What Daniel Kahneman Taught Me

Daniel Kahneman, a psychologist who was awarded the Nobel Prize in Economic Science in 2002, passed away on March 27, 2024, at the age of 90. Kahneman was known for the work on judgment and decision-making that he did alongside Amos Tversky, who passed away in 1996. Kahneman was also known for writing up his research into a popular book, Thinking, Fast and Slow, which came out in 2011.

As a psychologist who studies decision-making, I have been very inspired by Daniel Kahneman. I regret that I never got the opportunity to meet him. But despite the fact that we never met personally, he has taught me many valuable lessons. Here are some of them.

Context Matters

Kahneman and Tversky’s work centered on the ways in which people are suboptimal in their judgment and decision-making. People make judgments about others based on stereotypes, rather than statistics—an example of the “representativeness heuristic.” People make judgments about how likely an event is to happen based on how easily it comes to mind (the “availability heuristic”).

The insight that Kahneman and Tversky had that most resonates with me, though, is this: People make decisions based on whether they perceive potential outcomes to be gains or losses relative to their current situation. People will take more risks to prevent losses than to win gains. Even framing a choice such that the potential losses are emphasized more than gains can change people’s decisions. For example, a patient might be more likely to undergo surgery if they are told that the survival rate is 95 percent than if they are told that the mortality rate is 5 percent.

Although this discovery feels intuitive to us, most economic theory at that point assumed that people based their decisions only on the ultimate outcomes of the choice at hand. It was believed that context didn’t, and shouldn’t, matter.

But Kahneman and Tversky’s work revealed just how much it does. Context refers to both how a choice is framed (is the question worded to make people think about what they can lose, or what they can gain?), as well as what happened before the choice: our prior experiences. Prior experience matters because that’s how our expectations are formed. Our expectations then determine how we feel about the options in front of us.

This susceptibility to context makes human decision-making extremely variable and fascinating. A decision that seems odd to me may make perfect sense to a different person who has different experiences and expectations. Kahneman’s groundbreaking work has taught me to be more accepting of others’ choices, and it has inspired me to launch a research program that focuses on understanding the factors underlying individual differences in decision-making.

The Value of Interdisciplinary Work

Kahneman and Tversky’s research flew in the face of most economic theory at the time. They were saying that humans do not act according to how most economic models would predict that they would act.

Now, Kahneman and Tversky could have just written a list of ways in which humans act irrationally, published it in a psychology journal, and left it at that. But then Kahneman would not have won the Nobel Prize. What made Kahneman and Tversky great was that they realized that these human errors were systematic. People were irrational, but in predictable ways.

Proposing a mathematical model (known as prospect theory) to predict decision-making under uncertainty allowed Kahneman and Tversky to publish their most seminal paper in one of the best economics journals: Econometrica. Instead of distancing themselves from economics, they embraced it. They wanted to improve it.

Because of them, there is now a field called behavioral economics that combines insights from psychology and economics to learn about human behavior. Partly thanks to Kahneman, I now believe that the biggest questions can only be answered, and the biggest problems can only be solved, if people from different disciplines work together.

Thinking Slow

Science today moves at such a fast pace. There is immense pressure to publish papers quickly and often. These papers are often hard to read because they are filled with specialized jargon and hedging language. When an exciting new finding gets press attention, scientists are asked to write popular books about those findings right away, even if they have not been established or replicated.

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Daniel Kahneman flouted these conventions. He and Amos Tversky spent a great deal of time conversing, not just experimenting. They did not publish papers often, but when they did, the papers were beautifully crafted, clear, and comprehensible. Finally, Kahneman’s magnum opus, Thinking, Fast and Slow, was not published until 40 years after his first paper with Tversky came out. It became a mega-bestseller and introduced the world to behavioral economics.

One of the lessons of Daniel Kahneman’s book is that slow, deliberate thinking is often better than fast, intuitive thinking. In some sense, Kahneman’s career exemplified this idea. As a scientist, he chose to do his work slowly and deliberately, and we are all better off for it.