Thinking, Fast and Slow by Daniel Kahneman

Book review: Thinking, Fast and SlowNobel-prize-winner Daniel Kahneman describes his theory of the inevitable fall-out that arises when fast, unconscious thinking invades slow, calculated thought in his new book 'Thinking, Fast and Slow'.

By moneyweek
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Thinking, Fast and Slow by Daniel Kahneman

By Daniel Kahneman

Nobel-prize-winning psychologist Daniel Kahneman is one of the fathers of the field of behavioural economics, which, rather than assuming that we are all perfectly rational calculating machines (as is traditionally the case in economics), considers how the way our brains actually work in practice affects our economic and financial decisions, writes Sean Keyes.

Thinking, Fast and Slow is his first book for a general audience, and it is a "monumental achievement", says Roger Lowenstein in Businessweek. Kahneman categorises our thinking into System 1 (fast) and System 2 (slow). System 2 is conscious it operates slowly, deductively and logically. It's the system that we like to imagine governs our thought processes and decisions.

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This book is not about System 2. It's about freewheeling System 1, which governs far more of our internal lives than we like to think. System 1 is thinking without effort. It uses our lifetime's experience to build a quick-take model of the world. It automatically fills in the blank in Adam and ___', for example, to free us from spending our lives absorbed in calculation. In short, System 1 is a "marvel" but it sometimes intrudes on System 2's territory. This leads to repeated, predictable errors what we call "biases" such as overconfidence even in areas where we have little expertise, and a woeful grasp of probability and uncertainty.

The book's strength is in making hard science accessible, writes Oliver Burkeman in The Guardian. "Kahneman's approach to psychology spurns heart-sinking tables and formulae in favour of short, intriguing questions that elegantly illustrate the ways our intuitions mislead us." If it has a flaw, says New York University economics professor William Easterly in the Financial Times, it's that Kahneman concludes with some overly sweeping public policy recommendations based on the problems he has identified. But overall, this "book will help you Think Slow about what Thinking Fast gets very wrong, and what it gets very right".

Published by Allen Lane, £25.

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