Thinking Fast and Slow

It would be difficult to write a series of articles on decision-making without referencing Daniel Kahneman, who wrote an international bestseller ‘Thinking Fast and Slow’. Based on years of research, this is the book that focuses on the psychology of decision-making.?

One way to summarise it is as follows; we humans are capable of two modes of thinking: system 1 and system 2. A lot of what we do during the day is done on autopilot, as we don’t consciously think about most of our actions. These have become ‘heuristics’ or mental shortcuts, which is system 1 thinking.

When we engage in some cognitive effort – for example, creating a spreadsheet formula, or writing an article, we are using system 2 thinking. System 1 is fast, system 2 is slow.?

We couldn’t get through the day without system 1 thinking, as it takes care of basic things like making our legs move when we walk, driving a car, or riding a bicycle. It also does things like judging someone’s mood based on their facial expression, all of which require incredible amounts of precision, but are accomplished with minimal input.

System 2 thinking is slow and requires cognitive effort. Most of the time, system 1 is usually running the show, and system 2 is only engaged when needed. But the problem is that system 1 has a tendency to be overconfident in its own abilities and can make ‘judgments’ which are wildly inaccurate because the patterns it uses to take shortcuts are frequently unsuitable. This causes bias in our thinking, which can lead to terrible decisions. We’ll cover some of the common forms of bias in a later article.

For now, let’s look at an example of how system 1 can mislead us through a simple question: if a bat and ball together cost ￡1.10 and the bat costs ￡1 more than the ball, how much does the ball cost?

Without thinking about the problem, you probably had an impulsive answer spring to mind, which was 10p. But if the bat costs ￡1 more than the ball, that would make the bat ￡1.10 and the total ￡1.20. Given a few seconds of applied thought about the problem, most people will be able to calculate that the ball is actually 5p and the bat ￡1.05, so that the two together are ￡1.10 in total.

This is an example of substitution – a heuristic, or shortcut taken by our system 1 thinking, which can occur when we subconsciously substitute a simple question for a (mildly) difficult one. This happens so often and so easily that we can make judgments based on our instinct, which, with a few moments of thought, we would easily know were poor.?

Here’s another example: which position will you be in if you overtake the person in second place? Your system 1 thinking will tell you that you would be in the first place. But if you overtake the second-placed person, you will of course be in second place yourself, and a moment’s thought will confirm that.

I hope these examples have given you some food for thought. If nothing else, an awareness of this phenomenon may help us pause occasionally and utilise system 2 thinking when appropriate.

If you’d like to review the other articles in this series so far, you can do so here.