Thinking, Fast and Slow | Daniel Kahneman | Talks at Google

Speaker 0:01 All right. I'm John Boyd. It is my great pleasure to, uh, introduce, uh, Professor Kahneman today. And I just want to give you a, a brief, uh, background, uh, on, on, on his, on his outstanding career. Uh, he started in nineteen fifty-four, received his bachelor's in experimental psychology and mathematics from the Hebrew University in Jerusalem. Uh, in nineteen sixty-one, he was awarded his PhD from University of California Berkeley, uh, right across the bay, in, uh, in experimental psychology. In nineteen seventy-nine, he and his, uh, co-author, uh, Amos Tversky, published their seminal paper on prospect theory, which started to change the way that people reframed the argument around gains, losses, and decision making, uh, under uncertainty. Uh, several years later, in two thousand and two, uh, Professor Kahneman was awarded the Nobel Prize, largely for the work on prospect theory. And Nobel Prizes, I think, are always, uh, impressive. Uh, his perhaps more so because there actually isn't a Nobel Prize in psychology. He had to win his Nobel Prize in economics. And as far as I know, I think there's only one other person, one other psychologist, who has won a Nobel Prize, and that's, uh, uh, I-Ivan Pavlov. Uh, and he may be a physiologist. We could argue about that. Uh, years later, in two thousand and seven, psychologists tried to reclaim, uh, Professor Kahneman as one of our own, uh, when the American Psychological Association awarded him a Lifetime Distinguished Contribution Award. And today he is a senior scholar at the Woodrow Wilson School of Public and International Affairs at Princeton University, and he's here to talk about his new book, Thinking, Fast and Slow. And now, Google's mission, which we all know, is to take the world's information and to make it more useful and univ-universally accessible. And all information, all knowledge is, is important, but I think some, again, is more important than others because the information that he'll present today, I think it's very personal. It's about each of us. And if you listen carefully and really, uh, understand what he says, it's gonna change the way that you think about yourself, uh, and the world around you. So please join me in welcoming Professor Kahneman to Google.

Daniel Kahneman 2:05 [audience applauding]

Daniel Kahneman 2:06 Thank you. Well, uh, I think intuition has been discussed a lot in recent years, and I'll be talking about intuition. There are two camps in this, uh, discussion. Naturally, there is the pro and the con. Uh, and of course, many people here will have read Malcolm Gladwell, Blink, which although it, you know, it's not an unconditional defense of intuition, it certainly gave people the impression that, uh, sometimes we magically, uh, know things without knowing why we know them. Within the discipline of psychology and judgment and decision making, there is a group, and it's headed by a very interesting figure called Gary Klein, uh, who wrote a book that I recommend. Uh, it's Sources of Power is the one of his books that I would recommend the most warmly, and they are great believers in expert intuition. On the other side, there are skeptics, um, uh, about intuition in general and including expert intuition. And I have long been counted as one of the skeptics because my ear-ear-early work with Amos Tversky was about intuitive errors and flaws and biases of intuitive thinking. Today, you find that discussion in many places and for example, in medicine, among the popular writers, there are two writers, both of whom write for The New Yorker, Jerome Groopman and Atul Gawande, and they clearly differ. Atul Gawande is in favor of formal systems, very skeptical about, about human judgment and wanting to improve it all the time. And Jerome Groopman, uh, being in fact, although he doesn't quite admit it, he really likes good old-fashioned medical intuition. It-- of course, he would like the physicians well-educated, but he, uh, doesn't like formal system. And the issue in medicine is the issue of what is the role of evidence-based medicine, and how do you allocate functions between that and intuition? The background, actually, part of the background for what I'll talk today is a strange collaboration in which I engaged for about eight years with Gary Klein, whom I mentioned. So he is, he is the guru of a group of people who really, I wouldn't say they despise what I do, but they certainly don't like what I do because they, they think that the emphasis on biases of judgment has drawn an, an unjustly unfavorable picture of the human mind. And by and large, I'm inclined to agree. So seven or eight years ago, we-- I invited him and we worked together for a number of years trying to figure out what are the boundary, where is intuition marvelous and where is it flawed, and can we tell? And I think we can tell. And we, we wrote a paper at the end of six or seven years with, with a lot of, uh, sort of vicissitudes, uh, that we went through since we basically don't agree. Uh, we wrote a paper, the title of which was on a failure to disagree because on, on the substance, I think we know and we both agree where you can trust intuition and where you cannot. Uh, emotionally,

Daniel Kahneman 5:38 we haven't changed. Uh, he still hates the idea of biases and, and doesn't think that errors of experts are very funny, and I think that errors of experts are quite funny. So that's a, that's a difference right there. There are two modes of thinking that all of us are familiar with. And there is one mode, one way for thoughts that come to mind, and this is this. I mean, you know about this lady, that she's angry just as quickly as you know that her hair is dark. And it's interesting to dwell a bit about this. This is not something, the judgment that she's angry or the impression that she's angry doesn't feel like something you did. It feels like something that happens. It happens to you. We have the basic experience is a passive experience in those judgments. And that is true of perception. We, when we see the world, we don't decide to see it. It is true of impressions, and it is true in general, what we call intuitive thinking. It just happens. It comes from somewhere, and we are not the author of it. Now, there is another way that thoughts come to mind, and I mean, here, I suppose essentially nothing came to your mind, but, uh, the answer is, is four oh eight. That to produce the four oh eight requires a completely different kind of operation. You have to retrieve a program that you learn in school. Uh, the program consists of steps. You have to go through the steps. You've got to, uh, pay attention successively to partial products and so on, and keep things in mind and keep the whole program in mind. And this is hard work. This is something that you do. It is not something that happens to you. And there are many indications that this is hard work. Uh, one, uh, is that physiology indicates that this is hard work. You know, the pupil dilates. This is something that I studied many, many years ago. The pupil really, on, on a program like that, if you're, on a problem like that, if you're going to do it, uh, in your head, your pupil will dilate. The area will increase by about fifty percent, uh, as, as soon as you engage in that, and it will stay dilated as long as you're working, and it will sort of collapse back to normal size either when you quit or when you find the answer. So this is another way thoughts come to mind, and this is definitely not the intuitive way. Here we are, we feel a sense of agency. We feel something deliberate is happening. And a very important aspect of it, this is effortful. And what psychologists mean by effort is basically, you know, if you want a, a quick introduction to what effort is, this is something you cannot do while making a left turn into traffic. You cannot do it, and you shouldn't try. And

Daniel Kahneman 8:40 the, and the reason is that there is limited capacity to exert effort. And if you're en-engaged that capacity or those resources in one task, less is available for another task. Now, there is another function of System 2, and here I'm going to tell you a riddle. Most of you are familiar with it. Um, a bat and a ball together cost a dollar ten. The bat costs a dollar more than the ball. And of course, how much does the ball cost? How many people know this riddle, by the way? Oh, okay, so it's still usable. Um, the point about this riddle is that the number came to your mind, and the number is ten cents. And everybody just, I think, you know, maybe here, maybe they're exceptional, very few exceptions. People confess that the number ten cents immediately came to mind. Now, it's wrong. I mean, ten cents and a dollar ten is a dollar twenty, so that's not the solution. The solution is five cents. But what is interesting here is that at Princeton, at MIT, uh, at Harvard, and I don't know about Stanford or Caltech, but, uh, about fifty percent of students asked this question of undergraduates say ten cents. And we learn something very interesting when somebody says ten cents. We learn that they didn't check. Uh, because if they had checked, they wouldn't say ten cents. So there is a sense of confidence that people have, that these people in particular have. And it brings us to another function of what I'll call System 2. System 1 is the intuitive one. It performed those automatic and, uh, activities. And System 2 is the effortful one, the one that's the deliberate one. And the reason that I classify this as a System 2 operation is that self-control and controlling your attention and deliberate e-exertion of effort are impaired when, by other activities. So if, for example, to give you a trivial example, if somebody is asked to retain seven digits in their head and is then given a choice between chocolate cake, sinful chocolate cake, and virtuous fruit salad, they're more likely to choose the chocolate cake than they would if they were asked without seven digits in their head. It takes some effort to control your impulses, even such mild impulses as a preference for chocolate. So, um, you should be aware of that difference between System 1 operations, the automatic ones, and System 2 operations, the deliberate ones. Uh, it comes very clearly when in

Daniel Kahneman 11:43 driving. So driving is a skill, and any skilled activity, uh, measure of skill is that things begin to happen automatically. So you can drive and conduct a conversation. You cannot make a left turn into traffic. But by and large, we can drive and talk, so driving is largely automatic. Braking, when there is any sign of danger, braking is completely automatic. That is, you can notice why you are braking, but you first respond so that the response is immediate, it is fully automatic. Now, in some places, not here, where people drive in snow or ice, they learn about skids. And then occasionally, you'll find yourself as a driver in a skid, and then System 2 will be mobilized because in a skid, you're not supposed to do anything that comes naturally to you. You shouldn't brake and you shouldn't steer away from the skid. You should leave the brakes alone and steer into the skid. Completely non-intuitive. Now, when people have a lot of practice with skids, that too becomes automatic. So one thing that we can tell about System 1 and System 2, th-those two types of operations, is some of the basic innate operations, uh, functions that we have, such as perceiving things, having emotional reactions to things, uh, all this is System 1. We don't choose to do it, it just happens to us. But also, System 1 is where skill is. That is, when we get to be skilled at something, it becomes automatic and it demands fewer resources, and we get to be very good at it. Now, the issue of intuition, uh, and here I'm not sure that... But I suspect that Malcolm Gladwell really did us a disservice by giving that sense that there is a magic to intuition. There

Daniel Kahneman 13:45 really is no magic at all, and we should understand how it works. Intuition, and Herbert Simon, who was a psychologist then, an economist and a political scientist and a Nobel laureate, uh, Herbert Simon gave a very good definition of what intuition is. It is simply recognition. There is really no difference between the physician recognizing a disease, you know, a particular disease from a facial expression or something, and, and a little child learning, pointing to, uh, something and saying, "Doggy." The little child has no idea what the clues are, but he just said, he just knows this is dog without knowing why he knows. And once you think about it this way, this really demystifies, uh, intuition to a very considerable extent. And it also leads you to a sort of a solution to the problem that Gary Klein and I were, were trying to solve. When can you trust intuition and when can't you? And then it becomes an issue of is the world regular enough so that you can learn to recognize things? Or, and then did that particular individual have an opportunity to learn the regularities of the world? And so the world of chess players is highly regular. And statistically, even the world of poker players is regular, so there can be an element of chance. But there are rules. And, and the mind is so set that if there are rules in the environment and we're exposed to them for a long time, and we get immediate feedback on what is right and wrong, or fairly immediate feedback, we will acquire those rules. So all of us have expert intuitions, even if we're not physicians and we're not, uh, uh, and we're not chess players, master chess players. Uh, I recognize my wife's mood from one work on, one word on the telephone. And, you know, most of you can do that with people that you know very well. Uh, all of us recognize a dangerous driver on the next lane. And, you know, we get cues, and we don't necessarily know what is the cue, but that, uh, this person is driving erratically and could do something dangerous. And this is a lot of reinforced practice, and we're very good at that. Uh, we can learn about those, uh... There are differences among experts, among professionals in the level of expertise that they have, and they depend in the level of intuitive expertise that they can develop. And so, for example, compare anesthesiologists to radiologists. Anesthesiologists get very good feedback and immediate feedback whenever they do anything wrong. Uh, you know, they have all those measurements that are in real time, and, and they get the feedback. Radiologists give, get really miserable feedback about whether they're right or wrong. So you could expect anesthesiologists to develop intuition much more than you would expect radiologists to, uh, develop intuition. And so that is part of the answer about intuitive expertise. We don't need to disagree about that because we know pretty much

Daniel Kahneman 17:19 when intuitive expertise is likely to develop. And as I said, we also-- That means that intuitive expertise is not going to develop in a chaotic universe or in a chaotic world. Uh, so for example, I personally do not believe in, uh, that, that stock pickers, pe-people who picks, you know, stocks to invest in, can develop intuition because simply the, the market takes care of it. There isn't enough regularity in what's going to happen to prices for intuitions to develop. We also know about political forecasters. When they forecast long term, they are really no better than, you know, a dart-throwing monkey. And, uh, and they're certainly not better than an, the average reader of the New York Times. Uh, in intuitions And the reason it's not the pundits' fault, and that research has been done with pundits and with CIA analysts and with regional experts, it is really not their fault that they're not-- that they can't predict the long-range future, ten or fifteen years. They're quite good at short-term predictions. They're really not very good at all in long-term prediction. It's not their fault. It's the fault of the world. The world is probably not predictable. And if the world is not predictable, you're not going to, you're not going to predict it. When there are marginal situations where there is some predictability but poor, formulas do better than individuals. That is the domain where formulas beat individuals regularly, is a domain of fairly low predictability. Because when there are weak cues, people are not very good at picking them up and are not u-good at using them consistently. But formulas can be generated on the basis of experience, and they will do a better job than individual judgment. Okay. Now, I've introduced you to System 1 and System 2, and I've told you something about skill and about skill in, in System 1. Uh, now I'd like to point out something that we sometimes have intuitions, and that applies to political forecasters and to stock pickers and to, to all of us. We quite frequently have intuitions that are false. And they come up and come to mind, and they are subjectively undistinguishable from expert intuition. So I'm now talking of people who have intuitions that are not based on expertise. And they come, they're System 1 in the sense that they are effortless and, and automatic, and where do they come from? And that is what I'm going to try to illuminate, uh, illuminate, shed some light on, uh, in the rest of the talk. So I want to introduce you to System 1.

Daniel Kahneman 20:25 And first of all, let me get one thing clear because I might forget. I use System 1 and System 2, those terms, uh, they're very shocking terms in my discipline. You're really not supposed to do that, uh, because every psychologist gets taught fairly early, you're not supposed to explain what happens in the mind by invoking little agents inside the mind and explain what the mind does by what the little agents do. Those are homunculi, and that's a bad word, uh, in psychology. I'm going to use System 1 and System 2 absolutely as homunculi. So, uh, now, what do I have to say in my defense? Uh, first of all, well, I'm warning you, uh, those are fictitious characters. They don't exist. I don't believe that there is such a thing as System 1 and System 2. Don't look for them in the brain because they are not two systems in the brain of which one does one and the other does the other. So why am I using this terrible language? I'm using it because that's-- I think that is helpful. It fits the way our minds work. And to explain the background of that decision of why I use System 1 and System 2, I refer you to a very good book, uh, that I really recommend because it's, in addition to it being informative, it's very, uh, very entertaining. Uh, it's by Joshua Foer, and it's called Moonwalking with Einstein, and it came early, came out earlier this year. And what, uh, the book is about, Joshua Foer, uh, went... He's a science writer, and he went to the memory championship of the United States. You might not know there is such a thing, but there is. So people memorized decks of cards and, uh, very, very long lists of things and performed feats that we think are completely extraordinary. Joshua Foer decided to find out what happens, and a year later, he was actually the champion, the memory champion of the United States. And the book is a story of how he did it. And basically, the story, which was known to the Greeks in some form, is that memory is very, very good at some things and terrible at other things. Memory is terrible at remembering lists. We're really not good at remembering lists. Memory is superb at remembering routes through space. That evolution, evolution has endowed us with an ability to remember routes and not lists. So now you can trick yourself. If you mentally, you have a list and you want to remember the list, then you create a mental route, and you distribute the items on your list along the route. And then when you want to remember the deck of cards or whatever it is, then you go through your route, and you pick out the items one after the other because that you can do. It turns out that something very similar happens in another context. People are very good thinking about agents. The mind is set really beautifully to s- to think about agents. Agents have traits. Agents have behaviors. We understand agents. We form global impressions of their personalities. We are really not very good at remembering sentences where the subject of the sentence is an abstract notion. But an agent is very, very good. So just remember, whenever I say System 1 does X, what I mean is that X is a mental activity that can be performed automatically and without effort. You'll remember a lot more about System 1 if you think of it as doing things than if you think of those mental activities. It helps me think, and I think it helps other people understand. Okay, so let me introduce you to System 1. Uh, I'll begin with a, a study, just an extreme case of... This, um, study

Daniel Kahneman 24:29 was done at the university in the UK, and like in many, a department of biology actually. And like many places in the UK, they have a small room, which was a tea room, a coffee room, where people can make themselves tea or coffee and get some biscuits, and there is an honesty box, and they pay into the honesty box. And somebody had the bright idea of sticking a poster on, right on top of the honesty box, and of changing the poster once a week. And so this is week one, and that's the poster. [audience laughing] Okay? Week two is flowers. That's it. Week three is eyes, and so on. Now, what, what is remarkable about this is this is something that happens to people. They have no idea it's happening to them. In fact, they have no idea about the posters. They are barely aware that there are posters there. They certainly don't know that the posters change systematically. They have no idea that the posters influence their behavior. System 1 can do those things. Those things we... A lot is happening in our mind that we're not fully aware of, that we're not aware of at all, in fact. And there is a link between eyes and being watched, and being watched and not wanting to do bad things or wanting to do good things. All of this is deep in, in our associative memory, and it gets activated. You see eyes, especially those large eyes then on week one, and it does something to you that you may not be aware it does. Uh, now let me show you something else. Okay. Uh, this, I, I just want to enumerate very briefly what happened to you in the couple of s- seconds, the first couple of seconds when I put this on, on the screen. And first of all, you read them. You read the words. Now, you didn't intend to read the words. You didn't have to decide. I mean, uh, you had to read them. You, you had no choice in the matter. Second, uh, ideas and images and memories came to mind, probably none of them very pleasant. So that's the second thing that happened. Another thing that happened is physical. You recoil. This has actually been measured. I mean, when people are exposed to a threatening word, they move back. So the threat is to some extent, some slight extent, taken to be real. The symbolic threat is taken to be real. You made a disgust face. You experienced disgust. And that is getting to be interesting because those things are reciprocally reinforcing. So if you make a disgust face, you're more likely to feel disgust. If you make a smiling face, you're more likely to things, to think that things are funny. So, you know, one of my favorite experiments along those lines is you, you take a pencil, you stick it in your mouth like that, and cartoons will appear funnier to you because when you stick a pencil into your mouth like that, you're making a smile. And just the, just the sheer muscular change is enough to feed back into

Daniel Kahneman 28:01 our emotions and our feelings. This is all fairly important because what it means is you can think of... Well, let me add something, and then, then I'll, I'll pull it together. I think of System 1 very largely in terms of what, what happens in associative memory. And to think of associative memory, you can think of a gigantic network of ideas, and the ideas are linked to each other in various ways associatively. Some of them are causes of other things or categories or, uh, example instances of. There are many different links, but you have that huge representation of ideas that we have in our mind. And at any one time, a stimulus occurs, it activates a subset of those nodes in that representation in memory, and then activation spreads through the associative network. Not a lot, but it spreads some. So for example, you're now-- And we can know that it spreads because we become sensitized to other ideas that have been activated in this fashion. So for example, right now, if somebody whispered words in your ears, you would be much more likely to detect and recognize words like sickness and smell and stink and nausea and hangover and, uh, uh, a lot of associations have been activated. You're not aware of any of them. You're not aware of anything. Those are not conscious activations. But they are activations nonetheless, and because those ideas are partially activated, a weak stimulus is going to be sufficient to bring them over threshold. This, again, is a very important function of System 1 or associative memory. We are prepared. Basically, by the spreading activation prepares things for what might come next. You will be able to recognize and respond to things more easily than before. Um, then something else happens. And, and this is-- there are two words here, banana, vomit, and you made a story. I mean, what happens and, you know, there is really no, no need to do that, but in effect, this was sufficient to create, to create a causal link so that somehow the bananas caused the vomit. You didn't make a conscious decision for that to happen, but we know that's the kind of thing that happens. As soon as a stimulus is presented, we look back for causes. The associative machinery looks back and latches on possible causes. Here, it's very simple to find a cause and, you know, it, this has an effect, so temporarily, you know, you don't like bananas, uh, because an association has been created, and that happens because of a causal search. So this should give you a sense of one of the functions of, uh, of System One. And to, to complete that, let me show you something else. So this is a famous psychological demonstration, but, uh, many of you might not have seen it. You read that as ABC. You read th- you read this as twelve, thirteen, fourteen, but the B and the thirteen are physically identical. So this tells us something quite important about the way that, that associative machinery and System One work on new stimuli. Everything is made coherent. So in the context of letters, that ambiguous stimulus is going to be read as a letter. In the context of numbers, it is going to be read as a number. What is quite important, there are two aspects here. One is the coherence, and the other is that you're not aware of the ambiguity. The ambiguity is suppressed. That is, you just get one interpretation. In this case, it's a coherent interpretation, and

Daniel Kahneman 32:38 that is the way that the system works. It generates associatively coherent representations or reactions to, uh, situations. Associative memory or System One, uh, is also the repository of our world knowledge. So when an event occurs, our reaction to it is informed by a lot of things that we know. And I'll give you my favorite example of this. This is people are listening to sentences while the events in their brain are recorded. And, uh, somebody, an upper-class male British voice says, "I have a large tattoo-- I have large tattoos all down my back." And approximately three-tenths of a second later, the brain responds with a characteristic signature of surprise. This is astonishing if you stop to think about it. I mean, there was that voice. You have to classify it as an upper-class British voice. Now, upper-class British men don't have tattoos down their back. Something is odd, and you get a surprise reaction. You get a mobilization of System Two because System Two is the one that pays attention. Surprise calls attention to, uh, to the event. You know, um, a male voice saying, "I believe I'm pregnant," of course, same thing. Uh, so this system holds our world knowledge and uses our world knowledge to classify situations as normal or abnormal, and it does this at top speed. And it updates very quickly. Uh, well, I'll tell you a story about updating. Uh, it updates what, what it considers normal. Now, this is an anecdote. You're free not to believe me. I believe it because it's a personal experience. Uh, we were some years ago on vacation in, in Australia in a resort. It has all of forty, uh, uh, forty little villas. And, and in the evening, we go to have dinner, it's our first evening, and we meet a psychologist from Stanford. Oh, you know, surprise, coincidence, and we're very delighted to meet each other. Now, two weeks later, we're in a theater in London, and the, it goes dark, and we watch, and then the lights come back on, and next to me, same guy. Now, the important point is that I was less surprised the second time than the first because, oh, John, you know, he's the guy I meet everywhere. I mean, the- [audience laughing] It takes very little time to create what we call a norm. So one event, the second event links back to the first. If I had met anybody else, that is what, what's impressed me. If I had met anybody else, I would have been more surprised. That's, and that's odd. If you think about it statistically, it is crazy. But in fact, it was very clear that... And I wouldn't say that I consciously expect to see John wherever I go, but, but I, you know, if I'm going to meet someone, I'd, I'd be prepared to meet John. [audience laughing] Now, I've mentioned something about causal thinking, and I want to give you some sense of how that works. Um, so it's a question, which is more probable, that a mother has blue eyes if her daughter has blue eyes, or that a daughter has blue eyes if her mother has blue eyes? Now, again, as in the bat and ball, there is an intuitive response. And the intuitive response is that it's more probable that a daughter has blue eyes if her mother has blue eyes than the other way around. If you stop to do the math on the assumption that the incidence of blue eyes are the same in the two generations, the probabilities are strictly equal. But even before you do the math, y- your reasoning flows along causal lines. Your thinking flows along causal lines. This happens intuitively and it's not, uh... And one of these feels okay. It feels more coherent. And, and the coherence that we experience can be turned into a judgment of probability. That is, the confidence that we experience is a judgment of probability. Now, I'm going to skip the other example. Uh, and, okay. I said earlier that people have intuitions that are not necessarily true and that people are confident in judgments that are not necessarily true.

Daniel Kahneman 37:44 And I would like to sort of present, uh, a tentative theory about how that happens. And the general idea is very straightforward. When we're asked a question that we cannot answer, typically System 1 is going to come up with the answer to a related question that is easier, and it's going to use that answer to the wrong question, to the question that hasn't been asked, in place of the question that, that was asked. We call that a mechanism of substitution. It's substituting an easier question for a hard one. It happens automatically. People are not aware that it happens. And it is the source of many intuitions that don't c- don't come from expertise, and they're much less likely to be correct than the intuition that do come from expertise, but they come with equal confidence, or just about. So there are several mechanisms that, that take part in this substitution thing, and I'd like to introduce them. One of them, which I call the mental shotgun, is that when you are trying to instruct it to perform an operation, you typically perform other operations as well that are related to it associatively, are related to the target operation, but they are different. And, uh, you know, my favorite example is I'll say words, and you are to judge as quickly as possible whether the words rhyme or not. And the first pair of words is vote, note. That's easy. The second pair of question is vote, goat. And vote, goat is substantially harder than vote, note. Why? Because although nobody asked you to, you spell. And vote, goat, the-- there's a mismatch in spelling, and although they rhyme, at least as I pronounce them, just as well as vote, note, you have a conflict, and the conflict slows you down. So typically, we compute more than we intend to compute. And, and we can-- And that allows for substitutions to take place. So let me, uh, give you an example of a substitution here. Uh, the question here would be, uh, which of the three figures is larger on the screen? And the answer is they're equal. All three figures on the screen are of equal size. But it's a very powerful illusion. We see the figure on the right as larger than the figure on the left, and we see it because you cannot help it. Although you were told to think of it as a two-dimensional object, you compute the three-dimensional solution in which the object on the right is, in fact, larger than the object on the left, and that is what you see. There are many other examples of this general process. Uh, another one I like is, uh, I call that the dating heuristic. Um, students are asked in a survey, they're asked two questions. One is, "How happy are you?" And the other is, "How many dates did you have last month?" And, uh, and if you ask the questions in that order, the correlation is essentially zero. Turns out that there are many things in life that determine happiness and, and dating is not particularly important. You invert the order, so you ask people, "How many dates did you have last month?" And, "How happy are you with your life as a whole?" Correlation is point sixty-six.

Speaker 41:32 [laughing]

Daniel Kahneman 41:33 And, uh, what, what has happened, and, and this is both a heuristic and an example of what I call the focusing illusion, that you have an emotional reaction to-- the student has an emotional reaction to the question about number of dates. That emotional reaction is sitting there. Then you're asked a related question about happiness, and you, um, without knowing that you're doing this, you substitute one for the other. And you can do it with many different questions. Now, it's not that people

Daniel Kahneman 42:03 are confused about what happiness is. They know that happiness is not the same as, you know, satisfaction with the number of dates. It's just that this is the answer that comes to mind to the happiness question. There has been substitution, and you're not aware of it. Um, now, there is a process that is essential to this, and this is another strange ability of System 1. We can map intensities across different dimensions. So I'll give you- Uh, my standard example for this, so it's about Julie, who is a graduating senior, and she read fluently when she was age four. And the question is, what is her GPA? And the odd thing is that you know what her GPA is, pretty much. At least you have an idea. I mean, it's clearly above three point two. It's clearly less than four. You know, about three point seven. I mean, which is ridiculous, of course. But how do people get to three point seven or somewhere like that? Well, here is how it goes. She read fluently at age four. That gives us an impression of precocity. You know, how precocious was she as a reader? And that, people could express that in percentiles. You know, how many-- what, what is the likelihood that you'll meet a child that reads faster than that? Then when you're asked the question, what is her GPA? Without your knowing you're doing it, you're matching the percentiles, and you give a GPA that is about as extreme in the distribution of GPA as reading at age four is in the distribution of reading age. Completely unaware, statistically completely absurd. You should be much more aggressive. This is not the correct answer. But this is a compelling subjective answer. This is one of the mechanism that lead to intuitive errors, this mechanism of substitution. And I'll give you one more example. International travelers, this is an experiment. It's not, uh, it-- the experiment was run during a period when there were many terrorist incidents in Europe. So that's the background. How much would you pay for insurance that pays a hundred thousand dollars in case of death for any reason? And how much would you pay for insurance that pays a hundred thousand dollars in case of death in a terror incident? People pay much more for the second than for the first.

Speaker 44:39 [laughing]

Daniel Kahneman 44:40 And, and the reason that they do is that there is an immediate response, which is, how afraid am I? And I'm more afraid, most people are, are more afraid of the idea of dying in a terrorist incident than they're afraid of dying. And that is the mapping that takes place. Again, you know, it's-- that's the way it works. This is the associative machinery. And one beautiful thing about it, it, it doesn't get stumped.

Daniel Kahneman 45:10 It produces an answer to questions that it doesn't know how to answer, but it produces them by answering easier questions. And a lot of our mental life is conducted in just this way. So let me complete the circle and talk a little bit about subjective confidence. Subjective confidence, which is closely related to the probability of being correct, is actually not a judgment at all. It is a feeling. It is a feeling that people have. And I think we know what the origin of that feeling is, and it is System 1, if you will, assessing the fluency of its own processing, assessing the coherence of the story that it has created to deal with the current situation. And if the story is coherent, confidence is high. Now, this is disastrous in some ways because you can make a very coherent story out of very little information and out of information that is, in fact, not reliable. The quality of the story depends very little on the quality and quantity of the information. So people can be very confident with very little reason. Confidence is therefore not a good diagnostic for when you can trust either yourself or somebody else. And if, if you are to evaluate whether you can trust somebody with a lot of confidence, that's not the way to do it. The way to do it is, as I was saying earlier, is to ask, what environment have they been in, and have they had an opportunity to learn its regularities? Subjective confidence is not a good indicator. So that's, you know, the story I, I could tell in, uh, about forty-five minutes, uh, about the two systems. So let me remind you, they don't exist, but, uh, but, but I think you should feel free to think in those terms because what you may be beginning to do is you may be beginning to have an idea of the personalities of System 1 and System 2. Now, this is ridiculous, but having an idea of those personalities will actually enable you to think better about psychological events than if you were just had a long list of unrelated phenomena. Those ideas, those personalities have a certain-- they have a certain coherence, and, you know, they... There was something in the coin of, uh, being able to make judgments. Okay, I think we should open for questions. So let's see.

Speaker 48:06 [clapping]

Speaker 48:13 We have the, we have the mic up there, and I also have handheld mics if somebody has some questions. Uh, somebody's gotta ask the first question. There.

Speaker 48:28 Hey, how fixed or plastic are the System 1 processes, and are there things like mindfulness or other emotional regulation that have any effect on-

Daniel Kahneman 48:43 As I have described it, System 1 can be updated in terms of content very readily. So, you know, you can learn in one trial what is normal and what is not normal. What is very difficult to do is to get, get control over how it works, over the rules of its operation. And so I do not know of a lot of evidence that people, uh, that System 1 can change unless you have acquired skills, which requires reinforced practice. What you can do, and what people clearly can do, is you can educate your System 2 and you can educate, and you can learn to recognize situations in which System 2 takes over and takes control of the reactions and thereby avoid some mistakes. Can't be done too much. But I, if I don't sound optimistic about training System 1, it's because I'm not. Uh.

Speaker 49:48 Another question about training System 1. Uh, you talked about reinforcement learning and the time constants and the immediacy in building expertise. But for many of the practices that we have around software development, the time constants are somewhat longer. And in particular, you gave a counter example, which was your Australia-UK visit and the fact that a single incident with John predisposed you to that association. And so I, I wonder if there, has there been any testing to see what time constants really play a role here?

Daniel Kahneman 50:28 Well, no. I mean, in terms of updating and learning associations, this is something that we can learn quite quickly. And, you know, you can, you can be taught to be afraid of something without anything else ha-happening. So, uh, in that sense, System 1 associative memory can be updated. And you can now be... Developing software expertise, that is a somewhat different story, and it's more like learning how to be a chess master. And that takes a lot of experience so that you... And a lot of reinforcement, and it had better be effective reinforcement. Now, in, in the software thing, the time is to some extent not a big problem because ultimately you're going to see it all together, the error you made and, and the correct solution. So time is not, uh, a major factor. In, in learning, you know, how to, how to steer a tanker, you know, that reinforcement is very slow and it's a lot harder to learn to do that than it is to learn to steer a smaller ship.

Speaker 51:41 Uh, so this is a pretty broad question, so please take this whichever direction you like. But I was just wondering how these systems come into play and how you see it in media and advertising. And maybe, uh, I was thinking of how it's changed over time. Um.

Daniel Kahneman 51:55 Well, uh, it's very clear that advertising is typically addressed to System 1. I mean, it doesn't convey information for judgments. It moves your emotions and it creates associations. That's what it, it is intended to do. And, you know, and it's pretty effective. I mean, uh, so a lot of politics is addressed to System 1, a lot of political messaging. Uh, are, the influences of System 1 on activities and on, you know, which are really important and we should be thinking about, is pretty frightening. One of my colleagues at Princeton, of my younger colleagues at Princeton, has done studies on the effect of facial characteristics on political preferences, and it's utterly amazing. You take, uh, five hundred and thirty-eight pairs of pictures of, of the two, uh, contestants for each, uh, congressional race, and you show those pairs of pictures to Princeton students for one-tenth of a second, and you ask which looks more competent. That predicts seventy percent of elections. So the, the impact of System 1 on, on the decisions we make, for example, how much to pay to an honesty box, that is something that we're really very rarely aware of, and it's much more than we think.

Speaker 53:21 So in-- although you say the System 1 and System 2 don't show up as specific structures, have there been functional MRI, diffusion spectral imaging, diffusion tensor imaging studies that highlight whether System 1 is more primal brain initial activation and System 2 is more neocortex?

Daniel Kahneman 53:41 Well, uh, you know, System 1 is extremely sophisticated, so it's not, uh, uh... Some part-- That's, that is in part why I don't believe that there is any simple representation in the brain of, of those two systems. Because what I've called System 1 operations by their characteristics include both innate responses and highly skilled responses and, and the whole rep- the representation of world knowledge is in System 1. So it's hard to classify one as, as primitive. And I should add that System 2, the reasoning system as it were, uh, is not necessarily rational. I mean, System 2 does, knows what it knows. It knows what we know. And, and we don't know a lot. So, uh, it's not that System 2 is infallible and that all the mistakes come from System 1. We make very significant mistakes when we think very seriously Yes.

Speaker 54:46 So you mentioned that, uh, experts when making long-term forecasts, uh, w- and they trust their intuition, they're often wrong. Um, but there are still a lot of people who listen to them. So is it bad for the society in general that we listen to experts who may be just as wrong as we are? And should we, we, uh, should we be worried? Should we try to do something?

Daniel Kahneman 55:08 Uh, I think there is a very good reason for the demand for experts. And I, I was referring to a particular book that, you know, you may want to read or you may want to, to look for the New Yorker r-review of that book. It's a book by Phil Tetlock on political judgment, where he studied forecasts of-- in the time range of ten, fifteen years of political forecasts. And one of the interesting observations is who are the people that we like to listen to as pundits? And they are people with very high confidence who think they understand the world. Now, they actually are worse than chance. I mean, they're worse than people who are more hesitant. But we want them. We need them. And so there is a real demand for overconfidence. [audience laughing] Um, uh...

Speaker 56:02 So as you were going through all the slides of the various illusions, by the time you came to the three figures on the screen, um, I guess I was expecting that, okay, there's something. So even though the la-- the, the figure on the right looked bigger, I looked again and I was like, "Okay, they're, they are the same." Now was that System 1 or System 2?

Daniel Kahneman 56:18 Well, that is clearly System 2, and that is the way that we can learn to overcome illusions, both, uh, both visual and cognitive. You still see it as one larger than the other, but you know that when you see a display like that, you shouldn't trust your eyes. And to the, a similar extent, you can recognize, you can recognize that you're in a situation where somebody is having too much effect on you because she's very eloquent. But, you know, uh, the content may not be there, and so you force yourself to be skeptical.

Speaker 56:57 Right. So is there any research, uh, to that effect that people who are aware, let's say for example, that advertising, um, is gonna have an emotional effect on them. Is there any res-- let's say if I'm aware that advertising is supposed to have an emotional effect on me and activate System 1, will I be better suited to sort of ignore those things?

Daniel Kahneman 57:14 I mean, you certainly are going to ignore it better than if you didn't know it. But whether you're capable of ignoring it altogether, that I'm much more skeptical about. I mean, the, the real thing is not to expose yourself to it, because once you're exposed to it, it's going to, to affect you. And, you know, those effects of the cues in our world that we are not aware, that we're not aware of can be extremely powerful. There is a whole line of study. It's not exactly to your point, but I must tell you that story. There is a whole line of studies on what happens to people when they're exposed to the idea of money. And for example, they perform one task and there is a computer nearby, and on the computer there is a screensaver, and the screensaver are dollars floating in water, dollar bills floating in water. That makes you selfish. It makes you reluctant to ask for the help of others. It makes you, uh, put your chair further away from the chairs of other people when you have to set up a, a s- an interview situation. It has effects on all sorts of behavior that people are completely unaware of. And the, the links are symbolic and, and you can be aware of that. How can you resist it? You know, we are exposed to money, and it's going to have some effect. Now, if you're designing an organization or if you're designing an environment for people, you can create an environment that will remind people of money all the time, or you can create an environment that will remind them of other things, and that will control their behavior to some extent.

Speaker 58:57 Although possibly not one of the big five in the personality trait categories yet, have you developed any empirical testing that ranks people on a scale of one to two and shows where they fall in terms of default behaviors?

Daniel Kahneman 59:11 Well, uh, there is, there is a relevant scale on, on the activity of System 2. And the, the bat and ball question is actually a very, very good question. And there are several examples of this. My former colleague and postdoc, Shane Frederick, developed that test. It's, it's called the cognitive reflection test. And the people who fail that item, that is, who say ten cents, they are different in some interesting ways from the people who then, who are better able to make it. And let me give you an example. Uh, you ask them, you know, a standard Amazon question. So you've ordered a gift for yourself. How much will you pay extra to have it tomorrow rather than the second business day? And the people who fail this item are willing to pay more to get it tomorrow. So there are, uh, there are connections. Uh, what there isn't, and I'm very surprised there isn't, I don't know, there should be tests of intelligence that are tests of System 1, that are tests of the richness and subtlety of the model of the world that we have. All the intelligence tests that we have are tests for System 2. They're reasoning tests. We don't have, and I wish somebody would develop it, and I hope somebody will, but, uh, that we don't have at the moment.

Speaker 1:00:35 Hi. So this is sort of a two-part question. Um, so do you find that people who are more System 1 or System 2 prone for immediate judgments are more likely to be that way for long-term, like, larger decisions?

Daniel Kahneman 1:00:50 I don't know enough-

Speaker 1:00:51 Yeah

Daniel Kahneman 1:00:51 ... about this. We do know that self-control and the general activation of System 2 is an important personality characteristic and, you know, it's present in a rudimentary form at age four and has, has implications. You know, the ability, the test is called the marshmallow test, and you, you ask a child, "You can have one marshmallow now, or you can have two if you wait fifteen minutes." That predicts what they will do twenty years later, uh, [laughs] remarkably well. So, you know, there are things that are quite stable in-

Speaker 1:01:28 And then the other part is that, um, have you encountered people who say they are, they have to make a decision and they're aware that their System 1 mind is telling them decision A, their System 2 mind is telling them decisio-decision B. Do they, uh, what, what do people go with?

Daniel Kahneman 1:01:45 I don't know enough.

Speaker 1:01:46 Yeah.

Daniel Kahneman 1:01:47 Uh, I... No, I don't know enough. It, it will be so dependent on circumstances whether you impose, uh, you know, the System 2 judgment. In many cases, really, System 2 just endorses what System 1 suggests. I mean, that's the, the model that I have. Sometimes you can overturn it. It's hard work. Thank you. [audience applauding]