The book that changed my life: Thinking Fast and Slow by Daniel Kahneman

I read the book that changed my life, the one I can’t stop telling people about, last year.

Thinking Fast and Slow by Daniel Kahneman has completely changed the way I see the world.

Kahneman is a psychologist who researches the way people make decisions. He won the Nobel Prize for Economics. He won it for showing classical economics was founded on a fallacy. Classical economics is based on the idea that consumers are rational, that markets behave rationally. I’m a consumer and you’re a consumer and you know that’s absolute nonsense. Kahneman showed us why.

Available on the bestseller racks since publication in 2011, it looks like a self-help book and, in a way, it is. It teaches that most of the decisions we make are influenced by our own laziness and lots of other subconscious factors. For example, if you put a bunch of people in a room and ask half of them to look at pictures of old people and half to look at pictures of other things, then ask them all to walk down a corridor to get a cup of coffee, the ones who looked at pictures of old people walk measurably more slowly than everyone else.

Knowing this, the implications for what influences how people vote and for fake news are worrying. There’s some great stuff about when to trust an ‘expert’ and when to reserve judgement, as well as why big projects always seem to go over budget, and the value of a pre-mortem: if this very expensive thing we’re about to do goes tits up, what will we be saying to each other in this room in a year’s time about what went wrong?

Kahneman did most of his research with the late Amos Tversky. Michael Lewis, author of books about the bad lads in Wall Street – Flash Boys and The Big Short among others – wrote a book in 2003 called Moneyball. You may have seen the movie. It’s about how Billy Beane, the manager of failing baseball team Oakland Athletics, employed a young statistician to analyse players’ metrics. He then developed a recruitment policy based on those metrics, against the instincts, gut feelings and recommendations of his advisory board. He created a team that won 20 games in succession in 2002, confounding everyone. Lewis read a review of Moneyball which pointed out that the metrics idea came from two psychologists, Kahneman and Tversky, and now he’s written a book about them, The Undoing Project – A Friendship That Changed The World, published last December.

Hyperbole aside, read Thinking Fast and Slow, it may change your view of the world too.

By Chris Wallis