Daniel Kahneman Is a psychologist of Israeli origin nationalized as an American, renowned for his brilliant career. His most relevant work has been to integrate the psychological analysis of human behavior into economic science.
In fact, it was his research on human judgment and decision making, which earned him a 2002 Nobel Prize in Economics, along with Vernon Smith, despite not being an economist.
Birth and education of Kahneman
The son of Jewish parents of Lithuanian origin, Kahneman was born in Tel Aviv in 1934, while his mother visited relatives. His home was Paris, France, where his parents had emigrated in the early 1920s. His father worked as head of research at a large chemical factory.
Kahneman lived the terror of World War II. His father was arrested during the first major raid in the city against the Jews in 1942. He was imprisoned for six weeks in Drancy, a transit station for the death camps. However, he was released following the intervention of the company where he worked, since, as Kahneman later learned, the firm was headed by the financial pillar of the anti-Semitic fascist movement in France.
After that experience, the family escaped and moved to Vichy France. In that place they were relatively safe, until once more the Germans arrived and had to flee to the center of France. In 1944, Kahneman's father died as a result of not having been treated properly his diabetes, a few weeks of D-day. After the victory of the Allies, his mother, his sister and him met with the rest of his family in Palestine .
The beginnings of his career
Daniel Kahneman began to become interested in psychology from his teens. However, the questions that interested him at that time were more oriented to the philosophical world, questions like, what was the meaning of life, the existence of God and reasons for not misbehaving. But soon their interests changed.
He no longer cared much to know if God existed, but rather to understand what it was that made people believe in him. He was also interested in discovering the origins of people's beliefs about what is right or wrong, and not learning about ethics. Finally, when he went to professional counseling, the first recommendation was psychology.
Kahneman graduated with a degree in Psychology with a specialty in Mathematics from the Hebrew University of Jerusalem in 1954. After completing his studies, he entered military service in the newly established State of Israel. There he conducted research on a recruiting interview system, which remained in force for several decades.
In 1956 he moved to the United States, thanks to a scholarship granted to him in the Hebrew University to obtain a doctorate and to be able to give classes in the Department of Psychology. In 1961 he obtained his degree from the University of Berkeley, California, and that same year he joined Psychology at the Hebrew University of Jerusalem, where he held various positions.
In 1978 he moved to Canada to hold the position of Professor of Psychology at the University of British Columbia. He worked there until 1986, when he joined the faculty of the University of Berkeley, where he was until 1994. Today Kahneman is a professor and researcher in the Department of Psychology at Princeton University.
Theory of Perspectives
Daniel Kahneman is considered as one of the pioneers of the analysis of human behavior in decision making in environments of uncertainty, a postulate that departs from the basic principles of probability.
This work, which later became the basis for winning the Nobel Prize in Economics, was the result of a joint research with Amos Tversky , Cognitive and mathematical psychologist of Israeli origin, precursor of cognitive science.
In 1979, Kahneman and Tversky developed the Prospect Theory or Theory of Perspectives, in which they explained the decision-making process of individuals. The theory describes how people make their decisions when they are in situations where they must decide between alternatives that involve risk, such as financial decisions.
Until that time the economists explained the decisions of the people through the theory of the utility, a postulate that works with a simplistic version of the human being. According to this theory, a person, in his decision making, is rational, selfish and does not change preferences. For Kahneman, as a psychologist, this was a theory that made no sense, so he worked on formulating a theory that would better explain that reality.
From the point of view of psychology, it is clear that the human being is not perfectly rational nor completely selfish. Nor is it true that it does not change preferences, since in fact it does so very often.
Contrary to the theory of utility in decision making, the psychologist says that people do not always choose objectively. In addition, Kahneman indicates that people are not only not rational at all times, but also there are emotions such as fear, hatred and affection that away from rationality.
In his theory of perspectives, Kahneman and Tversky called these decisions heuristic shortcuts. In psychology, a heuristic is a rule that is followed unconsciously so that, through reformulation, a problem can be simplified and solved.
This theory is based on three basic principles: aversion to loss, asymmetric risk preferences and erroneous estimation of probabilities.
- The first principle has to do with the fact that the pain for a loss is greater than the joy one feels for a gain.
- The second is based on the fact that people prefer not to bet when they are winning, but contrarily they risk more when they are losing.
- And the last is based on the thought that some events are more likely to occur than they actually have.
Thinking. Fast and slow: a brain with two systems
"Thinking. Fast and Slow,"has been the work with which Daniel Kahneman has synthesized five decades of study as an experimental psychologist on the intuitive and rational behavior of the human being. In this book the author focuses on the study of cognitive illusions, that is, those false beliefs that people intuitively accept as true.
Kahneman states that while we have a single brain We have two Thought systems . System 1 is fast, intuitive and emotional, it is able to provide conclusions automatically. System 2, on the other hand, is slower, strenuous and rational, is that of conscious responses.
Kahneman's theories have influenced what is known as behavioral economics, which is nothing more than a stream that tries to show that the world of finance is not as predictable as it sounds.
Although for economic theories economic agents always act rationally, behavioral studies have shown that this is not the case. People's judgments are cognitively, emotionally, and socially conditioned, and this happens without being aware of it.
In fact, with respect to System 1 and System 2, it is difficult to know when one or the other has taken the reins of behavior.
In the day to day of a person, most of the judgments he makes come from System 1, since they occur in an intuitive, automatic and with an emotional component. The problem is that not all the time can be thought with this system, because although it allows us to develop reasonably, also generates all kinds of misconceptions.
System 2 is the only one that allows solving difficult problems, but for this we must learn to postpone the suggestions of the emotional system and invest a great cognitive effort.
Failure to do so and think more with System 1 (prepared to believe and not to doubt), can fall into one of many cognitive errors. The author explains that people tend to have a lot of confidence in judgments they make based on very little information.
This is why one of the most common cognitive errors, the Halo effect, occurs. It is the attribution of excessively negative or positive characteristics to a person based only on partial tracks. An example of this is the irrational love that some people have towards singers or movie stars.
For Kahneman this trust and belief is one of the most important aspects of cognition. While it is wonderful to be able to generate quick interpretations, that makes you unconscious of what is not known.
The experience of memory: the perception of happiness
"Think fast, think slowly"is a volume that presents the main findings of Daniel Kahneman on the way of thinking of human beings.
Human reasoning is an intricate process that leads to evaluate and analyze many aspects of life. And more than talking about the two ways of thinking: System 1 and System 2, the psychologist has also spoken in this book about the findings that psychology has brought to the concept of happiness.
Today the happiness Is something that everyone seeks to decipher. There are many books that talk about her and how to find her. However, the author explains in this work the importance of not confusing the experience and the memory , As doing so can cause a misunderstanding of what happiness is.
Daniel Kahneman affirms that one must learn to distinguish the lived experiences from the memories that one has of those experiences. These are two distinct entities, and confusing them is part of the problem of the notion of happiness.
The experiences are the moments that are part of the present, which only last a few seconds. And memories are just the ways we evaluate those experiences.
Therefore, to differentiate these elements, the author proposes to think of two yos, who are the"I who has experiences"and the"I who remembers". Although both entities are important in judging happiness, each perceives it differently. While the"experiencing self"is responsible for recording the sensations that one has, the"remembering self"is responsible for making sense of those experiences.
Sometimes what is experienced at each moment may be very different from what is remembered, since the"remembering self"can be affected by elements such as the duration or intensity of the moments experienced. So the author states that the two yos pose different notions of happiness.
Academic background
The work of Daniel Kahneman on the way of thinking of human beings has influenced many fields and even opened the way for other disciplines such as neuroscience, a field that seeks to explain that the brain guided by a more irrational instinct is responsible Of the financial swings.
In addition to being awarded the Nobel Prize for Economics and being the founder of the Behavioral economics , Kahneman is a member of the United States National Academy of Sciences, the American Academy of Arts and Sciences, the Philosophical Society, the American Psychological Society, the American Psychological Association, the Society of Experimental Psychologists and The Econometric Society.
In 2012, Daniel Kahneman was admitted as an academic at the Royal Academy of Economics and Finance of Spain and was included in the list of the 100 most influential global thinkers, named by Foreign Policy magazine.