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Kahneman fast and slow thinking explained

By | Behavioural Science

Excerpt: this is a reference page on which you can find the fundamentals of Kahneman’s breakthrough work on human decision making explained. It will address his discovery of fast and slow thinking, and the importance of our unconscious mind in making decisions and influencing behaviour.

 

Kahneman Fast and Slow thinking

On this page, we want to give you a quick guide to Daniel Kahneman’s groundbreaking work about decision making. Maybe you’ve already heard of system 1 and system 2. Or you’ve heard Kahneman was the first psychologist to win the Nobel prize for economics in 2002. Could be you’ve heard about cognitive biases and heuristics. Enough to be intrigued. He is one of our heroes and the godfather of behavioural economics. We’ll give you the highlights of Kahneman’s thinking which he published in his best-selling book ‘Thinking Fast and Slow.’

This isn’t so much an article, but more a reference page that you can consult whenever you want to know more or reread about Kahneman. To make your life a bit easier we have created page sections, so you can easily jump to a particular subject that is of particular interest to you. We also have included links into this page to more detailed information if you want to dive a bit deeper. The page sections:

System 1 and 2
The power of your subconscious mind
Heuristic: definition and meaning
Cognitive bias

System 1 and system 2

The groundbreaking research of Daniel Kahneman showed that our brain has two operating systems, which he called system 1 and system 2. These are the differences between the two systems of our brain:

System 1

  • FAST
  • DEFINING CHARACTERISTICS: unconscious, automatic, effortless
  • WITHOUT self-awareness or control “What you see is all there is.”
  • ROLE: Assesses the situation, delivers updates
  • Makes 97% of all our thinking

System 2

  • SLOW
  • DEFINING CHARACTERISTICS: deliberate and conscious, effortful, controlled mental process, rational thinking
  • WITH self-awareness or control, logical and skeptical
  • ROLE: seeks new/missing information, makes decisions
  • Makes 3% if all our thinking

system 1 and 2 Kahneman

Knowing this you could say that our system 2 is a slave to our system 1. Our system 1 sends suggestions to our system 2, who then turns them into beliefs. If you want to know more about the differences between system 1 and 2, we’ve made a more elaborate overview of the main characteristics of system 1 and 2. If you’d like to hear Daniel Kahneman himself explain the concept of system 1 and 2, this is a short but good video to watch. It is only 6.35 minutes long.

 

The power of your subconscious mind

By discovering not only the two operating systems of our brain but especially the bandwidth of each system was what made this research so significant. It was a breakthrough insight into the lack of reasoning in human decision-making. He showed how the two thought systems arrive at different results even given the same inputs. And foremost he revealed the power of the subconscious mind. Where we all tend to think we’re rational human beings that think about our decisions, and the things we do. Kahneman showed we’re (almost) completely irrational. But that’s a good thing. It’s our survival mechanism.

On average we all have about 35,000 decisions to make each day. These differ in difficulty and importance. It could be you taking a step to your left or right when talking, or deciding to take the stairs or elevator. But they all hit you on a daily basis. If you had to consciously process all these decisions your brain would crash. Your automatic system’s primary task is to protect your deliberate, system 2. It helps you prevent cognitive overload.

There are a few ways that our automatic system lightens the load on our deliberate system. First of all, it takes care of our more familiar tasks by turning them into autopilot routines, also known as habits. But what your system 1 is primarily doing without you even noticing it, is rapidly sifting through information and ideas. Prioritizing whatever seems relevant, and filtering out the rest by taking shortcuts. These shortcuts are also called heuristics. We’ll explain to you all about them in the next section.

For now the most important to remember is that we all have to accept that we are irrational human beings. Almost all of the time. Even if you think you’re not, you’re probably not rationally thinking. Somehow we can accept our irrationality, or at least understand it when it is explained to us. But we keep making the mistake when trying to influence someone, that we forget they are irrational too. We so often try to convince somebody with rational arguments or facts. We love to tell someone about the benefits of our products or services or ideas.

But understand that the decision of the person you’re trying to convince isn’t based on this rational information. It’s based on system 1 shortcuts. What the work of Kahneman shows is that people struggle with statistics or cannot reason probable outcomes of their decisions. A second very important insight from the work of Kahneman is that our decisions are driven by heuristics and biases. We’ll dive deeper into those in the next two sections.

Heuristic: definition and meaning

The shortcuts our system 1 makes Kahneman calls heuristics. The definition of a heuristic, as can be found on Wikipedia, is:

Any approach to problem-solving, learning, or discovery that employs a practical method, not guaranteed to be optimal, perfect, logical, or rational, but instead sufficient for reaching an immediate goal. Where finding an optimal solution is impossible or impractical, heuristic methods can be used to speed up the process of finding a satisfactory solution. Heuristics can be mental shortcuts that ease the cognitive load of making a decision.

If we bring it back to Kahneman’s thinking, a heuristic is simply put the shortcut our automatic (system 1) brain makes to save mental energy of our deliberate (system 2) brain. Our survival mechanism at play. You probably are already familiar with the way we describe the experience of heuristics. We sometimes refer to them as our gut feeling, a guestimate, our common sense or our intuition. We use heuristics for problem-solving that isn’t a routine or a habit. The way we ‘build’ heuristics is by reviewing the information at hand and connecting that information to our experience. Heuristics are strategies derived from previous experiences with similar problems. The most common heuristic is the trial and error heuristic. It is trying to solve a problem based on experience instead of theory.

Another example of a heuristic is the so-called availability heuristic. When making a decision, this heuristic provides us with a mental short-cut that relies on immediate cases that come to a given person’s mind. Or easier put: we value information that springs to mind quickly as being more significant. So, when you have to make a decision, we automatically think about related events or situations. As a result, we might judge that those events are more frequent or probable than others. You have a greater belief in this information. And we tend to overestimate the probability and likelihood of similar things happening in the future.

The problem with heuristics is that sometimes they are wrong. They are nothing more than mental shortcuts that usually involve focusing on one aspect of a complex problem and ignoring others. Therefore heuristics affect our decision-making and subsequently our and also our customer’s behaviour.

Cognitive bias

With all this in mind, you could say that Kahneman has discovered something very interesting about our cognitive abilities as human beings. It’s good to be clear about the meaning of cognition. If we look up the definition in the dictionary it says:

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

What Kahneman discovered is truly paradigm shifting, breakthrough thinking that can even hurt egos. We are far less rational and far less correct in our thinking than we’d like to think or give ourselves credit for. The side-effect of heuristics is that we all suffer from cognitive bias. A cognitive bias refers to a systematic pattern of deviation from norm or rationality in judgment, whereby inferences about other people and situations may be drawn in an illogical fashion. Individuals create their own ‘subjective social reality’ from their perception of the input.

There are a lot of cognitive biases. If you look on Wikipedia, you can find an extensive list of cognitive biases. You can take a look there to or check out an overview we made of the most common cognitive biases. The most important thing to remember is that we all base our decisions on a heuristic. And we all are influenced by our cognitive biases. By being aware of the most common biases, you can anticipate on them.

 

Cognitive bias in recruitment

To give you an example that ties up all the concepts of Kahneman discussed in this post: think about recruitment. If you have to interview a person for a position in your team or organization, the chance of this person is getting hired is proven to be established in the first 10 minutes. What happens? A person steps into the room. Your system I makes a fast, mostly unconscious judgment based on heuristics that lead to certain biases in your judgment. The person is similar to you, your system I instantly like him or her (liking bias). The person wears glasses, your system I thinks he or she is smart (stereotyping bias). It all goes fast.

Your system I has sent these suggestions to your system II without you even noticing it. And your system II turns those into beliefs. The rest of the interview your system II looks for affirmation of the system I suggestions. Our brain simply loves consistency; it lowers our mental stress or cognitive overload. And there you go, you base your final judgment on the two operating systems of your brain helped by heuristics and skewed by cognitive bias. And we do this all day, in all kinds of situations.

 

To sum it up

By understanding Kahneman you can understand human decision-making. And if you understand human-decision making, you can understand human or customer behaviour. You can see how we are predictably irrational (Dan Ariely wrote a beautiful book with this title, which we can highly recommend). We just have to accept our own irrationality. And understand that if we want to convince someone or try to nudge them into certain behaviour, that they are just irrational too.

 

Would you like to know more?

How to create change by design

By | All, Health & Fitness, Safety & Wellness, SUE Amsterdam & Behavioural Design Academy originals, Sustainability

It’s hard denying we as humankind are facing serious problems today, and things need to change. Global warming is happening as we speak, obesity is overtaking smoking as the number one cause of death.

And for most of us, it isn’t that we don’t care about these problems. Sometimes we care a great deal. Who wasn’t shocked after seeing Before the Flood, the stunning climate change documentary starring Leonardo DiCaprio? Who wasn’t moved by Jamie Oliver’s quest to start a Food Revolution knowing children didn’t even recognize real food like an ordinary tomato?

And even if you weren’t aware of these two specific examples: We all know some serious issues are going on.

It’s a framing game

But the interesting question is why don’t we act? Is it because the issues are too big to comprehend? Or do we feel too powerless to make a change? Might very well be, because they are, at least if you frame them as a problem for humankind or the world.

But if you look at global warming or obesity from a different frame, you come to realize they have one thing in common.

People.

You and me.

We eat sugar. We don’t go to the gym. We save time by buying processed foods in the supermarket. We drive cars. We take flights. We buy loads of packaging and forget to recycle. We love taking long showers and binge watch Netflix on the couch while eating crisps.

This way, you realize that the significant issues we’re facing in the world right now can be brought back to simple daily human behaviour. Things we can comprehend. Things which we could change.

So, why don’t we do it? Why don’t we cook with fresh fruit and vegetables? Why don’t we work out? Why don’t we go out and walk more often, for instance to the recycle container? The answer is simple: Because we don’t. It’s that plain simple. We can play the guilt trip or blame game for a much more extended period, but it isn’t relevant, and it surely doesn’t do us any good. Not us as people. Or us as humankind.

We’re all just irrational.

The only relevant question to ask ourselves is: How can we help people adjust this daily behaviour? How can we nudge people into making better choices on an everyday basis?

I believe the answer is behavioural design. If you want to change behaviour, you need to understand behaviour. You need to know how people make decisions. Why they do things and why they don’t. You need to understand human psychology.

Recent years the understanding of behavioural psychology has skyrocketed. We now know more about the human brain than ever before. To me, the biggest eye-opener was that we all are entirely irrational. Not just a little bit, but for the most part.

We all think we consciously make decisions, we all believe that we control our thinking. But in fact, most of our decisions are made through shortcuts – such as heuristics and biases – and have nothing to do with a rational or controlled thinking process. As one of the groundbreaking researchers in behavioural psychology Daniel Kahneman has put it:

We are very influenced by completely automatic things that we have no control over, and we don’t know we’re doing it.

That explains why the blame and guilt trip game isn’t beneficial. How can you be blamed or feel guilty if most of the time we’re just doing things automatically without even knowing we’re doing it? Dr. Kahneman says it even more prosaic:

We are blind to our blindness. We have very little idea of how little we know. We’re not designed to know how little we know.

To conclude behavioural psychology has given us powerful insights into the human mind.

Challenging a commonly accepted assumption

To me, a crucial part of solving the puzzle of making this world a better, healthier, happier place is the realization that behavioural psychology challenges a commonly accepted assumption that people who make poor decisions, made the conscious decision to do so. But science has shown us that’s not true.

Still, millions of euros are invested in campaigns to convince people to act differently, targeting their thinking capacity. That’s just money down the drain.

But what is the answer then? Understanding how the mind works is just one thing. But how do you translate scientific research into practice? How can it stop me from eating pizza? From buying sneakers for comfort instead of running? From buying plastic bottles instead of refilling my own? How can we apply science to daily life?

Behavioural design is the answer

I think a behavioural design is the only answer. I do realize design instantly opens up associations about the visual, about aesthetics. But if you look at design in a broader sense and if you take a closer look at what designers do, you see their job is to find new solutions to problems using creativity. And there are some fascinating things to learn from the way they work:

1. Just as behavioural psychologists, designers have always taken humans as a starting point. When designing a new chair, they want people to be able to sit on it. When designing a new fountain pen, they want people to be able to write correctly.

2. Just as a behavioural psychologist, designers do empirical testing. Designers have always used early testing with prototypes. They build scale models; they make paper cut dresses, they make beta releases. They watch how people interact, react or behave. And then measure, learn and adapt.

A lot is written about design thinking. Tim Brown, the CEO of IDEO – one of the leading innovation companies – has written a great book on the subject: Change by Design, if you want to get some more in-depth information.

Behavioural design is the symbioses between two things: behavioural psychology and design thinking.

To me, Behavioural Design is the symbioses between two things: behavioural psychology and design thinking. If you combine those two worlds, you’ll be able to come up with better products, with better ideas and better interventions that will help people make better decisions, as you take people and their irrational decision making into account when developing an idea.

Change will come

But to get back to us as humankind tackling the world’s problems, my belief is design thinking is indeed an answer. It will help you:

– See that obesity, and global warming are both behavioural problems on an individual level, making them comprehensive and tangible;

– Understand people most of the times aren’t unwilling, but unable to change their behaviour, making you realize you need ideas that enable them to make better decisions;

– Use design thinking to come up with ideas that influence people’s daily behaviour and get evidence-based results by testing them at an early stage;

– Experience that change will come

– The first step in finding wicked answers to wicked problems is reframing a question to a behavioural challenge.

 

Behavioural design teaches us that the first step in finding a great answer is reframing the question to a behavioural challenge. By doing this, you’ll automatically end up with people. You’ll end up with us. At you. And if all of us make a change on a daily basis, we make an impact. We can change the world. I am convinced.

Astrid

 

 

 


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Astrid is the founder of SUE Amsterdam and The Behavioural Design Academy. Our mission is to unlock the power of behavioural psychology to nudge people into making positive choices in work, life, and play.

In two days of high-end master classes, we train people in unlocking the powerful principles of behavioural psychology and teach them our Behavioural Design Method™ that translates this knowledge into actionable skills to influence personal behaviour or the behaviour of customers, employees, family members or the general public.

Cover image by welovecostarica.com under creative commons license.

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Rediscovering the Unconscious

By | All, Behavioural Science

“When you try to answer a question,” said Kahneman, “you sometimes answer a different question.” In a seminal 1979 paper, he and Tversky described a series of experiments that questioned the classical economic assumption of “homo economicus,” a rational actor motivated by self-interest. In its place, they defined what they termed prospect theory, a description of the mental shortcuts, or heuristics, that guide people’s everyday decisions, as well as the systematic biases that could result from them. “A heuristic,” Kahneman explained, “is just answering a difficult question by answering an easy one.” When asked, for instance, the number of divorces at one’s university, one might substitute the question of how easy it is to think of examples of divorces, a heuristic Kahneman and Tversky dubbed “availability.” “Evaluation happens in a fraction of a second,” Kahneman said. Reflecting on this theory’s place in the history of psychology, he noted, “In the last 20 years, [psychologists] have rediscovered the unconscious…but it didn’t come from Freud. It came from experimental psychology.”

Read the whole article here

 

Cover image as published by Harvard Business Review.

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