Wednesday, 4 September 2013

Book Review: Thinking, Fast and Slow

Thinking, Fast and Slow by Daniel Kahneman is a must read book. Kahneman synthesises the lessons of his 60 year nobel prize-winning career into this tome. As one of the fathers of Behavioural Economics he has been at the forefront of exposing the inherent illogicality of the human mind - features such as loss aversion (the endowment effect) and our tendency to see coherence and causation where there is none.

Kahneman fills this book with quick exercises that illustrate our habitual jumping to flawed conclusions - the "fast" thinking of the title. He explains that this is a fundamental and sometimes useful characteristic of our brains and suggests ways to mitigate the consequences and harness the "slow" thinking which buys us time to correct our instinctive mistakes.

This book is bristling with challenges to the rational economist, and provides tempting insights for the salesman and the potential criminal. It is playfully written and although the author has been an eminent academic since the 1950s, it is modern and engaging for the non-technical reader like me.

Kahneman reflects on happiness. His suggestions are fascinating. Two notable points:
  1. Choose your goals carefully so that they are achievable. Kahneman singles out those who aspire to success in the performing arts as particularly prone to disappointment.
  2. Spend time with friends. This, Kahneman asserts, is the key to happiness. Read the book to find out more, then come over for supper to discuss it!

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