Bloomberg Businessweek
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During the past 20 years, the author has watch China move from being a developing country into an industrial superpower
Money Moves, 5/24: Chocomize Co-Founder Fabian Kaempfer talks with Bloomberg’s Deirdre Bolton about the business of customizing chocolate
The president's campaign has a new rule—no cell phones allowed
In honor of remote control inventor Eugene Polley, we recognize other influential but neglected inventors who have felt the sting of stolen glory
Adam Johnson talks about what trading vehicles can help you earn more money per trade
The Italian automaker and others are adding hybrid technology to elite cars
The storied bridge that links San Francisco and Marin County changed the face of California
Schools cultivate ties with startups before they're big successes
Dave McClure's traveling venture capital show scours the world for promising startups
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System 1 simplifies, confirms—it looks for, and believes it sees, narrative coherence in an often random world. It does not perform complicated feats of logic or statistical evaluations. You hear about a terrorist incident and want to avoid all buses and trains; only if you slow down, employ the tools of System 2, do you realize that the risks of terrorism affecting you are very slight.
Willpower requires effort; it is a feature of System 2. In an experiment, 4-year-olds who were able to delay eating an Oreo scored higher, a decade later, on IQ tests. Kahneman suggests that the ability to switch to System 2 is a sign of an “active mind” and a predictor of success.
Contrivance though it is, this framework is remarkably effective in describing how we think; we believe we are creatures of our thinking selves, but many of our opinions merely ratify our automatic responses. In contrast to Malcolm Gladwell, Kahneman is telling us not to blink.
Kahneman is perhaps least persuasive in his treatment of the business world. Noting that even top performers in business—also sports—tend eventually to revert to the mean, he attributes success largely to luck. This confuses events that may not be predictable with those that are determined by chance. A high-achieving retail store, to cite one of his examples, is not lucky—it is well-situated. And if its sales later decline, that is not necessarily a sign that its prior success was random. Business has a self-correcting cycle that fosters mean reversion. Success attracts competitors.
Some readers will object that Kahneman’s is an overly Cartesian world, barren of human intuition. He recommends using formulae even for predicting the future value of wines. Thinking, Fast and Slow is nonetheless rife with lessons on how to overcome bias in daily life. Kahneman advises that you “recognize the signs that you are in a cognitive minefield, slow down, and ask for reinforcement from System 2.” The next time a relative pops off about the stock market or President Obama, I will wonder: Does he or she know? Or is this just their reflexive self? I will never think about thinking quite the same. It’s a monumental achievement.
Lowenstein is a columnist for Bloomberg News.
