December 20, 2016
The research of Kahneman and Tversky has become some of the most influential social science of the past century. It has helped to reorder economics by exposing the folly of economists’ belief in an unconsciously rational human mind. The work has also led to advances in medical diagnosis and patient behavior. It has affected eating habits, cellphone use by drivers, retirement savings and many other areas.
The work is also full of practical little ideas. “No one ever made a decision because of a number,” Kahneman has said. “They need a story.” Or Tversky’s theory of socializing: Because stinginess and generosity are both contagious, and because behaving generously makes you happier, surround yourself with generous people.
One of the clearest places to see their work’s impact, although surely not the most important, is professional sports. Team executives have realized that some of their long-held assumptions about what makes a great athlete or a winning strategy turn out to be wrong. And they have adjusted. The adjustments have not always worked, and many of the old beliefs — say, the importance of fielding skill among catchers in baseball — contain wisdom. Yet the reformist movement has had many more wins than losses. One reformer is Theo Epstein, the executive who has overseen the demise of mythical curses on both the Boston Red Sox and Chicago Cubs.
The changes in sports are known as the Moneyball revolution, after the title of a 2003 book by Michael Lewis, about the low-budget success of the Oakland Athletics. One review of “Moneyball” particularly caught Lewis’s eye, because it offered a criticism that had not occurred to him. Writing in The New Republic, two academics — Richard Thaler, an economist who had helped overthrow his field’s hyperrationality, and Cass Sunstein, a law professor — argued that Lewis had missed a larger story: The success of the A’s could trace its intellectual roots not only through the world of baseball’s analytical geeks but also back to the work of Kahneman and Tversky.
“Until that moment I don’t believe I’d ever heard of either Kahneman or Tversky,” Lewis now writes. “My book wasn’t original. It was simply an illustration of ideas that had been floating around for decades and had yet to be fully appreciated by, among others, me.” Lewis set about learning more about the psychologists, and the result is his latest book, “The Undoing Project,” a joint biography of Kahneman and Tversky, and a discussion of their ideas and complex relationship.
Lewis is the ideal teller of the story. Dating to his 1989 debut, “Liar’s Poker,” about the Wall Street boom of that decade, he has displayed a rare combination for a writer. He immerses himself in big ideas — about finance, technology, sports and, ultimately, the human condition — and then explains them to readers with sophistication and clarity. But he is also a vastly better raconteur than most other writers playing the explication game. You laugh when you read his books. You see his protagonists in three dimensions — deeply likable, but also flawed, just like most of your friends and family.
Kahneman and Tversky are no longer obscure figures, thanks in part to Kahneman’s best-selling “Thinking, Fast and Slow.” Yet their story is still not well-known. They were both grandsons of rabbis from Eastern Europe, and both atheists. They were deeply affected by their service in the Israeli military — including in the 1973 Yom Kippur War, after they had already established themselves as academics. The experiences helped make Kahneman far more practical than he otherwise might have been, because he understood that psychology could save, or cost, lives.
For Tversky, military service sharpened the brazenness that became crucial to their collaboration. At one time, against the orders of a superior, he rushed over to a fellow soldier who had collapsed near an unexploded grenade and pulled the soldier to safety. “Once I did that,” he later told a friend, “I felt obliged to keep this image of hero.” His confidence and brilliance combined to make for a cutting sense of humor. After he had given a talk, an English statistician approached him and said, “I don’t usually like Jews, but I like you.” Tversky responded, “I usually like Englishmen, but I don’t like you.”
Tversky’s panache made him the more prominent of the pair, by a considerable margin, while they were doing their work. The gap aggravated tensions that existed between the two men despite what Lewis describes as a platonic love between them. Many of today’s readers, of course, know only Kahneman’s name. The back story is tragically affecting: Tversky died of cancer in 1996, at the age of 59. He received the diagnosis just after he and Kahneman had severed their friendship, only to repair it in Tversky’s last months.
For all of the personal anguish that their differences created, those differences also fueled their accomplishments. Tversky’s boldness helped the pair to take on strongly held beliefs in one field after another. Kahneman’s humility and insecurity were just as important to their success. He was unsparingly self-critical, which allowed him to understand his own mental errors — and, by extension, to diagnose widespread human errors that others had missed. Kahneman came to realize that when he was faced with results from studying 40 subjects, a typical sample in psychology, his instinct was to devise an explanation for the results. In truth, the most likely explanation was statistical noise.
If you want to conduct your own experiment along these lines, ask someone to write down the results of a hypothetical sequence of 20 coin flips. Then ask the person to flip a coin 20 times and write down the results. The actual flips will almost certainly contain long streaks of only heads or tails — the sort of streaks that people don’t think a random coin produces on its own. This kind of misconception leads us to misanalyze all sorts of situations, in business, politics and everyday life. Lewis, describing one of Kahneman and Tversky’s real-life disciples, writes, “He suggested a new definition of the nerd: a person who knows his own mind well enough to mistrust it.”
That notion — reflected in the book’s title — is one of the most important that Lewis offers, especially now. Many people attracted to Kahneman and Tversky’s ideas have a little bit of Amos Tversky’s brashness in them. They (in fairness, I should say “we”) get some enjoyment from puncturing shibboleths with data and observation. As a result, they are often seen as arrogant and sometimes are indeed arrogant.
I read “The Undoing Project” during the final days of the 2016 presidential campaign and its aftermath. In many ways, the campaign’s result and its winner represented the antitheses of Kahneman and Tversky’s work. The election was a victory for gut instinct over empiricism, for cynicism over reason.
But the full message of Kahneman and Tversky’s work, I think, is more subtle than it often seems — and even more important in the new political world than the old. The human species is fantastically complex and often doesn’t know what it is doing. The search for a better understanding of our behavior is vital. It’s also difficult, never-ending and still very much worth the struggle.