E-book Assessment "The Undoing Project" - Offended Bear

Offended Bear | November 2, 2024 7:00 am

The one-handed economist

Michael Lewis wrote this 2016 guide concerning the “intellectual love story” between Amos Tversky (AT) and Daniel Kahneman (DK), two Israeli psychologists who overturned our concepts about threat, choice making and the way we see the world. And by “our” I don’t simply imply people but in addition (to a level) economists.

AT died in 1996, at 59 years outdated. DK received the economics Nobel in 2002, primarily based (largely) on joint work. The story of their mental relationship has so much to do with their totally different personalities: AT was precise, assured, and sensible in a pointy, slicing approach. DK questioned, filled with doubt, into vagaries that ranged from foolish to thoughts blowing. They received alongside as a result of they have been extra beneficiant with tolerance for one another than they have been with others. DK listened to AT’s criticisms with out shying away; AT was prepared to droop his aggressive essential thoughts whereas DK “groped” his approach thorough the ocean of potentialities.

They labored most productively from the late Nineteen Sixties till the Nineteen Eighties, however then they’d a falling out — considerably predictably — when DK felt like AT was not giving him his due. Though they have been largely estranged within the years resulting in AT’s demise, AT spent extra of his final days and hours speaking with DK than he did with anybody else, as outdated companions typically do in a time of want.

Lewis is a good story-teller, as typical, and I took a variety of notes:

DK’s curiosity in human complexity dates from the second on the finish of WWII when a Nazi soldier, reminded by DK of his personal son, hugged younger DK (a Jewish boy) as a substitute of capturing him.
DK: “By then the question of whether God exists left me cold. But the question of why people believe God exists I found really fascinating. I was not really interested in right and wrong. But I was very interested in indignation.”
“The Gestalt psychologists and the behaviorists and the psychoanalysts might all be jammed into the same building with a plaque on the front that said Department of Psychology, but they didn’t waste a lot of time listening to one another. Psychology wasn’t like physics, or even economics. It lacked a single persuasive theory to organize itself around…Part of the problem was the wild diversity of the people who wanted to be psychologists—a rattle-bag of characters with motives that ranged from the urge to rationalize their own unhappiness, to a conviction that they had deep insights into human nature but lacked the literary power to write a decent novel, to a need for a market for their math skills after they’d been found inadequate by the physics department, to a simple desire to help people in pain. The other issue was the grandma’s attic quality of the field: Psychology was a place all sorts of unrelated and seemingly unsolvable problems simply got tossed.”
On DK: “When someone says something, don’t ask yourself if it is true. Ask what it might be true of.” That was his mental intuition, his pure first step to the psychological hoop: to take no matter somebody had simply mentioned to him and check out to not tear it down however to make sense of it.”
“A one-line intelligence test: The sooner you figure out that Amos is smarter than you are, the smarter you are… He’d sit there quietly. And then he would open his mouth and speak. And in no time he became the light that all the butterflies fly to; and in no time everyone would look up to him wanting to hear what he would say.”
On violations of transitivity (a key assumption in mathematical economics): “`Is this behavior irrational?’ he wrote. “We tend to doubt it. . . . When faced with complex multidimensional alternatives, such as job offers, gambles or [political] candidates, it is extremely difficult to utilize properly all the available information.” It wasn’t that folks really most well-liked A to B and B to C after which circled and most well-liked C to A. It was that it was typically very arduous to grasp the variations.”
However right here’s a great way to consider it: “When people picked coffee over tea, and tea over hot chocolate, and then turned around and picked hot chocolate over coffee—they weren’t comparing two drinks in some holistic manner. Hot drinks didn’t exist as points on some mental map at fixed distances from some ideal. They were collections of features. Those features might become more or less noticeable; their prominence in the mind depended on the context in which they were perceived. And the choice created its own context: Different features might assume greater prominence in the mind when the coffee was being compared to tea (caffeine) than when it was being compared to hot chocolate (sugar). And what was true of drinks might also be true of people, and ideas, and emotions.”
“It is generally assumed that classifications are determined by similarities among the objects,” wrote Amos, earlier than providing up an opposing view: that “the similarity of objects is modified by the manner in which they are classified.”… A banana and an apple appear extra comparable than they in any other case would as a result of we’ve agreed to name them each fruit. Issues are grouped collectively for a cause, however, as soon as they’re grouped, their grouping causes them to look extra like one another than they in any other case would. That’s, the mere act of classification reinforces stereotypes. If you wish to weaken some stereotype, get rid of the classification.”
“DK thought of himself as someone who enjoyed, more than most, changing his mind. “I get a sense of movement and discovery whenever I find a flaw in my thinking,” he mentioned. His principle of himself dovetailed neatly along with his moodiness. In his darker moods, he grew to become fatalistic—and so wasn’t stunned or disturbed when he did fail. (He’d been proved proper!) In his up moments he was so filled with enthusiasm that he appeared to neglect the potential of failure, and would run with any new concept that got here his approach. He might drive folks up the wall along with his volatility.”
“Reforms always create winners and losers, and the losers will always fight harder than the winners. How did you get the losers to accept change? The prevailing strategy on the Israeli farms—which wasn’t working very well—was to bully or argue with the people who needed to change. The psychologist Kurt Lewin had suggested persuasively that, rather than selling people on some change, you were better off identifying the reasons for their resistance, and addressing those.”
“The more complicated and lifelike the situation a person was asked to judge, they suggested, the more insidious the role of availability [an image, example, or scenario]. What people did in many complicated real-life problems—when trying to decide if Egypt might invade Israel, say, or their husband might leave them for another woman—was to construct scenarios. The stories we make up, rooted in our memories, effectively replace probability judgments. The production of a compelling scenario is likely to constrain future thinking.”
“Historians imposed false order upon random events, too, probably without even realizing what they were doing. Amos had a phrase for this. “Creeping determinism,” he referred to as it—and jotted in his notes one in all its many prices: He who sees the previous as surprise-free is certain to have a future filled with surprises.”
Considered one of my favourite observations: “The secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours. It is sometimes easier to make the world a better place than to prove you have made the world a better place.”
“AT found it troubling to think that crucial decisions are made, today as thousands of years ago, in terms of the intuitive guesses and preferences of a few men in positions of authority. The failure of decision makers to grapple with the inner workings of their own minds, and their desire to indulge their gut feelings, made it “quite likely that the fate of entire societies may be sealed by a series of avoidable mistakes committed by their leaders.”
“DK was stunned: If a 10 percent increase in the chances of full-scale war with Syria wasn’t enough to interest the director-general in Kissinger’s peace process, how much would it take to convince him? That number represented the best estimate of the odds. Apparently the director-general didn’t want to rely on the best estimates. He preferred his own internal probability calculator: his gut. `That was the moment I gave up on decision analysis,” mentioned Danny. “No one ever made a decision because of a number. They need a story.’”
“If you follow the rule that you take any bet with a positive expected value, you take the bet. But anyone with eyes could see that people, when they made bets, didn’t always act as if they were seeking to maximize their expected value. Gamblers accepted bets with negative expected values; if they didn’t, casinos wouldn’t exist. And people bought insurance, paying premiums that exceeded their expected losses; if they didn’t, insurance companies would have no viable business. Any theory pretending to explain how a rational person should take risks must at least take into account the common human desire to buy insurance, and other cases in which people systematically failed to maximize expected value…. The marginal value of the dollars you give up to buy fire insurance on your house is less than the marginal value of the dollars you lose if your house burns down—which is why even though the insurance is, strictly speaking, a stupid bet, you buy it… You place less value on the $1,000 you stand to win flipping a coin than you do on the $1,000 already in your bank account that you stand to lose—and so you reject the bet.”
Anticipated worth principle [EVT] blew up the theories of rational selection and anticipated utility [EUT].. “which the entire economics profession, seemed to take as a fair description of how ordinary people faced with risky alternatives actually went about making choices. That leap of faith had at least one obvious implication for the sort of advice economists gave to political leaders: It tilted everything in the direction of giving people the freedom to choose and leaving markets alone. After all, if people could be counted on to be basically rational, markets could, too.”
“Of course, EUT also predicted that people would take a sure gain over a bet that offered an expected value of an even bigger gain. They were “risk averse.” However what was this factor that everybody had been calling “risk aversion?” It amounted to a payment that folks paid, willingly, to keep away from remorse: a remorse premium.”
“The gambles that economists studied were choices between gains. In the domain of gains, people were indeed risk averse. They took the sure thing over the gamble. Danny and Amos thought that if the theorists had spent less time with money and more time with politics and war, or even marriage, they might have come to different conclusions about human nature. In politics and war, as in fraught human relationships, the choice faced by the decision maker was often between two unpleasant options.”
“The reference point was a state of mind. Even in straight gambles you could shift a person’s reference point and make a loss seem like a gain, and vice versa. In so doing, you could manipulate the choices people made, simply by the way they were described. This one they called “framing.” Just by altering the outline of a state of affairs, and making a achieve appear to be a loss, you may trigger folks to fully flip their perspective towards threat, and switch them from threat avoiding to threat in search of.”
“Economists assumed that you could simply measure what people wanted from what they chose. But what if what you want changes with the context in which the options are offered to you? “It was a funny point to make because the point within psychology would have been banal,” the psychologist Richard Nisbett later mentioned. “Of course we are affected by how the decision is presented!”
“The imagination obeyed rules: the rules of undoing. One rule was that the more items there were to undo in order to create some alternative reality, the less likely the mind was to undo them. People seemed less likely to undo someone being killed by a massive earthquake than they were to undo a person’s being killed by a bolt of lightning, because undoing the earthquake required them to undo all the earthquake had done. “The more consequences an event has, the larger the change that is involved in eliminating that event,” Danny wrote to Amos. One other, associated, rule was that “an event becomes gradually less changeable as it recedes into the past.” With the passage of time, the results of any occasion collected, and left extra to undo. And the extra there may be to undo, the much less probably the thoughts is to even strive. This was maybe a technique time heals wounds.”
Two cultures: “We tried to create a psychology and economics seminar at Yale. We had our first meeting. The psychologists came out completely bruised. We never had a second meeting.” Within the early Nineteen Nineties, Amos’s former scholar Steven Sloman invited an equal variety of economists and psychologists to a convention in France. “And I swear to God I spent three-quarters of my time telling the economists to shut up,” mentioned Sloman. “The problem,” says Harvard social psychologist Amy Cuddy, “is that psychologists think economists are immoral and economists think psychologists are stupid.” Within the educational tradition conflict triggered by Danny and Amos’s work, Amos served as a strategic advisor. Not less than a few of his sympathies have been with the economists. Amos’s thoughts had at all times clashed with most of psychology.”
“We think we know things we don’t. We think we are safe when we are not. “For Amos it was one of the core lessons,” mentioned Redelmeier. “It’s not that people think they are perfect. No, no: They can make mistakes. It’s that they don’t appreciate the extent to which they are fallible [read The Black Swan or Fooled by Randomness]. ‘I’ve had three or four drinks. I might be 5 percent off my game.’ No! You are actually 30 percent off your game. This is the mismatch that leads to ten thousand fatal accidents in the United States every year.”
“DK made a rule about his fantasy life: He never fantasized about something that might happen. He established this private rule for his imagination once he realized that, after he had fantasized about something that might actually happen, he lost his drive to make it happen.”