Daniel Kahneman is an Israeli psychologist and economist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was awarded the 2002 Nobel Memorial Prize in Economic Sciences.Here is a selection of his most widely quoted observations.
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o We’re blind to our blindness. We have very little idea of how little we know. We’re not designed to know how little we know.
o Nothing in life is quite as important as you think it is while you’re thinking about it.
o We think, each of us, that we’re much more rational than we are. And we think that we make our decisions because we have good reasons to make them. Even when it’s the other way around. We believe in the reasons, because we’ve already made the decision.
o Optimism is normal, but some fortunate people are more optimistic than the rest of us. If you are genetically endowed with an optimistic bias, you hardly need to be told that you are a lucky person – you already feel fortunate.
o Nothing in life is as important as you think it is while you are thinking about it.
o True intuitive expertise is learned from prolonged experience with good feedback on mistakes.
o We think of our future as anticipated memories.
o The planning fallacy is that you make a plan, which is usually a best-case scenario. Then you assume that the outcome will follow your plan, even when you should know better.
o Courage is willingness to take the risk once you know the odds. Optimistic overconfidence means you are taking the risk because you don’t know the odds. It’s a big difference.
o Happiness is determined by factors like your health, your family relationships and friendships, and above all by feeling that you are in control of how you spend your time.
o If people are failing, they look inept. If people are succeeding, they look strong and good and competent. That’s the ‘halo effect.’ Your first impression of a thing sets up your subsequent beliefs. If the company looks inept to you, you may assume everything else they do is inept.
o It’s nonsense to say money doesn’t buy happiness, but people exaggerate the extent to which more money can.
o If owning stocks is a long-term project for you, following their changes constantly is a very, very bad idea. It’s the worst possible thing you can do, because people are so sensitive to short-term losses. If you count your money every day, you’ll be miserable.
o An investment said to have an 80% chance of success sounds far more attractive than one with a 20% chance of failure. The mind can’t easily recognize that they are the same.
o We’re generally overconfident in our opinions and our impressions and judgments.
o There’s a lot of randomness in the decisions that people make.
o The brains of humans contain a mechanism that is designed to give priority to bad news.
o When you look at the books about well-being, you see one word – it’s happiness. People do not distinguish.
o It is the consistency of the information that matters for a good story, not its completeness. Indeed, you will often find that knowing little makes it easier to fit everything you know into a coherent pattern.
o Optimistic people play a disproportionate role in shaping our lives. Their decisions make a difference; they are inventors, entrepreneurs, political and military leaders – not average people. They got to where they are by seeking challenges and taking risks.
o Experienced happiness refers to your feelings, to how happy you are as you live your life. In contrast, the satisfaction of the remembering self refers to your feelings when you think about your life.
o Economists think about what people ought to do. Psychologists watch what they actually do.
o Nobody would say, “I’m voting for this guy because he’s got the stronger chin,” but that, in fact, is partly what happens.
o Negotiations over a shrinking pie are especially difficult because they require an allocation of losses. People tend to be much more easygoing when they bargain over an expanding pie.
o There are domains in which expertise is not possible. Stock picking is a good example. And in long-term political strategic forecasting, it’s been shown that experts are just not better than a dice-throwing monkey.
o Alternative descriptions of the same reality evoke different emotions and different associations.
o People are very complex. And for a psychologist, you get fascinated by the complexity of human beings, and that is what I have lived with, you know, in my career all of my life, is the complexity of human beings.
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To learn more about Daniel Kahneman and his work, please click here.