Thinking, Fast and Slow Summary: Daniel Kahneman

Thinking, Fast and Slow Summary

Thinking, Fast and Slow Summary provides a free book summary, key takeaways, review, top quotes, author biography and other key points of Daniel Kahneman’s famous self-help book. “Two systems” compete for controlling your mind. And, “two selves” determine your happiness. Is it possible for all four to get along?

Nobel Prize winner Daniel Kahneman addresses these complex topics through his book Thinking, Fast and Slow. They’re very integral to the human brain. He asks us to consider thinking. For example, how our mind naturally contradicts itself, misleads us and twists data. His style is smooth and eloquent. The reasoning is severe and his honesty uplifting. Kahneman shows the conflict in thinking with instances from his personal life. The outcome is a slightly slow read. But, it is a rewarding experience. We recommend this classic to everyone interested in neuroeconomics and neuroscience. Plus, it’s also a great read for people wanting to improve their thinking about thinking.

“Although System 2 believes itself to be where the action is, the automatic System 1 is the hero of the book.”

This Summary Will Help You Learn

  • How your brain functions “slow and fast.”
  • The way in which your “two selves” impact your outlook, and
  • How to improve your thinking.
Thinking, Fast and Slow Summary: Daniel Kahneman

Take-Aways

  • To understand the working of thinking, consider a model. It says we use two cognitive systems.
  • “System 1” works naturally and easily. It doesn’t need much effort. This system makes fast decisions by familiar trends.
  • “System 2” requires more efforts. It needs high focus and works systematically.
  • These two systems continually interact. But this interaction isn’t always smooth.
  • People like making simple deductions from the complicated truth. They seek reasons in random situations. People also believe rare incidents are likely to occur.
  •  “Hindsight bias” makes your twist reality by rearranging your memories to jibe with new data.
  •  “Loss aversion” and the “endowment effect” affect how you predict risk and value.
  • Your “two selves” analyze your experiences in different ways.
  • The “experiencing self” experiences your life. Your “remembering self” examines your experiences. It takes lessons from them and determines your future.
  • These two selves and systems contradict economic theories which claim people act logically.

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Thinking, Fast and Slow Summary

Your “Two Systems” and What They Mean

When you want to understand anything, you think about it. Want to fathom this process? Consider a model which claims people use two cognitive systems.

“System 1” or mental processing reads emotions. It deals with natural skills such as driving a car or adding one plus one. This first system overpowers our thinking when we understand simple statements. For example, “complete the sentence ‘bread and ….’”. Or, when you naturally turn to look where some noise is coming from. System 1 offers connected meanings quickly and involuntarily. 

In contrast, “System 2” is used to focus on specifics. For example, figuring out how to file tax returns.  This system deliberately uses effort. Take the case of doing complex math problems, trying new exercises, etc. System 2 thinking is slow. But, it’s crucial for systematic thinking like formal logic. 

Humans tend to value System 2 while neglecting System 1. But, the truth is much more complicated. These processes of the brain involve “division of labor” regarding thinking. They continually interact. We usually live in a world of System 1. Here, the quick processing is highly efficient. You could be thinking about a task in System 2. But, you get distracted or tired and see that you’ve moved to System 1. This can happen even without you realizing it. Were you ever confused about an optical illusion? Chances are you’ve experienced the state when these two systems function at cross-roads.

“The main function of System 1 is to maintain and update a model of your personal world, which represents what is normal in it.”

Duality and Collaboration

The system you use and the way you think rely on the efforts you put in. If you’re doing easy things like walking on a known path, you’re using System 1. There’s enough mental capacity remaining for thinking. If you increase the speed of walking, System 2 switches on. Now, try solving a math problem while walking. You’re likely to stop in the middle of the road. It’s because your mind can’t deal with the extra burden. Recent studies show that high System 2 focus decreases the glucose level. If you have a busy System 2, you’re more prone to stereotyping or giving in to urges. 

System 1 jumps on the direct answer. So, suppose an apparent right answer appears when you’re facing a challenge. System 1 will by default jump to that solution and cling to it. This system does quick “associative activation.” Pair two terms, or an image and a word. Your brain will connect them. It will build a story from those bits of information. For example, you’re exposed to the term “eat.” Then you’ll more likely fill the blank S-O-_-P as “soup” instead of “soap.”

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Which system to appeal to for influencing people? It would be System 1 for easy and memorable information. Use bold fonts in your reports, use rhyming phrases in your ads, etc. Such inclinations are signs of System 1’s bigger function. This includes assembling and maintaining your perception of the world. System 1 prefers consistency. Looking at a car in flames will stand out in your brain. Suppose you see another car in flames at the same place later on. System 1 will tag it “the spot where cars get into flames.”

Making Meaning, Making Mistakes

System 1 likes the world to be meaningful and connected. So, if you’re handling two separate facts, it’ll presume them to be linked. It strives to encourage cause-and-effect reasonings. Likewise, when you see only some data, it assumes to have the whole story. The “what-you-see-is-all-there-is” habit is strong in clouding your decisions. Suppose, all you’ve to go on are a person’s looks. System 1 will fill in the information you don’t know. This is the “halo effect.” For instance, if a player is handsome, you’ll assume that he’s skilled too.

System 1 also “anchors” you. Under this, you involuntarily connect your thinking on a subject to data you’ve just seen. This is regardless of the two not having anything to do with each other. For example, mention the number 10. Now ask, how many Asian nations are UN members. This will give lower estimates than if you stated 10 and asked the same question. But, System 2 can enlarge your mistakes. It finds reasons for you to believe in the answers you produce. System 2 doesn’t contradict System 1’s findings. Instead, it’s the promoter of how System 1 wants to classify your world.

Weighing Content over Relevance

The habit of focusing on a message’s content instead of its relevance impacts your judgment. People grasp various examples of shaping their plans and fears for the future. For instance, news coverage of disasters and accidents in contrast to common occurrences like asthma. These events become anchors which people use to make wrong analyses. Especially regarding where the threats to their health lie.

People also analyze wrongly when they can’t recognize the “regression to mean.” In the long-run everything returns to the average. But, people build and use “causal inferences” to random events. For example, a baseball player has a bad performance after a strong first year. Now sports fans will attribute such fall to any number of factors. But, in truth, the player was maybe just luckier in his initial games.

“People who are ‘cognitively busy’ are… more likely to make selfish choices, use sexist language and make superficial judgments in social situations.”

Distorted Reality and Optimism

We tend to draw meaning from tales which stress individual features like skill. But, we neglect the role of demographic factors and luck. We’ll focus on some extraordinary things that happened. But, we’ll overlook the countless events which didn’t happen. It’s because of “hindsight bias.” We twist reality by re-adjusting memories of instances to jibe with new data. So, we’re over-optimistic when narrating tales of events, we’re involved in. We overvalue our talents compared to those of others. Plus, we give our knowledge more weight than it deserves.

Such high optimism is helpful for the economy in several ways. Entrepreneurs start new ventures, regardless of the odds against them. Roughly just a third of businesses make it to five years. Still, over 80% of US entrepreneurs rank their ability to outdo this statistic as high. A third claimed that their chances of failure were nil.

Experts and Risk

System 1 impacts how openly people analyze their gut-feeling and validity. This means that not every expert gives great advice. Expertise depends on a person’s skills, “practice and feedback.” For example, firefighters must know to weigh the risks posed by different fire types. Their repeated practice and experience in this area enables them to read different situations. They’re then able to recognize key patterns. Likewise, an anesthesiologist depends on instant clinical feedback to keep patients safe. 

But, don’t trust the decisions of experts in areas where challenges greatly vary. Or where luck decides success. And where there’s a huge gap between feedback and action. For example, people who estimate stock prices fall in this group. System 1 minutes of silence experts with “fast answers to tough questions.” Hence, their gut-felling could be flawed. But, System 2 is not able to find such variances. 

Are We Loss-Averse?

We’re more prone to flawed thinking while making decisions of value and risk. Most of us are “loss averse.” That is, we hate losing $100 more than we like winning $200. But, money traders show relatively less emotional System 1-kind response to loss. People also go through the “endowment effect.” We overestimate the value of something we own compared to things we don’t own. Even if it’s just for a small period. Homeowners are examples of the endowment effect. They often overvalue their properties.

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Join this with the fact that people miscalculate how possible rare events are. Or, place too much importance on rare events while making decisions. The outcome is the basis of the modern insurance sector. How you see risk molds your analysis of it. For example, you hear a life-saving medicine has a .001% risk of lasting disability. Your reaction will be different than toward same treatment which leaves 1 of 100,000 people disabled. The two are the same. So, it’s tough to believe economic theories which say humans are rational. But, sound decisions rely on focusing on where the information comes from. Plus, understanding its framing, checking personal confidence about it and measuring how valid are the sources.

“A compelling narrative fosters an illusion of in­evitabil­ity.”

“Two Selves,” One Mind

Your two selves fight over the quality of your life experiences. The “experiencing self” lives your life. In contrast, “remembering self” assesses the experiences you’ve. It derives lessons from them and takes future decisions. For the second self, happiness isn’t collective. The last phases of any event are critical in your memory of its quality. For example, researchers asked respondents to assess someone’s life who happily lived till 65. This was relative to someone else who happily lived through 65 but was mildly happy for another five. The respondents said the first life was better. 

Your remembering self’s analysis of your life shows how you see whether you’re happy. You rate yourself by goals or standards you set. The time-to-time analysis of your experiencing-self gives the other end of your happiness. Such conclusions may contradict. It’s because they consider different versions of reality. Job status which influence “general work satisfaction” don’t shape your everyday mood.  Instead, the context of your job gives you more happiness. For example, not having any time pressure or talking with colleagues.

The things your focus on has a significant impact on your mood. Active leisure like exercise or outing with friends gives you more pleasure. Passive leisure, like watching TV may not give that much pleasure. You may not change your work, but you can shape your focus. Focus, in turn, shapes your self-analysis.

Connection Between Two-Selves and Two-Systems

Your two selves are connected with the two systems. System 2 built your remembering self. But your tendency to prefer “short pains and long pleasures” come from System 1. The link between your self-has implications for policy-makers and philosophers. You’ll make different decisions about which issues to deal with. And, how to deal with them. These decisions will depend on whose outlook you see – remembering-self or experiencing-self.

Knowledge of the mental systems can help understand that purely rational people are fictional. Real people require aid to make better judgments in their life. Knowing your brain’s working can help you support policies which consider those issues. The opposite is also true. Your brain doesn’t work perfectly in all cases. Hence, rules must save people from those who intentionally exploit their weakness. For individuals, it’s tough to catch flaws in their System 1. But, organizations can work with greater systematic rationality.

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Thinking, Fast and Slow Review

According to the article, there is focus on the key points of the Daniel Kahneman’s as in his book; there is focus on our Thinking, Fast and Slow that thinking could be fast and slow according to the situations. In the book, there is focus on the system 1 and 2 of thinking in us. It is concerned that in the system 1, we can think naturally and easily; however, system two we require more efforts. In the system 1, there is a focus on the reading of other emotions while the system 2 focuses on specifics. We can make better decisions according to the thinking; as there is thinking fast and can be slow, as known that in both of the thinking the processing is highly efficient, in the system 2, there can be a focus on solving a math problem, or system 2 can be involved in it.

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Thinking or Fast and Slow allow the people to focus on the open people and there is also the concerns regarding the gut-feeling and validity. Moreover, the author relates the thinking with the practice and feedback; as with the analysis of the value and risk the thinking can be according to the life experiences. It is concerned in the book that better judgments are allowed in the thinking process; the mental systems support policies while making the better decisions. It is concerned in the book that every person focus on the decision according to one way of thinking. According to the book summary; it is concerned that thinking can control our mind and able to determine our happiness. The human brain naturally contradicts according to the mental systems or the system of the thinking so that better judgments processes can be focused according to social situations.

Thinking, Fast and Slow Summary: Daniel Kahneman

Thinking, Fast and Slow Quotes

“Although System 2 believes itself to be where the action is, the automatic System 1 is the hero of the book.”

“The main function of System 1 is to maintain and update a model of your personal world, which represents what is normal in it.”

“People who are ‘cognitively busy’ are… more likely to make selfish choices, use sexist language and make superficial judgments in social situations.”

“A compelling narrative fosters an illusion of in­evitabil­ity.”

“When an unpredicted event occurs, we immediately adjust our view of the world to accommodate the surprise.”

“Facts that challenge… basic assumptions – and thereby threaten people’s livelihood and self-esteem – are simply not absorbed.”

“The idea that the future is un­pre­dictable is undermined every day by the ease with which the past is explained.”

“We are confident when the story we tell ourselves comes easily to mind, with no con­tra­dic­tion and no competing scenario. But ease and coherence do not guarantee that a belief held with confidence is true.”

“Most of us view the world as more benign than it really is, our own attributes as more favorable than they truly are, and the goals we adopt as more achievable than they are likely to be.”

“Or­ga­ni­za­tions that take the word of over­con­fi­dent experts can expect costly con­se­quences.”

“Confusing experience with the memory of it is a compelling cognitive illusion.”

“The ex­pe­ri­enc­ing self-does not have a voice. The remembering self is sometimes wrong, but it is the one that keeps score and governs what we learn from experience, and it is the one that makes decisions.”

“The way to block errors that originate in System 1 is simple in principle: recognize the signs that you are in a cognitive minefield, slow down and ask for re­in­force­ment from System 2.”

About the Author

Daniel Kahneman is a professor emeritus at Princeton. He’s also a Nobel Prize winner in economics. Kahneman has written a lot on the psychology of decision making.

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Thinking, Fast and Slow
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Thinking, Fast and Slow
  • Thinking Fast and Slow
  • Daniel Kahneman
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