There are very few psychologists who can boast of having won a Nobel Prize; in fact, they can be counted on the fingers of one hand. And only one of them can claim to be the first psychologist to win such a prestigious award: Daniel Kahneman, who In 2002 he won the Nobel Prize in Economics, no less.. The prospect theory, which he developed together with Amos Tversky, opened up a new field of research in economics. However, Tversky, with whom he collaborated for almost two decades, died in 1996.
Daniel Kahneman is still alive today, but what has his life been like?
Daniel Kahneman Born in Tel Aviv in 1934when the city was still Palestinian territory and Israel did not exist. He was born there by chance, because his birth coincided with a visit to his mother's relatives, but He spent the first years of his life in Paris. The city, far from being the city of love at the time, was soon occupied by the Nazis. Despite his Jewish ancestry, Kahneman was lucky to escape unscathed from the Nazi terror.
In fact, it was precisely a run-in with a Nazi German soldier that led him to become interested in psychology, that strange science that may have saved his life.
In 2003, when the Third Reich was nothing more than a memory of its horrors, Kahneman recounted that once, when he was seven or eight years old, he had skipped the curfew that required Jews to return home before six in the morning by staying out playing with a friend. As a Jew, he wore a Star of David pinned to his jersey.as a form of identification. Knowing it was dangerous, he decided to turn his jersey inside out.
It was then that met a German soldier: «He was wearing the black uniform I had been told to fear most of all, the one worn by specially recruited SS soldiers. As I approached him, trying to walk quickly, I noticed that he was watching me intently. Then he beckoned to me, picked me up and hugged me. I was terrified that he would notice the star inside my sweater.» His mother used to tell him that “people were infinitely complicated and interesting.” That day he discovered that he was right.
I returned home more certain than ever that my mother was right: people were infinitely complicated and interesting.
Daniel Kahneman's career path
In 1948, Daniel Kahneman returned with his family to Palestine. By 1954 he was already Bachelor of Psychology from the Hebrew University of Jerusalembut the truth is that even then psychology was not able to satisfy, on its own, the thirst for knowledge of a researcher who never let any area limit him. It is therefore not surprising that, shortly after graduating, he also took a master's degree in mathematics at the same university.
Kahneman returned to his origins at the very moment when the State of Israel was created. It is not surprising that, in the face of the successive wars that followed the conflictive creation, Daniel Kahneman decided to join the Israel Defense Forceswhere he worked as a psychologist by evaluating officer candidates.
However, Kahneman soon traveled to the United States, where the University of California at Berkeley: there he received his doctorate in 1958 and later worked as a psychology teacher there. His career as a university professor, however, began at the Hebrew University of Jerusalem.where he had studied his degree years before. Other universities followed suit: the University of British Columbia, Princeton University…
Teaching was not, by any means, his only passion. It was not for nothing that Kahneman stood out as a researcher, a facet that led him to write almost twenty scientific articlesHe also wrote some books, among which stands out «Thinking fast, thinking slow»published in 2011 and winner of awards such as the 2011 Los Angeles Times Book Award and the 2012 National Academy of Sciences Award.
In “Thinking, Fast and Slow,” Daniel Kahneman set out to unravel the mysteries of human thought, presenting Two systems that shape our thoughts: »System 1 is fast, intuitive and emotional, while System 2 is slower, deliberative and logical.»
What Daniel Kahneman taught us in “Thinking, Fast and Slow”
Daniel Kahneman's theory is based on a very simple basis: two systems come into play in human thought. The first system of thought is fast, involuntary and responds to emotions; The second, on the contrary, is much slower, but it is also analytical.which requires more concentration.
As you might have guessed, each of these two systems performs different tasks:
- System 1 It helps us make decisions quickly, without evaluating all possible options and therefore with more chances of error. He is in charge of making you flee from danger.
- System 2 is one that generates slow reflections, the one in charge of acting when you are deeply concentrated such as in an exam. However, sometimes it draws on system 1, which means it can also make decisions that are not very well thought out and require less mental effort.
So, Daniel Kahneman came to the conclusion that when we think we make cognitive errorss, or what he called «heuristic assumptions.» The cognitive is that which «belongs to or relates to knowledge.» Therefore, a cognitive error is one that influences your knowledge.
Some of these cognitive errors are the following:
- Confirmation bias It is the tendency to ignore everything that contradicts what we already know. Thus, when you have to make a decision, associative memory, which is very important in system 1, makes you choose what confirms what you already know, ignoring everything that contradicts it.
- The halo effect It is a cognitive error that consists of basing our opinion about a person, a cultural product, a brand, etc. on what we know about it and what we like. For example, if you enter a new workplace and someone smiles at you as soon as you enter, greeting you kindly, you will tend to think that this person is kind, even though you know nothing else about them. Similarly, if your favorite film studio releases a film, you will be more inclined to like it than if the same product were released by a different studio.
- The affective biaswhich comes into play when our decisions, instead of being governed by logic, are governed by what we feel. For example: imagine that you live in a city that you like, where you have prospered professionally and where you live surrounded by friends and family; however, suddenly you meet a person from another city with whom you fall madly in love and decide to move in with her, even though you have no friends there, no family, and no good job secured. The driving force behind that decision has been love, not reason.
- The law of small numbers He argues that the human mind has difficulty understanding statistics. Thus, we can draw conclusions based on the results of a very small sample that is not at all representative and will most likely lead us to make a mistake. For example, when the coronavirus began to spread in Asia, but there were hardly any cases in Europe, it was common for the media to claim that it was a very mild disease, similar to the flu, due to the low incidence it had here; this was clearly a cognitive bias.
- The availability bias This makes you answer questions based on what comes to mind most easily. It is much easier to understand with an example: imagine that in your country there are demonstrations on a regular basis and that most of them are peaceful; however, once or twice a month, the media reports on demonstrations where acts of vandalism have occurred, so you start to think that it is dangerous to go to a demonstration. Is it really? Well, the reasoned answer would be “no, in most cases”; your mind, on the other hand, conditioned by what you have seen many times, will make you think that it is.
- The hindsight bias It is the phenomenon that makes us think that past events were predictable. Imagine that you are watching a match of your favorite football team and the coach decides to replace a player with another who is on the bench; your team loses and then you think that it was obvious that, by removing that player from the bench, they would have lost, even though there was no evidence to support it before.
Daniel Kahneman's prospect theory, or theory of perspective
It was his forays into the field of economics that earned him the greatest recognition. Not for nothing. won the Nobel Prize in Economicsafter explaining, from a psychological perspective, the way in which people make decisions when the risk factor comes into play.
Broadly speaking, the prospect theory by Daniel Kahneman and Amos Tverskycontradicted other previous economic theories that claimed that each individual's decisions were based on probability. Kahneman and Tversky, for their part, claimed that The probability stopped having an effect when the uncertainty component was added.; then losses and gains were evaluated.
What this theory says, in practice, is the following:
Suppose that You have 5,000 euros and two options:
- Win 1,000 euros guaranteed.
- 50% chance of winning another 5,000 euros and 50% chance of winning nothing.
Most people would choose the first option, because When it comes to profits we are risk averse.
But there is another scenario: again you have 5,000 euros and two options:
- Lose 2,500 euros insured.
- Having a 50% chance of losing 4,000 euros and a 50% chance of losing nothing.
In this case, Kahneman and Tversky found that most individuals chose an option similar to the second. That is why prospect theory states that People choose risk when they enter the loss zonebecause we are naturally averse to losses.
In this way, Kahneman and Tversky made the world understand that The economy could not be separated from peoplesince people are economic subjects with a central role in this field. Today, his discoveries continue to be of great help to many economists and companies. Not for nothing in 2015 the English newspaper The Economist It gave him the position of the seventh most influential economist in the world.