Two systems in the head – and why the fast one takes over

Daniel Kahneman received the Nobel Prize in economics in 2002, as a psychologist. The work he and Amos Tversky did from the late 1960s showed that people do not make decisions the way economic theory assumed – and that the deviations are not random but systematic. Thinking, Fast and Slow is his summary of a working life.

The two systems

The image the book is built around: the brain works in two ways.

System 1 is fast, automatic and takes no effort. It recognises faces, reads the words on a sign before you have decided to read them, and answers 4 to 2 + 2. It is always on.

System 2 is slow, deliberate and takes concentration. It is what you use to multiply 17 by 24, to fill in a form, or to keep your composure in a difficult conversation. It is effortful, and so we economise on it.

The two systems

System 1

Fast and automatic

• Takes no effort
• Always on
• Recognises faces, reads signs, answers 4 to 2 + 2
• Answers even when it cannot

System 2

Slow and deliberate

• Takes concentration
• Switched on when needed, and preferably not
• Multiplies 17 by 24, fills in the form
• Is rarely asked to check System 1

The problem is not that System 1 exists. The problem is that it answers questions it cannot really answer, and that the answer arrives so quickly and so confidently that System 2 is rarely asked to check.

Some of the biases

• Anchoring. A number you have just seen affects what you guess afterwards – even when you know the number was random.
• Availability. We judge how common something is by how easily we can call up an example. So we overestimate risks that get media coverage, and underestimate those that do not.
• Loss aversion. Losing a hundred stings roughly twice as much as winning a hundred pleases. It explains a lot of behaviour that otherwise looks irrational.
• Framing. “Nine in ten survive” and “one in ten die” are the same information, but they lead people to choose differently.
• WYSIATI – what you see is all there is. We build a coherent story from what we happen to know, and do not notice what is missing.
• The planning fallacy. We estimate time and cost as if everything will go to plan, even when we know it never has before.

Prospect theory

The work that earned the Nobel Prize. In short: people do not evaluate outcomes by how much they end up with, but by the change from where they stand now. And the curve is steeper going down than going up. That is why the same money means different things depending on whether it is experienced as a gain or a loss.

Prospect theory – the curve is steeper going down

Two selves

One of the most thought-provoking parts is about memory. The experiencing self is you while something is happening. The remembering self is you telling the story afterwards. They do not agree.

The remembering self hardly cares how long something lasted, but cares a great deal about the most intense moment and about the ending. That means we make choices for the future based on memories that systematically distort what we actually experienced.

What has not held up

This belongs here. The book came out in 2011, just before the replication crisis in psychology. The chapter on priming – that small, imperceptible cues steer behaviour to a significant degree – rests on studies that have since failed to replicate.

Kahneman himself wrote in 2017 that he had placed too much weight on those findings, and that readers should not rely on that chapter. That is unusually honest of an author, and worth repeating when recommending the book.

The core findings on anchoring, availability, loss aversion and framing stand far stronger, and have been replicated many times.

Worth knowing

The book is long and demands concentration – fittingly. It offers no checklist for avoiding the errors, and Kahneman is clear that he does not believe you can think your way out of them. What he does think is possible is recognising the situations where the errors are likely, and building in a check there.

The walk-through includes the caveats the research has acquired since.

Main topics

• System 1 and System 2 – the two ways the brain works
• Anchoring, and why random numbers affect judgements
• Availability – that what we recall easily feels common
• Loss aversion and prospect theory
• Framing, and how the question decides the answer
• The planning fallacy – why everything takes longer than assumed
• The experiencing self and the remembering self
• What has not held up, and what Kahneman himself retracted

Questions this episode answers

• What are System 1 and System 2?
• What is a cognitive bias?
• What is the anchoring effect?
• Why do losses weigh more than equivalent gains?
• What is the framing effect?
• Why do we always underestimate how long something takes?
• What is the difference between experiencing something and remembering it?
• Can the findings in Thinking, Fast and Slow be trusted?

Key points

• The brain has two modes: one fast and automatic, one slow and effortful.
• The fast system also answers questions it cannot answer.
• A loss is felt roughly twice as strongly as an equivalent gain.
• How a choice is worded changes what people choose.
• We plan as if nothing will go wrong, every time.
• Kahneman himself added a caveat to the chapter on priming. So should the reader.

Sources and references

• Daniel Kahneman – Thinking, Fast and Slow (2011)