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Book Review:
Thinking, Fast and Slow by Daniel Kahneman Review by Kris Freeberg, Economist Book finished May 2017 Review written July 2017 |
Favorite quote:
". . . true experts know the limits of their knowledge" (page 239).
". . . true experts know the limits of their knowledge" (page 239).
Reading this book may help you make a lot more money. It sure helped me.
It was recommended to me by a user of the HWD Productivity & Project Management application. He appreciated the "slow thinking" that had gone into its development.
"Slow thinking." On first glance that might appear insulting, as in "stupid."
But it's not; it's a compliment. "Slow" means careful, deliberate, accurate; what Kahneman calls "effortful." "Fast" thinking, on the other hand, means primal ("lizard brain"), instinctive, hasty, sloppy, prejudiced, jumping to spurious conclusions; (one might even say, beastly); what he calls "automatic."
Software designed with slow thinking works. Software designed with fast thinking doesn't. It's hastily slapped together and shipped to meet some arbitrary deadline.
Both fast and slow thinking have their appropriate places. Consider driving a car. Fast thinking is what we do when we're driving straight down the freeway. We steer, accelerate, and brake automatically. While doing this, we can listen to the radio or carry on a conversation with passengers.
Slow thinking, on the other hand, is what we do when we make a left turn. We have to shut down distractions and focus on the oncoming traffic, timing the turn to avoid a head-on collision.
That's the difference in a nutshell. Kahneman calls fast, automatic, instinctive thinking "System 1" (in the end of the book, "The Experiencing Self") and the slow, careful, "effortful" thinking "System 2" (in the end of the book, "The Remembering Self"). But in more than four hundred pages he does such an excellent job of unpacking the subject that he won a Nobel Prize in Economics, and the book became a New York Times bestseller.
He points out how System 2 is "lazy." It has to be woken up; and often, the way that waking happens is via surprise.
Think about how surprise works: it's when our expectations are contradicted. We expected this, and that happened instead.
Surprise causes us to stop and think: "Where did I go wrong? How are my wires crossed? What did I misunderstand? What is exceptional about this incident?"
System 2 thinking is effortful. It burns a lot of energy. That's where System 1 comes in: it helps us conserve energy by developing what Kahneman calls "heuristics" or rules of thumb about normalcy. System 1 lets us go on "automatic pilot" about things that are normally true most of the time, so we can afford the energy necessary to cope with exceptions.
The problem is, if we get into the habit of relying on surprises to trigger System 2, of only thinking carefully when we're surprised, we may easily lapse into a fairly thoughtless (beastly) life that is confined by incorrect assumptions, or prejudices.
So the challenge, the key to (I would say) being Fully Human, is, instead of depending on surprises to trigger System 2, to invoke it at will.
And I find that this necessity is not confined to lofty intellectuals immured in the groves of academe. On the streets it's called "staying woke." It's everybody's business.
Intuition. One of the things I really appreciated about Kahneman's work is in how he de-mystifies Intuition, which gets a lot of hype around here in the Pacific Northwest and on the West Coast among self-styled, so-called "Creatives."
In 2005, in Blink: Thinking Without Thinking, Malcom Gladwell treated Intuition as a mystery. Kahneman mentions the book on page 235. Six years later, Kahneman masterfully de-mystified it by showing how we develop Intuition through a series of mutually validating experiences that shape our sense of normalcy.
Collectively, this body of experiences forms what we normally understand to be Intuition.
It's not special. Everybody has it; or at least, everybody has the potential to develop and experience it.
The reason it's important to de-mystify and, I would say, "Democratize" Intuition is, that those who adopt a sort of Gnostic view of it, as though it were a "special" gift possessed by some and not by others, is that a kind of Licentiousness can set in, in which "Intuitive" "Creatives" use their "special" gift of Intuition to excuse themselves from THINKING; that is, the "effortful" System 2 type thinking that is the subject of Kahneman's book that, in the final analysis, marks the difference between being beastly, and being human.
Put more bluntly, they'll "play the Intuition Card" to excuse themselves from the hard work of thinking. But if we understand that there IS no "Intuition Card" because it's not special - everybody has it - then thinking becomes everybody's business.
And that's a good thing.
Substitution. Another thing I really appreciated was how he unpacked the problem of answering questions nobody asked. Politicians do this all the time and it drives me nuts. Kahneman taught me to have a little more patience and compassion for people who do this by explaining how they may not necessarily be dodgy deceitful scoundrels. They may be subconsciously practicing what he calls "substitution": answering an easier question than the harder one that was asked, without even being aware that they're doing it.
WYSIATI. "What You See Is All There Is." This is the somewhat conceited notion that we are all-seeing and all-knowing. Jesus talked about having eyes that don't see and ears that don't hear, rebuked Pharisees for being "blind guides", and talked about the importance of removing planks from our own eyes before we remove specks from others'.
Sure enough, our senses can and do fail us all the time. Check this out:
It was recommended to me by a user of the HWD Productivity & Project Management application. He appreciated the "slow thinking" that had gone into its development.
"Slow thinking." On first glance that might appear insulting, as in "stupid."
But it's not; it's a compliment. "Slow" means careful, deliberate, accurate; what Kahneman calls "effortful." "Fast" thinking, on the other hand, means primal ("lizard brain"), instinctive, hasty, sloppy, prejudiced, jumping to spurious conclusions; (one might even say, beastly); what he calls "automatic."
Software designed with slow thinking works. Software designed with fast thinking doesn't. It's hastily slapped together and shipped to meet some arbitrary deadline.
Both fast and slow thinking have their appropriate places. Consider driving a car. Fast thinking is what we do when we're driving straight down the freeway. We steer, accelerate, and brake automatically. While doing this, we can listen to the radio or carry on a conversation with passengers.
Slow thinking, on the other hand, is what we do when we make a left turn. We have to shut down distractions and focus on the oncoming traffic, timing the turn to avoid a head-on collision.
That's the difference in a nutshell. Kahneman calls fast, automatic, instinctive thinking "System 1" (in the end of the book, "The Experiencing Self") and the slow, careful, "effortful" thinking "System 2" (in the end of the book, "The Remembering Self"). But in more than four hundred pages he does such an excellent job of unpacking the subject that he won a Nobel Prize in Economics, and the book became a New York Times bestseller.
He points out how System 2 is "lazy." It has to be woken up; and often, the way that waking happens is via surprise.
Think about how surprise works: it's when our expectations are contradicted. We expected this, and that happened instead.
Surprise causes us to stop and think: "Where did I go wrong? How are my wires crossed? What did I misunderstand? What is exceptional about this incident?"
System 2 thinking is effortful. It burns a lot of energy. That's where System 1 comes in: it helps us conserve energy by developing what Kahneman calls "heuristics" or rules of thumb about normalcy. System 1 lets us go on "automatic pilot" about things that are normally true most of the time, so we can afford the energy necessary to cope with exceptions.
The problem is, if we get into the habit of relying on surprises to trigger System 2, of only thinking carefully when we're surprised, we may easily lapse into a fairly thoughtless (beastly) life that is confined by incorrect assumptions, or prejudices.
So the challenge, the key to (I would say) being Fully Human, is, instead of depending on surprises to trigger System 2, to invoke it at will.
And I find that this necessity is not confined to lofty intellectuals immured in the groves of academe. On the streets it's called "staying woke." It's everybody's business.
Intuition. One of the things I really appreciated about Kahneman's work is in how he de-mystifies Intuition, which gets a lot of hype around here in the Pacific Northwest and on the West Coast among self-styled, so-called "Creatives."
In 2005, in Blink: Thinking Without Thinking, Malcom Gladwell treated Intuition as a mystery. Kahneman mentions the book on page 235. Six years later, Kahneman masterfully de-mystified it by showing how we develop Intuition through a series of mutually validating experiences that shape our sense of normalcy.
Collectively, this body of experiences forms what we normally understand to be Intuition.
It's not special. Everybody has it; or at least, everybody has the potential to develop and experience it.
The reason it's important to de-mystify and, I would say, "Democratize" Intuition is, that those who adopt a sort of Gnostic view of it, as though it were a "special" gift possessed by some and not by others, is that a kind of Licentiousness can set in, in which "Intuitive" "Creatives" use their "special" gift of Intuition to excuse themselves from THINKING; that is, the "effortful" System 2 type thinking that is the subject of Kahneman's book that, in the final analysis, marks the difference between being beastly, and being human.
Put more bluntly, they'll "play the Intuition Card" to excuse themselves from the hard work of thinking. But if we understand that there IS no "Intuition Card" because it's not special - everybody has it - then thinking becomes everybody's business.
And that's a good thing.
Substitution. Another thing I really appreciated was how he unpacked the problem of answering questions nobody asked. Politicians do this all the time and it drives me nuts. Kahneman taught me to have a little more patience and compassion for people who do this by explaining how they may not necessarily be dodgy deceitful scoundrels. They may be subconsciously practicing what he calls "substitution": answering an easier question than the harder one that was asked, without even being aware that they're doing it.
WYSIATI. "What You See Is All There Is." This is the somewhat conceited notion that we are all-seeing and all-knowing. Jesus talked about having eyes that don't see and ears that don't hear, rebuked Pharisees for being "blind guides", and talked about the importance of removing planks from our own eyes before we remove specks from others'.
Sure enough, our senses can and do fail us all the time. Check this out:
For longer than I can recall, I have always recognized and said that the inherent Dilemma of Being Human is not knowing what we don't know. This is why being a conceited know-it-all is such a tragic road toward Arrested Development.
We're born knowing nothing, and hopefully, we progress from there, continuing in a state of life-long learning. Hopefully, we never stop regardless how many authorities or institutions may congratulate us for finishing or for having arrived.
If we ever settle smugly into the comfortable delusion that we're done, that we now know everything there is to know about anything . . . at that moment, we arrest our own development. At that moment, I would say, we stop being Human; we become beastly, even zombified. That moment marks the beginning of the end; it is like an existential death, more grievous than physical death, because it is entirely voluntary and self-imposed.
This is why we must always remain teachable. All of us have blind spots. We're like swiss cheese: full of holes. This is why we need each other and why humility is so important. I really appreciate how with his WYSIATI acronym. many illustrations, and dry endearing wit, combined with his own self-effacing humility, Kahneman makes the Humility Mandate so obvious.
Probability. Kahneman points out how even Statisticians are terrible Statisticians. That is, when they skip the math and depend instead on their own guts to judge probability, they're wrong. They fail.
There's no substitute for doing the math.
Recently I suggested to a dear friend that we "think about the hazards we don't think about" (via SWOT Analysis) as well as the ones we do think about, because odds are, the hazards we don't think about are more likely to happen than the hazards we do think about.
For example, contrast the odds of injury or death from distracted driving with the odds of injury or death from a terrorist attack or plane crash. Clearly, the odds of injury or death from distracted driving are higher, but we don't think about them because . . . well, we're distracted. Distraction is how it happens in the first place. We're more focused on what I call "The Big Them" (whom we can't control) than the rascal in the mirror (whom we can control).
(Underlying this tendency to displace probability may be Narcissistic motivation. In 2015 I also studied Narcissism in considerable depth, and learned that Displacement is a common Narcissistic behavioral pattern.)
Anchors. I used lessons from Kahneman's book to improve my income. In Chapter 11, one of the ways he discusses Anchors is in the context of price negotiations.
Ordinarily, the Human Condition being what it is, most of us are Epistemologically and Axiologically fragile. That is, we're not sure what we can believe and we're not sure what's valuable. We're shaky on Truth and Value.
Because Truth and Value are difficult to ascertain, some despair entirely of the objective existence of either, becoming Nihilists, uttering absurdities like:
Comparison shopping is System 1 thinking. It's lazy, it's expedient, it merely glances at obvious nearby alternatives. By contrast, getting to the bottom of difficult Epistemological and Axiological questions - questions of bottom-line Truth, and bottom-line Value - is hard, "effortful" System 2 type work. Most of the time, most people are not equal to the challenge, making them susceptible to, for example, fake "deals" in which a price is artificially raised, then "discounted."
Think of the difference between, say, a Warren Buffett and Joe Average Investor. Warren didn't just read Benjamin Graham's Securities Analysis; he devoured it and made it Berkshire Hatheway's playbook and, as a consequence, has become such an expert at assessing Intrinsic Value that the rest is history.
But reading Graham's book is hard, effortful, System 2 type work. So is putting the theory in its pages into practice by assiduously studying the balance sheets and annual reports of countless companies.
In many cases, the best we can do is comparison shop. But comparison is always relative, and it begins with a beginning, an anchor. Kahneman showed how whoever starts the negotiation by setting the anchor, usually wins. Owning initiative, and being Epistemologically and Axiologically solid - that is, being confident about Truth and Value - are powerful.
Back to Normal. In Chapter 17, Kahneman calls it "Regression Toward the Mean" and, as a student of Statistics, I had always thought of statistical regression in dry, quantitative, mathematical terms. But Kahneman shows how "regression" is a loaded value judgment - the opposite of "progression" - and rightfully so. He shows how "normal" isn't necessarily GOOD. It's simply what we're used to, or what is clustered in the middle of a mob.
By definition, Excellence is pro-social deviance. It is NOT normal. It's waaayyyyy out there on the right tail of the bell shaped normal curve.
In the middle is mediocrity. In this sense, "regression" isn't just a mathematical computation. It's a bad thing. It's the opposite of progress. It's degrading.
Chapter 17 is deep. It requires repeated review to master - at least, for my mind anyway. Kahneman gives many mathematical examples of how we unintentionally "mediocratize" ourselves by failing to notice how Regression to the Mean happens, and how it hurts us.
But to simplify: just think of a dysfunctional family that may be used to things like alcoholism, pathological hoarding, petty crime, malnutrition, obesity, quarreling, indolence, and poverty. To them, that's their "normal."
Then think about one family member who wakes up one day and decides that s/he is sick and tired of being sick and tired. S/he starts going to the gym, eating healthy, cleaning up, detoxing, getting organized, working more, loafing less, and making healthier friends.
During that time there's tension between the one family member's progress, and everyone else's unhealthy habits. During the improvement, there might be occasional confrontations and conflicts. Eventually the improving family member moves on and proceeds to thrive.
Meanwhile the rest of the family remains where they are and, relieved of the one's influence, they go back to normal. The house becomes dirty and cluttered again. They loaf more and work less.
Back to normal. This is what I understand Kahneman means by "Regression to the mean."
The Endowment Effect: A bird in hand is worth two in the bush. I will not risk violating a copyright by posting a photograph of a page in the book. But on page 283 there is a graph showing how people value avoiding losses more than they value enjoying gains. "Losses evoke stronger negative feelings than costs" (364). That one graph is golden in terms of understanding motivation, human behavior, effective negotiation, and opportunity management.
The implications are staggering. This lesson caused me to evaluate my own life critically and to choose my own battles much more wisely. Much of the time when we fight, we're fighting for what we have; we are fighting to prevent a loss.
It caused me to wonder: instead of fighting to prevent loss; instead of fighting for what I have; what if I spent the same effort on developing new gains, on exploring new horizons, on gaining new territory, on forming new alliances, on making new deals?
In very plain financial terms, one way to apply this lesson is on the question of whether to focus effort on decreasing expenses, or on increasing income. Nobody is born balanced in this area. People accustomed to the middle class and below (the majority of the population) are used to a fairly fixed, non-negotiable income; so in their view, the only negotiable, adjustable part of their economy is spending.
But for the minority of the populations that is above the middle class, they've learned that income can also be negotiable. Some of them fall for the opposite hazard, of making money hand over fist but letting expenses run wild. What's necessary and wise is a balanced approach of both securing a robust income, and spending it wisely.
But nobody is born balanced. Very few individuals or groups attain and sustain this balance. Most flail. That's why professional help is so important.
I happen to come from a lower middle class, austere Scandinavian peasant background that's very focused on keeping what little you have and avoiding loss at all costs, on fighting over scraps. Reading this book totally shifted my paradigm and taught me to pick my battles much more carefully. Now I'm focused on progressing in all things, on avoiding minor skirmishes and winning major victories, the ultimate of which isn't even personal; it's paying off the national debt.
Related to this matter of Loss Aversion, another key page in the book to note is page 317 in Chapter 29, "The Fourfold Pattern." It shows how in their zeal to avoid loss, people will do foolish, crazy, desperate things. I think of it as a great Crazy Firewall . . . that is, not a firewall that is crazy, but a firewall that can protect you from Crazy.
Well-Being, Duration, and Peak Experiences. The final chapters 36-38 (Life as a Story, Experienced Well-Being, & Thinking About Life) and the Conclusion caused me to reflect critically on how I want my own life to go. It reminded me that we're wired to remember and derive satisfaction from "Peak Experiences."
For example I can still remember vividly moments in the Boy Scouts paddling the Bowron Lakes in Canada, sleeping under the stars while cycling through the San Juan and Gulf Islands, or enjoying the view from the peak of a mountain in the Cascades, seeing so far that it seemed like you could actually see the stuff that makes the sky blue.
Kahneman uses a vacation as a simple example. After the fact, what seems to matter to people is not whether a vacation was over a long weekend or a whole month or more. Regardless whether the vacations were short or long, what matter are the peak experiences. So if there were more memorable, vivid, peak experiences during a long weekend costing, say, $400, than during a month long vacation costing, say, $7,000, the $400 vacation was more valuable.
Likewise with longsuffering. If it leads to some kind of victory or reward, the length of the suffering isn't what's memorable; the reward is.
Beginning with the work of Mihaly Csikszentmihalyi on page 40, Kahneman sprinkles throughout the book notions of Flow, Attention, and Goals as keys to happiness and well being. That is, "Flow" is not so much a goal as it is evidence that the goal is being reached. When people are in a state of Flow, totally engrossed in what they are doing (as I've been for the past five or so hours writing this review), that's as good as it gets. They are well; they are happy. And usually, as he mentions on page 401, "Goals make a large difference" because when people have goals, that is where they focus their attention; and it's within this state of focused attention that Flow happens.
Final Thoughts. I'll let Kahneman himself finish this review with the final few quotes that I underlined in his Conclusion:
"The way to block errors that originate in System 1 is simple in principle: recognize the signs that you are in a cognitive minefield, slow down, and ask for reinforcement from System 2."
"Unfortunately, this sensible procedure is least likely to be applied when it is needed most. We would all like to have a warning bell that rings loudly whenever we are about to make a serious error, but no such bell is available, and cognitive illusions are generally more difficult to recognize than perceptual illusions."
"More doubt is the last thing you want when you are in trouble."
"An organization that seeks to improve its decision product should routinely look for efficiency improvements . . . . The operative concept is routine" [my emphasis].
"Constant quality control is an alternative to the wholesale reviews of processes that organizations commonly undertake in the wake of disasters" [a.k.a. "Crisis Management"].
"There is much to be done to improve decision making. One example out of many is the remarkable absence of systematic training for the essential skill of conducting efficient meetings" [also my emphasis].
"Ultimately, a richer language is essential to the skill of constructive criticism . . . ."
Respectfully submitted,
Kris Freeberg, Economist
Making End$ Meet
www.makinendsmeet.com
[email protected]
(360) 224-4322
We're born knowing nothing, and hopefully, we progress from there, continuing in a state of life-long learning. Hopefully, we never stop regardless how many authorities or institutions may congratulate us for finishing or for having arrived.
If we ever settle smugly into the comfortable delusion that we're done, that we now know everything there is to know about anything . . . at that moment, we arrest our own development. At that moment, I would say, we stop being Human; we become beastly, even zombified. That moment marks the beginning of the end; it is like an existential death, more grievous than physical death, because it is entirely voluntary and self-imposed.
This is why we must always remain teachable. All of us have blind spots. We're like swiss cheese: full of holes. This is why we need each other and why humility is so important. I really appreciate how with his WYSIATI acronym. many illustrations, and dry endearing wit, combined with his own self-effacing humility, Kahneman makes the Humility Mandate so obvious.
Probability. Kahneman points out how even Statisticians are terrible Statisticians. That is, when they skip the math and depend instead on their own guts to judge probability, they're wrong. They fail.
There's no substitute for doing the math.
Recently I suggested to a dear friend that we "think about the hazards we don't think about" (via SWOT Analysis) as well as the ones we do think about, because odds are, the hazards we don't think about are more likely to happen than the hazards we do think about.
For example, contrast the odds of injury or death from distracted driving with the odds of injury or death from a terrorist attack or plane crash. Clearly, the odds of injury or death from distracted driving are higher, but we don't think about them because . . . well, we're distracted. Distraction is how it happens in the first place. We're more focused on what I call "The Big Them" (whom we can't control) than the rascal in the mirror (whom we can control).
(Underlying this tendency to displace probability may be Narcissistic motivation. In 2015 I also studied Narcissism in considerable depth, and learned that Displacement is a common Narcissistic behavioral pattern.)
Anchors. I used lessons from Kahneman's book to improve my income. In Chapter 11, one of the ways he discusses Anchors is in the context of price negotiations.
Ordinarily, the Human Condition being what it is, most of us are Epistemologically and Axiologically fragile. That is, we're not sure what we can believe and we're not sure what's valuable. We're shaky on Truth and Value.
Because Truth and Value are difficult to ascertain, some despair entirely of the objective existence of either, becoming Nihilists, uttering absurdities like:
- "There is no Truth."
- "Whatever's true for you . . . ."
- "It's all good."
- "One man's junk is another man's treasure."
- "Beauty is in the eye of the beholder."
Comparison shopping is System 1 thinking. It's lazy, it's expedient, it merely glances at obvious nearby alternatives. By contrast, getting to the bottom of difficult Epistemological and Axiological questions - questions of bottom-line Truth, and bottom-line Value - is hard, "effortful" System 2 type work. Most of the time, most people are not equal to the challenge, making them susceptible to, for example, fake "deals" in which a price is artificially raised, then "discounted."
Think of the difference between, say, a Warren Buffett and Joe Average Investor. Warren didn't just read Benjamin Graham's Securities Analysis; he devoured it and made it Berkshire Hatheway's playbook and, as a consequence, has become such an expert at assessing Intrinsic Value that the rest is history.
But reading Graham's book is hard, effortful, System 2 type work. So is putting the theory in its pages into practice by assiduously studying the balance sheets and annual reports of countless companies.
In many cases, the best we can do is comparison shop. But comparison is always relative, and it begins with a beginning, an anchor. Kahneman showed how whoever starts the negotiation by setting the anchor, usually wins. Owning initiative, and being Epistemologically and Axiologically solid - that is, being confident about Truth and Value - are powerful.
Back to Normal. In Chapter 17, Kahneman calls it "Regression Toward the Mean" and, as a student of Statistics, I had always thought of statistical regression in dry, quantitative, mathematical terms. But Kahneman shows how "regression" is a loaded value judgment - the opposite of "progression" - and rightfully so. He shows how "normal" isn't necessarily GOOD. It's simply what we're used to, or what is clustered in the middle of a mob.
By definition, Excellence is pro-social deviance. It is NOT normal. It's waaayyyyy out there on the right tail of the bell shaped normal curve.
In the middle is mediocrity. In this sense, "regression" isn't just a mathematical computation. It's a bad thing. It's the opposite of progress. It's degrading.
Chapter 17 is deep. It requires repeated review to master - at least, for my mind anyway. Kahneman gives many mathematical examples of how we unintentionally "mediocratize" ourselves by failing to notice how Regression to the Mean happens, and how it hurts us.
But to simplify: just think of a dysfunctional family that may be used to things like alcoholism, pathological hoarding, petty crime, malnutrition, obesity, quarreling, indolence, and poverty. To them, that's their "normal."
Then think about one family member who wakes up one day and decides that s/he is sick and tired of being sick and tired. S/he starts going to the gym, eating healthy, cleaning up, detoxing, getting organized, working more, loafing less, and making healthier friends.
During that time there's tension between the one family member's progress, and everyone else's unhealthy habits. During the improvement, there might be occasional confrontations and conflicts. Eventually the improving family member moves on and proceeds to thrive.
Meanwhile the rest of the family remains where they are and, relieved of the one's influence, they go back to normal. The house becomes dirty and cluttered again. They loaf more and work less.
Back to normal. This is what I understand Kahneman means by "Regression to the mean."
The Endowment Effect: A bird in hand is worth two in the bush. I will not risk violating a copyright by posting a photograph of a page in the book. But on page 283 there is a graph showing how people value avoiding losses more than they value enjoying gains. "Losses evoke stronger negative feelings than costs" (364). That one graph is golden in terms of understanding motivation, human behavior, effective negotiation, and opportunity management.
The implications are staggering. This lesson caused me to evaluate my own life critically and to choose my own battles much more wisely. Much of the time when we fight, we're fighting for what we have; we are fighting to prevent a loss.
It caused me to wonder: instead of fighting to prevent loss; instead of fighting for what I have; what if I spent the same effort on developing new gains, on exploring new horizons, on gaining new territory, on forming new alliances, on making new deals?
In very plain financial terms, one way to apply this lesson is on the question of whether to focus effort on decreasing expenses, or on increasing income. Nobody is born balanced in this area. People accustomed to the middle class and below (the majority of the population) are used to a fairly fixed, non-negotiable income; so in their view, the only negotiable, adjustable part of their economy is spending.
But for the minority of the populations that is above the middle class, they've learned that income can also be negotiable. Some of them fall for the opposite hazard, of making money hand over fist but letting expenses run wild. What's necessary and wise is a balanced approach of both securing a robust income, and spending it wisely.
But nobody is born balanced. Very few individuals or groups attain and sustain this balance. Most flail. That's why professional help is so important.
I happen to come from a lower middle class, austere Scandinavian peasant background that's very focused on keeping what little you have and avoiding loss at all costs, on fighting over scraps. Reading this book totally shifted my paradigm and taught me to pick my battles much more carefully. Now I'm focused on progressing in all things, on avoiding minor skirmishes and winning major victories, the ultimate of which isn't even personal; it's paying off the national debt.
Related to this matter of Loss Aversion, another key page in the book to note is page 317 in Chapter 29, "The Fourfold Pattern." It shows how in their zeal to avoid loss, people will do foolish, crazy, desperate things. I think of it as a great Crazy Firewall . . . that is, not a firewall that is crazy, but a firewall that can protect you from Crazy.
Well-Being, Duration, and Peak Experiences. The final chapters 36-38 (Life as a Story, Experienced Well-Being, & Thinking About Life) and the Conclusion caused me to reflect critically on how I want my own life to go. It reminded me that we're wired to remember and derive satisfaction from "Peak Experiences."
For example I can still remember vividly moments in the Boy Scouts paddling the Bowron Lakes in Canada, sleeping under the stars while cycling through the San Juan and Gulf Islands, or enjoying the view from the peak of a mountain in the Cascades, seeing so far that it seemed like you could actually see the stuff that makes the sky blue.
Kahneman uses a vacation as a simple example. After the fact, what seems to matter to people is not whether a vacation was over a long weekend or a whole month or more. Regardless whether the vacations were short or long, what matter are the peak experiences. So if there were more memorable, vivid, peak experiences during a long weekend costing, say, $400, than during a month long vacation costing, say, $7,000, the $400 vacation was more valuable.
Likewise with longsuffering. If it leads to some kind of victory or reward, the length of the suffering isn't what's memorable; the reward is.
Beginning with the work of Mihaly Csikszentmihalyi on page 40, Kahneman sprinkles throughout the book notions of Flow, Attention, and Goals as keys to happiness and well being. That is, "Flow" is not so much a goal as it is evidence that the goal is being reached. When people are in a state of Flow, totally engrossed in what they are doing (as I've been for the past five or so hours writing this review), that's as good as it gets. They are well; they are happy. And usually, as he mentions on page 401, "Goals make a large difference" because when people have goals, that is where they focus their attention; and it's within this state of focused attention that Flow happens.
Final Thoughts. I'll let Kahneman himself finish this review with the final few quotes that I underlined in his Conclusion:
"The way to block errors that originate in System 1 is simple in principle: recognize the signs that you are in a cognitive minefield, slow down, and ask for reinforcement from System 2."
"Unfortunately, this sensible procedure is least likely to be applied when it is needed most. We would all like to have a warning bell that rings loudly whenever we are about to make a serious error, but no such bell is available, and cognitive illusions are generally more difficult to recognize than perceptual illusions."
"More doubt is the last thing you want when you are in trouble."
"An organization that seeks to improve its decision product should routinely look for efficiency improvements . . . . The operative concept is routine" [my emphasis].
"Constant quality control is an alternative to the wholesale reviews of processes that organizations commonly undertake in the wake of disasters" [a.k.a. "Crisis Management"].
"There is much to be done to improve decision making. One example out of many is the remarkable absence of systematic training for the essential skill of conducting efficient meetings" [also my emphasis].
"Ultimately, a richer language is essential to the skill of constructive criticism . . . ."
Respectfully submitted,
Kris Freeberg, Economist
Making End$ Meet
www.makinendsmeet.com
[email protected]
(360) 224-4322
