We’ve thought a lot about when and how we think poorly. How can we help each other think better? (More)

Thinking, Fast and Slow, Part VI – Thinking Better Together (Non-Cynical Saturday)

For the last two weeks, Morning Feature has looked at Daniel Kahneman’s book Thinking, Fast and Slow. Last Thursday we saw the two ways we think, fast and slow. Last Friday we examined our mental shortcuts and biases. Last Saturday we explored overconfidence. This Thursday we considered how we make weigh choices and chances. Yesterday we met our two selves, experience and memory. Today we conclude with how our improving model of human thinking should shape public policy.

Daniel Kahneman is a Professor Emeritus of psychology and public affairs at Princeton University’s Woodrow Wilson School of Public and International Affairs. In collaboration with Amos Tversky, Dr. Kahneman was a pioneer in the psychology of judgment, decision theory, and behavioral economics. He was awarded the 2002 Nobel Prize in Economics for his work in prospect theory, and has taught at universities in Israel and across the U.S.

When we think well

Last Thursday I emphasized that we are “predictably irrational,” from the title of Dan Ariely’s book, and that key word was predictably. We sometimes make random mistakes, but those are less worrisome as truly random mistakes tend to cancel each other over time. The larger issue – for Dr. Kahneman and others in the field of behavioral economics – is our predictable mistakes: ones we all tend to make, repeatedly and in ways that reinforce rather than cancel each other.

To understand when those systemic mistakes are likely, it helps to identify when we think well. Dr. Kahneman notes that he spent many pages discussing our human weaknesses, but we should not confuse the number of pages with the ratio of our good and bad decisions. We tend to make good enough and often very good decisions intuitively, if we get many opportunities to practice and our decisions produce clear and immediate feedback. We supplement intuitive thinking with deliberate thinking, and we tend to do that well enough when we’re not too tired or distracted, if the problem is familiar, not too complex, and its true shape can be expressed in stories rather than statistics.

Most of our everyday decisions fit those criteria, which makes evolutionary sense. If most of our decisions were bad, our species would never have survived. We have not only survived. We have thrived, adapting to an astonishingly wide range of environments and making a stunning variety of scientific, organizational, philosophical, and artistic achievements. We are not stupid.

When we think poorly

Yet we also make mistakes, both individually and collectively, both trivial and tragic. And we make them repeatedly, because while most of our everyday decisions fit the criteria above, many of our most important decisions do not. Dr. Kahneman discussed two thinkers, two species, and two selves in his book, and his conclusion takes them in reverse order:

* Two Selves: Experiencing and Remembering – We make decisions in the here and now, but those decisions are shaped by our memories of past events and our memories of events are not “total recall.” Our remembering selves average peaks and end states, and neglect sums and duration. Our remembering selves are also subject to hindsight bias, endowing the past with inevitability and making us too confident in our predictions of the future. That includes our predictions of what we will later cherish and what we will later regret.

* Two Species: Econs and Humans – Classical and neoclassical economics are based on the theory of rational actors: Econs. These mythical beings seek out all relevant information, ignore irrelevant information, know when seemingly separate problems should be solved together, and weigh all options objectively and statistically, courageously balance risk and reward, and update their decisions as new information arrives. Meanwhile, back in Realworldia, Humans use the information they have or can easily find, some of which is irrelevant, to solve problems as they are presented, weighing options in terms of stories, trying to avoid losses even at risk of foregoing some gains, and often don’t go back to review bad or stale decisions. In a world of Econs, rugged self-reliance might make more sense. In a world of Humans, we make better decisions when we help each other.

* Two Thinkers: System 1 and System 2 – We Humans are not Econs, and our experiencing and remembering selves often disagree, because we have two thinkers. System 1 is fast, effortless, automatic, and mostly invisible. System 2 is slow, effortful, lazy, and what we see as “thinking.” Yet System 1 does the vast majority of our thinking. System 2 often simply endorses defends the conclusions that System 1 has already reached. If challenged, System 2’s first response is usually to find reasons for those System 1 choices. Critiquing those choices requires effort, and usually help from others.

Alas, we tend not to want or appreciate help analyzing our mistakes. Fortunately, most of us like to help analyze someone else’s mistakes….

Better gossip

I say “fortunately” because that’s why Dr. Kahneman wrote Thinking, Fast and Slow. In his introduction, he wrote that he hoped the book will change “water cooler conversations,” where coworkers, friends, families, and neighbors chat about what is about to go wrong or has already gone wrong – for someone else, of course – and how that could be or could have been prevented:

There is a direct link from more precise gossip at the water cooler to better decisions. Decision makers are sometimes better able to imagine the voices of present gossipers and future critics than to hear the hesitant voice of their own doubts. They will make better choices when they trust their critics to be sophisticated and fair, and when they expect their decision to be judged by how it was made, not only by how it turned out.

His “water cooler conversations” are part of what we at BPI call Fred Whispering, and I agree with Dr. Kahneman’s conclusion that ‘better gossip’ can lead to better decisions. Humans are a social species, and ‘our own’ thinking is shaped by others: what they talk about, how they talk about it, and how we imagine they might talk about our ideas. We saw clear evidence of that in how the Tea Party changed what issues we, the media, and our elected leaders discussed, and in how we and they discussed those issues. The Occupy movement has had the same effect, both changing the issues and changing how we talk about them.

Discussions about our thinking – System 1 and System 2, Econs and Humans, experiencing and remembering – cannot be mere debates between academics. The ways we think, when we make good decisions and when we make predictable mistakes, have profound public policy implications. When ordinary people tend to make good enough decisions, we should be encouraged to make them for ourselves. But when ordinary people tend to make predictable mistakes, we need and should be encouraged to help each other.

“Whatever else it produces,” Dr. Kahneman writes, “an organization is a decision-making factory.”

That includes our homes, our businesses, our communities, and our nation. Psychology, cognitive science, decision theory, and behavioral economics offer tools to help our “factories” produce better decisions, and we should use those tools.

To learn and use those tools, we need better gossip. So go talk to Fred.

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Happy Saturday!