers during the 2007-2008 U.S. housing bubble, was also adapted from one of Lewis’s works. At first glance, Lewis’s books might not seem suited for Hollywood adaptations.
LEWIS: I was astonished that anybody bothered to make Moneyball*, much less* The Big Short*. And so my experience with the movie business is peculiar because what seems to happen is I write books that are ever harder to turn into movies and they work ever harder to make them into movies.*
His latest challenge is The Undoing Project, which focuses on two academics—Israeli psychologists Amos Tversky and Danny Kahneman—who spent decades together writing papers.
Amos Tversky, and Daniel Kahneman
Amos was asked once by somebody who says “Does the work you and Danny do have any bearing on artificial intelligence?”
And Amos said: “I’m much more interested in natural stupidity than I am in artificial intelligence.”
Although Amos Tversky passed away in 1996, before Kahneman won the 2002 Nobel Prize and published the wildly popular Thinking, Fast and Slow in 2011, Tversky’s contributions are no less significant. The book offers a more personal view on Tversky and Kahneman, resembling a biography more than a semi-technical textbook.
Michael Lewis’s The Undoing Project is a portrait of two men who redefined many of our assumptions about human thought and decision-making. Kahneman and Tversky met in the late 1960s at Hebrew University in Jerusalem. Despite their differences—Tversky was outgoing and assertive, Kahneman introspective and riddled with insecurities—they looked at psychology from very different angles at the beginning. Tversky, being a mathematical psychologist, happily accepted the assumptions of economics and mathematical psychology—that people are basically rational and good intuitive statisticians when making decisions. Kahneman, on the other hand, being less mathematically inclined but highly intuitive, thought mainstream economics and psychology’s rationality assumptions were ludicrous and told Tversky as much.
LEWIS: Kahneman thought that the standard assumptions of mainstream economics and psychology were ridiculous. And he said so, to Amos Tversky’s face, when Kahneman invited Tversky to speak to a graduate seminar that Kahneman was teaching. Tversky, with his usual brio, began to extol the notion that most people are pretty good at making decisions based on a rational assessment of the available information.
Danny is the first one to really challenge him on this saying, “I’m not! I make mistake after mistake after mistake and I’m smarter than most of the people I know. This is nonsense, that I can show to you that people make systematic mistakes when they’re faced with decisions and judgments.” And this intrigued Amos. And very quickly they’re in a room together with a door shut and don’t want to see anybody else. And a collaboration begins. And the collaboration is all about the exploration of how the human mind actually works.
So the story begins. Btw, this collaboration was surprising to just about everyone at Hebrew University.
LEWIS: They were regarded as two big dogs on campus yet they were also regarded as polar opposites. No one who knew them both could imagine them spending five minutes together. Kahneman was difficult, neurotic, seemingly perpetually unhappy, full of doubt, you know, tortured. He was very fertile, had lots of ideas, but the minute he had the ideas he thought they were crap and he would walk away from his own ideas very quickly. What he says now is he had a peculiar talent for changing his mind. He liked changing his mind. That’s a nice spin —
DUBNER: Do you believe it?
LEWIS: I think it’s much more complicated than that. I think that he doesn’t know what stability feels like. He was a child of the Holocaust. He spent ages 7, 8, 9, 10, 11 being chased through southern France by Nazis and hiding in chicken coops and barns. He watched his father die because he couldn’t seek medical treatment for fear of being caught by the Germans. And he himself has as one of his central qualities a kind of evasiveness. People found him hard to know. But incredibly talented.
Aside from their significant contributions to psychology, economics, and public welfare—including in the medical field—Kahneman and Tversky have profoundly impacted countless lives, whether individuals recognize it or not.
LEWIS: It’s a messy story, but it is incredible to me how many different spheres of human existence these guys’ work has touched and influenced. So it’s not just economics. You know, medicine. It’s now a standard part of medical training for doctors to be introduced to Kahneman and Tversky’s work or at least their ideas, because they’re going to be rendering intuitive judgments about patients and they need to be aware of how they might be fallible. In government, I think the big influence that Amos and Danny have had is in an awareness of the importance of choice architecture — that the environment in which people make the decision has a huge effect on the decision. And if you want government workers to save more money, you design the pension plans so that they have to opt out of them rather than opt into them. And all of a sudden you double or triple the savings rates. If you want school lunches to be healthy, you create the default option as a healthy option and force to kids to trade it in for a less healthy option if they want it. There are units in the U.S. government, in the British government, in the Australian government, the German government’s interested in it, the Scandinavian governments. They’re calling them Nudge units, after Dick Thaler and Cass Sunstein’s work. But this job is really to create environments that will lead people to make choices that are good for them. And that really comes out of Danny and Amos’s work. One of their great discoveries is that people don’t make clean, clear decisions between things, or choices between things. They make choices between descriptions of things. And so how things are described have a huge effect on the way people choose, and governments are often charged with creating these decision-making environments.
Amidst the backdrop of their groundbreaking work, it’s remarkable how fate serendipitously united these two distinct scholars, blending their complementary talents to unfurl a narrative that has profoundly shaped our understanding of human decision-making.
DUBNER: So these two guys, Danny Kahneman and Amos Tversky, had an incredibly fruitful, original intellectual partnership that was also a very rocky relationship. At times Danny felt that Amos was getting a lot of credit for their work. Danny could be resentful and insecure, and as you write the story, three days before Amos Tversky was diagnosed with melanoma they had effectively ended their friendship. Kahneman called it a “divorce.” Amos died. Danny later won a Nobel Prize in economics and Amos, being dead, was not eligible to receive that. So Danny wins the Nobel for work that had been done largely with Amos. So talk for a minute about Danny’s feelings about the award and all the recognition and opportunity it brought to him with his partner gone.
LEWIS: One of the most lovable things about Danny Kahneman is as much as he tortures other people with his doubt, he tortures himself even more. And when Amos had died, he was left with a sense, Danny, that the world found their work extremely important, but maybe thought maybe he didn’t have much to do with it.
Personally, I’m finding that Daniel Kahneman has influenced me more than I had imagined. Before I was even aware of his name, I had read Thinking, Fast and Slow mindlessly in high school, simply picking one and the book from my dad’s shelf. Many of my friends idolize Kahneman, and being aware of his ideas and research results has completely shifted the way I view and plan my life. And the same seems to be true for Stephen DUBNER:
DUBNER: And he deserves it, frankly, right?
LEWIS: My God. I’ve written about a lot of people and I’ve got a lot of characters in my life over the course of my career. I’ve never had one of such depth of interest as Danny Kahneman. Everything that comes out of his mouth is interesting. Everything he thinks is interesting. He just doesn’t believe it.
(Dubner) For the record, it was the work of Kahneman and Tversky that first got me interested in economics, and which led to Freakonomics. Before them, economics seemed too methodical; too bloodless. So I’m grateful to Danny Kahneman and Amos Tversky for shining their light into the human brain—and I’m thankful to Michael Lewis for shining his light on them.
Disclaimer: The content within the quotations in this blog post has been adapted from the Freakonomics podcast episode “The Men Who Started a Thinking Revolution (Update).” I do not claim originality for these excerpts, and all intellectual contributions belong to the original authors and the production team of the Freakonomics podcast.