Thinking, Fast and Slow by Daniel Kahneman Book Review

The book Thinking, Fast and Slow by Daniel Kahneman is a complete and outstanding study of the relatively new field of Behavioral Economics. The book is divided into five parts that analyze human behavior and the two systems that work together to form our judgments. I have outlined Part 1 of the book and I highly recommend you read the other four parts.

Thinking, Fast and Slow

Daniel Kahneman is a recipient of the Nobel Prize in Economics and has been a pioneer for the relatively new field of Behavioral Economics. He makes the assertion that there are two systems of judgment and choice. System 1 is intuitive and automatic while System 2 is more effortful and analytical. When you are asked to solve 2 + 2, System 1 is able to involuntarily answer the question. When you are asked to fill out a tax form, System 2 is needed to focus the required attention on the laborious task. If System 1 has a conflict that cannot be resolved, System 2 is able to process the problem in more analytical detail. The relationship of the two systems is highly efficient and System 2 is able to take charge in situations when there is a lack of self-control.

System 2 is characterized as being lazy and not going the full distance to solve a difficult problem. There was an experiment that was conducted in which System 2 would be fully engaged. The task was named Add-1 and pupil dilation was measured to study whether pupils shrink when participants quit a problem. It was found that within the first 5 seconds, the pupil dilates but immediately shrinks when a participant gives up on a task. System 2 relies on immense attention and effort to produce the required mental effort to solve a difficult problem.

Self-control is a significant problem for System 1 and is magnified when System 2 is cognitively busy. While System 2 controls thoughts and behaviors, System 1 struggles with temptations and impatience. The researcher Walter Mischel exposed children to an Oreo dilemma. They were to remain in a room with a single cookie and a bell. If they waited for the researcher, the child would get two cookies. It was found that the children who were able to resist the temptation scored incredibly higher on intelligence tests. The kids who exhibited more self-control were found to be less likely to get in trouble later on in their lives. Their System 2 and reasoning skills were considerably stronger than the other kids.

Kahneman realized that System 1 could be manipulated and act in accordance to the surrounding environment. The priming effect causes individual’s System 1 to become biased. If a person is primed with thoughts of old age, they begin to start walking slowly. This is known as the “Florida effect”. Individuals who are money-primed become more individualistic and selfish when faced with an opportunity to help someone. The priming scenarios arise in System 1 and there is no conscious access to the actions of the mind.

Cognitive strain helps reject the wrongly based intuitive answer of System 1 by assembling System 2. It is possible that System 1 is biased in rating words that are presented more often a higher ranking than unfamiliar words. This can be related to mood and how System 1 can be influenced when we are unhappy. When we are in a happy mood, System 2 is disengaged and the intuitive and creative process is enacted. We are also less surprised the second time an event occurs than on the first.

Jumping to conclusions should only be done when the costs are low and the situation is familiar. System 1 is able to make a guess that is guided by experience. The uncertainty and doubt are left to System 2 to handle. The halo effect occurs when the first impression is given more weight. Kahneman gave an example of his grading method in which he was biased by the first essay that he graded of each student. He would compare the subsequent essays to the initial impression of the first. He used a commitment device to reduce his biases by hiding the first grade of the essay to make the process fair. What you see is all there is (WYSIATI) exhibits why jumping to conclusions on limited evidence can be dangerous.

The mental shotgun refers to computing more information that one wants or needs. The conflict is that the irrelevant answers can be a disruption to the actual real answers. System 1 has a tendency to find a related question that is easier and answer that one. This is known as substitution and combines with the mental shotgun to generate quick answers without getting help from the lazy System 2.

Part of thinking fast and thinking slow is the ability for System 1 to work in conjunction with System 2. This process must be efficient and create a system that combines the intuitive and automatic with the analytical and deliberate.

 

Learning History from Biographies

One of my toughest subjects in school was always history. I relentlessly struggled to remember the important names and dates that were tested. Studying history by memorizing can be difficult and devastating to the learning process. In result, I decided to embark on a self-learning sabbatical that eliminated traditional history classes and textbooks. I picked a mode of instruction by reading biographies of outstanding men that changed the United States forever. Three biographies broadened my knowledge and helped shape my views of United States history over the past century.

Truman by David McCullough

The first biography that I read profiled President Harry S. Truman’s life as a Democratic leader from Missouri. I wrote a book review that analyzed the impact that Truman made on the United States.

From a historical standpoint, McCullough starts the story of Truman’s ancestors beginning on the Missouri frontier. He then plots the gruesome battle of War World I and advances to the intricacies of World War II. The decision of dropping the atomic bomb was the most impactful and in-depth part of the biography. Truman was plagued with a decision that only a strong person could handle. The factors were weighed and he was forced to make a decision.

Global and political policies were expressed when the meetings of Potsdam were revealed in immense detail. Stalin and Churchill were described in a way that expressed each of their powerful personalities.

The decision of sending troops to Korea, and the firing of General McArthur caused Truman to consider the implications of being a president and facing public sentiments. In order to be President of the United States, Truman proved that it takes courage, risks, and a willingness to stand by the decisions that one makes.

From a historical standpoint, Truman had the opportunity to live through the decades that had the most progress for America. He was a leader of the United States and had the responsibility of conducting policy matters in a way that appeased other nations. He was a role model for all citizens and his biography was fantastic for learning United States history from inside of the system. In order to understand this period of history from both sides, an alternate view must be presented. In the next book that I read, the financial history of the United States was revealed. Seeing the finance world through Warren Buffett provided a unique perspective of history.

The Snowball: Warren Buffett and the Business of Life by Alice Schroeder

Warren Buffett is more knowledgeable about the United States financial system than possibly any other person. In this biography, Schroeder takes the reader through the transition of Buffett from his modest beginnings to his billionaire status.

The most striking aspect of Buffett is that he is frugal his entire life and does not burn cash. He keeps his modest values that he learned on a small farm in Omaha, Nebraska.

Buffett is an investment genius that is able to see trends in companies that no one else can. He developed the skill of finding undervalued investments by hard and dedicated research. There was not a time when he was not constantly taking in information—whether it was reading the newspaper, watching the news, or savaging through financial reports.

The biography provided a financial history of the United States that the biography Truman did not touch on. Buffett’s biography complimented Truman perfectly because the same issues were being discussed in both books. Buffett had an alternate view of Truman and probably disliked him as a President.

Understanding both sides of events from two different viewpoints is important for learning about the people who lived before us. Now, to sum up the self-directed history learning, I picked up a biography that featured a controversial war veteran and scientific genius of airplane design.

Boyd: The Fighter Pilot Who Changed the Art of War by Robert Coram

Colonel John Boyd was a fighter pilot in the Air Force and questioned the status quo to the day that he died. He was highly controversial and was not afraid to emphasize and speak the truth. The Air Force is a highly structured bureaucratic system that forced Boyd to break down the barriers of traditional practices.

Nicknamed forty-second Boyd, there was not a person alive that was able to set their target on Boyd and hose him. He had a bet that if any person was able to set their sights on him and yell Guns! Guns! Guns!, he would give the fighter pilot forty bucks. There was never a person that was able to hose forty-second Boyd.

Not only was Boyd a cocky, flamboyant fighter pilot, he was extremely smart. The most significant achievements were the creation of the F-15 and F-16 fighter pilots for the Air Force. It was almost an impossible task to go against the grain and design aircrafts that went against everything that the Air Force believed.

The confident and rebellious nature of Boyd was exacerbated when the intellectual portion of his life emerged. He stopped flying fighter jets and went into a sabbatical of learning. During this time, he developed an Energy Maneuverability Theory that was briefed to members of the armed forces. Boyd did not stop there as he researched a new theory and named it Destruction and Creation. The paper analyzes how the creative process evolves and how mental models are used.

The biography provided an account of history from the vantage point of a person who worked and lived in the system. Boyd had to develop his theories in secrecy and had to make sure his ideas were one hundred percent accurate. If anything were wrong with one of his theories, his credibility would be deflated.

Colonel John Boyd was a strong and defiant person and there was not a person that could stand in his way of presenting the truth. The military strategy that he developed was profound and provided an inside view of the intentions of the Air Force and Marines in prior wars. The biography provided me with the most information and inside knowledge. It was interesting to learn how the armed forces are structured and the process that must be completed to change a military strategy.

What’s Next?

After reading these biographies, I was provided with an education that cannot be duplicated by reading textbooks. There weren’t any facts and figures that I forced myself to memorize. I read for comprehension and with the intention of understanding how the three men progressed through their lives.

The next biography that I will read will most likely be Benjamin Franklin: An American Life by Walter Isaacson. I will explore the earlier history of America through the eyes of the person who invented bifocal glasses.

Book Review: Truman by David McCullough

President Harry S. Truman is one of the most unique and hardworking Presidents of the United States. David McCullough depicts Truman’s classy and resilient personality in his 1,000-page biography, Truman.

As a Missourian, Truman came from a family of diligent workers from the Midwest part of the country. His heritage was reflected in his political philosophy to protect farmers and the common, middle-class people. Truman became President as Franklin Delano Roosevelt passed in 1945 and was immediately forced with the pressure of living up to FDR’s great legacy.

Truman was placed into a situation where he had to make a series of tough decisions that would shape the way the American people viewed him. The assessment of the atomic bomb, the meetings with Stalin and Churchill at Potsdam, the Marshall plan, and the Korean War all shaped his career for two terms as President of the United States.

Even though he made his best effort, not all of his judgments were met with praise and jubilation. Through all of the tribulations and setbacks, he was able to prevail and handle his critics graciously and astutely. After receiving a low approval rating for a greater part of time in office, he never changed his behavior or plans. There was never a time when he refused to make the tough evaluation that would lead to the majority disproving. Harry S. Truman loved people and he could persuade anyone to join his team in fighting for the good of the nation.

Ambitious by nature, he was never torn by ambition, never tried to appear as something he was not. He stood for common sense, common decency. He spoke the common tongue. As much as any president since Lincoln, he brought to the highest office the language and values of the common American people. He held to the old guidelines: work hard, do your best, speak the truth, assume no airs, trust in God, have no fear. Yet he was not and had never been a simple, ordinary man. The homely attributes, the Missouri wit, the warmth of his friendship, the genuineness of Harry Truman, however appealing, were outweighed by the larger qualities that made him a figure of world stature, both a great and good man, and a great American president.

The biography is rich with historical facts and provides a narrative of how America reacted to the sudden changes in the world. Truman promoted the democratic worldview that one person should not control an entire country. There are many people who are involved in making a country run and prosper. He was willing to risk the safety of American troops to fight for the freedom of the civilians that live in the world.

The most gripping and resonating part of the biography was Truman’s difficult task of deciding whether to drop the atomic bombs on Japan. McCullough provides a blow-by-blow account of the thought process of Truman and those advising him. The immense strain of the choice is unparalleled and unprecedented. There is debate whether Truman made the right or wrong decision, and I have to say that he made the most educated and best decision possible.

I enjoyed the descriptive meetings at Potsdam with Stalin and Churchill. McCullough used illustrative ways to make the reader feel like they were in the conferences and could observe the emotions on Stalin’s face. Stalin’s grimacing character was accurately portrayed and I could sense the deceitfulness between the words on the page. Truman handled himself wonderfully throughout the meetings and allowed the reader to realize what an amazing man he was.

This is one of the best biographies that I have read of a political figure. Truman was more than a politician and this was revealed from the beginning. He was a man of decency and courage. There was never a person who he would not talk to and he always demanded equality of every person.

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