“Thinking, Fast and Slow” by Daniel Kahneman, a Nobel Prize winner in Economic Sciences, offers us an often scary, always interesting, analysis of the problems we face with judgment and decision-making. The more autonomous System 1 is fast, intuitive and emotional, while the effortful System 2 is slower, more deliberate and logical. Our minds are filled with incomparable capabilities and faulty biases. Better understanding of when to trust ourselves and others provides us with insights about the quality of challenging choices we make throughout each day.
Among the findings reported is our general preference to avoid the strain and effort of System 2 problem-solving, seeking instead the cognitive ease of System 1. Even experienced judges, expected to “apply legal reasons to the facts of a case in a rational, mechanical, and deliberative manner” have been found to be profoundly affected by “psychological, political, and social factors.”
As reported in the Proceedings of the National Academy of Sciences depletion effects in judgment showed up in a study of parole judges in Israel. Cases were reviewed in random order throughout the work day with the default decision being denial of parole. Only 35% of all requests were approved, but when the request was reviewed made a significant difference since the percentage of favorable rulings dropped gradually from about 65% to nearly zero within each decision session and then returned abruptly to about 65% after each food break.
The data indicates that a hungry and tired judge is not someone you want reviewing your parole request. As stated in the “Extraneous factors in judicial decisions” abstract, the “findings suggest that judicial rulings can be swayed by extraneous variables that should have no bearing on legal decisions.”
Long-term issues such as pension policies can also suffer from cognitive distortions due to effects such as anchoring around discount rate projections and ignoring regression to the mean. Climate change also challenges our cognitive abilities due to its complexity and controversy.
Rare events are especially difficult for us to assess as there is a tendency for people to overestimate the probabilities of unlikely events or ignore them altogether. Either approach adversely affects appropriate allocation of scarce resources.
There is plenty more well-delivered information in “Thinking, Fast and Slow” so it’s not surprising that the New York Times Book Review, The Economist and The Wall Street Journal all considered it one of the best books of 2011.