Learning To Be Rational, and Happy (his)

If we were completely rational beings we would be happier.  Our brains, however, are not built to be fully rational and therefore not designed to help us be happier.  If you’re looking to be happier you can’t always trust your brain.  If you question this premise you should learn more about Daniel Kahneman by reading his New York Times best-selling book, Thinking, Fast and Slow.

If you have followed our Twitter or Facebook posts you know that we’re fascinated by Daniel Kahneman.  He pops up often in our feeds and rightfully so.  He is a brilliant scientist and has turned his attention to the study of happiness.

I’m awestruck by Daniel Kahneman for the following 3 reasons:

1. He is a research psychologist who won the Nobel for economics in 2002.

In the 1970s Kahneman, along with his research partner Amos Tversky, began investigating the foundational assumption of economic theory – that people are rational economic thinkers.  Kahneman and Tversky’s “Prospect Theory” rebutted this basic premise by showing that people are not at all rational in their decision-making.  As one writer put it, “the human mind is so wedded to stereotypes and so distracted by vivid descriptions that it will seize upon them, even when they defy logic, rather than upon truly relevant facts.”*

I studied economics in college and again in my graduate program and was always troubled by the assumption that we’re all rational economic actors.  If this weren’t true then we should be skeptical of any economic theory based on it.  Through a series of experiments, Kahneman and Tversky showed that people are influenced by all kinds of factors that aren’t logical, reasonable or grounded in fact.  In uncertain circumstances our brains tend to grasp at information that’s readily available or easy to remember rather than true.  They called this “the availability heuristic” and as a result, Kahneman won the 2002 Nobel in economic science (Tversky would have been included but he died in 1996).

2. He is arguably the co-founder of the “Moneyball” movement in baseball.

Anyone who knows me knows I’m a big fan of the “Moneyball” movement in baseball.  This term was coined by Michael Lewis’s book Moneyball (recently made into a movie) that highlighted the shift in baseball from picking players based on a scout’s “gut” to more statistical analysis.  I love this movement because I believe we should make more of our decisions based on data and statistical analysis and less on our “gut”.  It’s also the reason for Hapacus.  Hapacus is a similar movement away from following our “gut” on what will make us happier and looking more towards the data of scientific research.

Now, let me connect the dots back to Kahneman.

Kahneman and Tversky’s debunking of the idea that we’re rational economic thinkers resulted in the rise of Behavioral Economics – what actually happens rather than what should.  Paul DePodesta, the assistant to Billy Beane, the GM of the Oakland A’s, and upon which the book Moneyball was based, studied Behavioral Economics at Harvard.  DePodesta (who was played by Jonah Hill in the movie) was hired by Beane because of his analytical data skills and interest in applying it to choosing the best players at the lowest price.  Therefore, Kahneman’s influence on DePodesta and all the other Behavior Economists and statisticians who now work in baseball’s front offices is significant.  Kahneman, however, can only be regarded as a co-founder because much of the credit for this movement is in the hands of Bill James, the father of baseball statistics.

3. He now focuses his research on happiness.

Daniel Kahneman

Rather than rest on his laurels, Kahneman, who is 77, continues to research and write about the frailties of our own minds, but in the context of how we pursue happiness.  Kahneman’s new book, Thinking, Fast and Slow helps us understand how our brains operate, why they can’t always be trusted, and what we can do to manage our minds so we do maximize our happiness.

The title and basis of his book come from the idea that our brains are made up of two systems – System 1:  our fast, automatic, intuitive and unconscious mind; and System 2:  our analytical, reasonable and conscious mind.  System 1 speeds along and takes care of many things on its own.  Unfortunately, System 2 is inherently lazy and not prone to check all the conclusions of System 1.  As a result, System 2 allows decisions based on faulty information to determine our actions.  Often there isn’t a problem either because the truth is close enough or the resulting action doesn’t do us much harm.  However, we make enough decisions about our life and our own happiness based on faulty assumptions coming from our System 1 that it’s important we work at engaging System 2 more actively and often.  But that takes work and we aren’t prone to such work.

True happiness takes work.  It takes a well refined System 2 to understand the happiness facts and constantly check the automatic workings of System 1.  Only by working on our System 2 can we maximize our happiness.  Daniel Kahneman teaches us that.
 

*Lewis, Michael, “The King of Human Error”, Vanity Fair, December, 2011, p. 145.