Thinking, Fast and Slow: Conclusions Summary & Analysis

Kahneman concludes by reexamining some of the larger principles in the book, beginning with the experiencing and remembering selves. The remembering self is a construction of System 2, but duration neglect and the peak-end rule originate in System 1. We do not treat all moments the same—some are more memorable, and some are more important.

The issue of which of the two selves matters more is important to both medicine and welfare. He wonders, through a series of rhetorical questions, whether investments should be made based on the actual suffering that people experience, or how much, holistically, they want to be relieved of their condition.

Kahneman then returns to the idea of Econs and Humans, as well as basic economic theory. He argues that the definition of rationality as being consistent and coherent removes reasonable people from the definition of rationality. Humans are not irrational, but they need help to make accurate judgments and better decisions. In a nation of Econs, government should keep out of the way, but Humans require more guidance.

In Richard Thaler and Cass Sunstein’s book Nudge, they address the dilemma of how to help people make good decisions without curtailing freedom. They come up with libertarian paternalism, which has great appeal across a broad political spectrum. One example of a “nudge” is that joining a pension plan is the default option. Another example lies in a policy that many firms now offer employees: those who sign on allow the employer to increase their contribution to their savings plan by a fixed proportion whenever they receive a raise. It improved the savings rate and brightened the future prospects of millions of workers.

Additional applications of libertarian paternalism introduced by Sunstein include the gas mileage example from earlier, a new version of dietary guidelines that eradicated the Food Pyramid and replaced it with a Food Plate, and an inclusion of both frames on labels like “90% fat-free” alongside “10% fat.”

Kahneman ends by returning to the two systems: the automatic System 1 and the effortful System 2. System 1 is the origin of much of what we do wrong, but also much of what we do right. Our thoughts and actions are generally on the mark, but sometimes it becomes unreliable. The way to block errors that originate in System 1 is simple: “recognize the signs that you are in a cognitive minefield, slow down, and ask for reinforcement from System 2.” This is what occurs when we encounter the Müller-Lyer illusion after we have learned that our intuition is incorrect.

Organizations are better than individuals when it comes to avoiding errors, and can institute and enforce the application of checklists, reference-class forecasting, and the premortem.

Ultimately, having a vocabulary for the different heuristics is also important in avoiding their errors. Labels like “anchoring effects,” “narrow framing,” or “excessive coherence” reminds us of our potential biases, their causes, effects, and what can be done about them.