W W Norton & Co., New York, 2017
There are a few books that one enjoys from beginning to end, often one has reservations about aspects work, the praise may be leading, the author may not express his arguments clearly, or she may be plain wrong; however, Michael Lewis has once more produced a book which is enjoyable throughout. This is a first-rate introduction to the work of two amazing Israeli intellectuals, Daniel Kahneman and Amos Tversky. Their collaboration shows that even today, it is possible to individuals to produce new ideas, and concepts, as a result of discussion, and the use of pen and paper. The ideas that they generated over a period of 20 years created the new field of behavioural economics, they demonstrated clearly that human intuition, fallible, and that the decisions of professionals vary, because human beings are susceptible to making decisions based on irrelevant data.
Finally, in 2002 Daniel Kahneman was awarded the Nobel Prize for economics, had Amos Tversky not died in 1996, his name would undoubtedly have also been added to the Nobel citation. The partnership of these two men was unlikely because of the different characters, but together they created a symbiotic relationship, generating unique and important ideas, which continue to influence our thinking today, in economics, social policy, and any field involving human judgement and decision-making. I strongly recommend this book, not only because it is interesting in its own right, well-written, but because the subject matter is important, something that we should all be aware of.
To give one example, in considering the problem of “availability”, Lewis says, they focused entirely on the various tricks human memory plays on us, they concluded what people did in many complicated real-life situations was to construct scenarios, which are stories rooted in our memories. They said, “The production of a compelling scenario is likely to constrain future thinking, there is much evidence showing that, once an uncertain situation has been perceived or interpreted in a particular fashion, it is quite difficult to view it in any other way.” Furthermore, they noted that the scenarios or stories that people told themselves were biased by the availability of material used to construct them. They noted that, “Images of the future are shaped by experience of the past”, noting that what people remember about the parts is likely to walk the judgements of the future. They added, “We often decide that an outcome was extremely unlikely or impossible, because we are unable to imagine any chain of events that could cause it to occur. The defect, often, is in our imagination.” This concept, goes some way to understand the process of denial, in the face of new and unforeseen threats. Bettelheim, in The Informed Heart, noted that some Jews survived in Germany and the occupied countries during World War II, because they had a more realistic understanding of events and realised that when a world goes to pieces, when inhumanity reigns supreme, man cannot go on with business as usual, Bettelheim says, “in short, one has to take a stand on the new reality.” In contrast, many Jews, ignored the growing reality of the Holocaust, preferring to believe that things could not get worse, almost all died in the death camps.
While the events in Nazi Germany, may be seen to be extreme, they illustrate the fallibility of human judgement, in the face of radically changed circumstances, as Kahneman and Tversky wrote, “Images of the future are shaped by experience of the past”. Availability, was only one of many areas that Kahneman and Tversky studied, similarity was another topic where they challenged existing thinking. They noticed that when people compare two things, and judge the similarity, they were essentially making a list of features, which was simply what they noticed about the objects.
I strongly recommend this book, it is intellectually stimulating, tells a very human story, about two remarkable men, and is well written.
© Andrew Palmer. 2017