Daniel Kahneman, Nobel Laureate and Author of Thinking, Fast and Slow Takes Your Questions

One of the first times I met Danny Kahneman was over dinner, just after SuperFreakonomics was published. Shortly after we were introduced, Danny said, “I enjoyed your new book.  It will change the future of the world.” I beamed with pride at this compliment. Danny, however, was not done speaking. “It will change the future of the world. And not for the better.” While I’m sure many people would agree with his last sentence, he was the only person who ever said it to my face!

If you don’t know the name, Danny Kahneman is the non-economist who has had the greatest influence on economics of any non-economist who ever lived. A psychologist, he’s the only non-economist to win the Nobel Prize in Economics, for his pioneering work in behavioral economics. I don’t think it would be an exaggeration to say that he is among the 50 most influential economic thinkers of all time, and among the ten most influential living economic thinkers.

In the years since that dinner with Danny, I’ve gotten to know him quite well. Every time I am with him, he teaches me something.  His particular brilliance, I have decided, is being able to see what should be totally obvious, but somehow no one else manages to notice until he points it out.

He has a fantastic new book aimed at a popular audience entitled Thinking, Fast and Slow. It is a wonderfully engaging stroll through the world of behavioral economics – the kind of book people are going to be talking about for a long, long time.

Danny has generously offered to take questions from Freakonomics blog readers. So post your questions in the comments section, and if you are lucky will you get to a response from one of the wisest sages of our time. [Addendum: the answers to your questions can be found in this post.]

This post is no longer accepting comments. The answers to the Q&A can be found here.

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  1. Sam McNerney says:

    Professor Kahneman,

    Now that we understand reason as being largely unconscious, motivated by emotion, embodied and constituted by many biases and heuristics, where do you see the future of cognitive science going? Are we at the beginning stages of a paradigm shift?

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  5. Matteo says:

    Is Prospect Theory challenged by how investors are behaving actually on european govi bonds ? Investors seems to prefer a sure loss of investing in German Bunds, that carry a sure negative real yield, instead of PIGS countries bonds (p.e. Italy), with a positive real yields and a possible-but not sure-loss.
    What do you think about it ?
    Thank you very much Professor.

    Matteo Serio

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    • Enter your name... says:

      We should not forget about money illusion, the tendency to think in nominal, not real terms, described Shafir, Diamond & Tversky in 1997.
      As with most shortcomings in economic reasoning, there’s a named bias for it!

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  6. Correction says:

    The mathematician John Nash was vastly more influential than Kahneman on economics.

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    • well... says:

      Well, saying that he’s the most influential non-economist is just an opinion. However, to say that he’s the only non-economist to have won a Nobel in economics is a stretch. Herbert Simon’s degrees were in PoliSci, and he never held a position in a department of economics. He was certainly influential in economics, but at the time of his Nobel, many (e.g., Friedman) didn’t see him as a proper economist. Much like Kahneman, actually. Sometimes, the most influential changes have to some from the outside.

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  7. Joshua Northey says:

    I have been thinking about what I call “consumption traps” since I was a kid in the early 90s. I think a huge number of people in the US over-consume optional goods to the point where it has drastically negative impacts on their life prospects. Why would they do this? My theory is that they fall (or marketers push them ) into “consumption traps”. In college I discovered that behavioral economics was ferreting a lot of these inefficiencies in “homo economicus” in the 80s.

    One I have long speculated about is something like “sticky expectations”.

    It seems that some modern consumer goods (particularly electronics) are improving at a rate that drastically outstrips people’s ability to psychologically adjust. Today’s Ipod would have been worth $10,000 or more as a consumer good 10 years ago. I am still partially psychologically identical with the person who lived in that time. So when I go out and drop $150 on an Ipod I cannot really afford I feel a lot better about the decision than I normally would because in my mind some of that residual $10,000 valuation remains. So it activates some of the “this is a tremendous deal, act now” circuitry in my brain even though it is not, at present, actually a deal.

    On the other hand perhaps people have always been this prone to over-consumption and thus “this increasing rate of improvement in goods effect” is a theory explaining a phenomenon that doesn’t exist.

    I haven’t yet encountered anything regarding this. Are you familiar with any studies/research on the topic?

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    • Bart Ronsmans says:

      Joshua, in my opinion it’s indeed cunning marketing practices driven by economic ever higher quest for growth and profit (in fact the basis of our current economic system), that drives people to buying stuff they either do not need, or replacing things they already have (but haven’t worn out yet) or in the best of cases simply renewing it because their neighbour, colleague or friend has bought it as well. Sometimes people have the money (by savings) to buy it, sometimes they don’t (so they buy on credit), this all goes well in case of economic prosperity, but as we saw in practice in 2008, at a certain moment, this living on credit bubble burst, and reality came on top, which is that a lot of Western countries and people have been living a life, they actually couldn’t afford.. In this system everyone (banks, government, companies and individuals), had their role to play, and indeed often Marketing and commercials are to blame, but it’s indeed hard to resist commercials if you look and see them about every 20 minutes on tv, in every magazine and corner you see commercial adds, every shop gives constant discounts, etc…
      I think we are all consuming ourselves to death (simply because we are lazy and think and behave like pigs as soon as we get the opportunity)
      This is by the way also the reason why people in Africa, Asia and South-Mid-America, are currently producing all our consumer goods (but hardly get paid for it) and why Western coutrny people support or try to keep the system in place as long as possible (some hundred years ago we were doing this production and we had a much tougher life..)
      The Chinese are producing all these plastic society goods to which we have all become a slave.. We have forgotten what the real emotionally rewarding things are, which are sometimes very simple things like a flower, tree, a conversation with family or friends, or beautifull walk in nature, and having enough time to spend on these simlple things of life, in stead we have replaced these (or tried to replace them) by buying artificial things.
      But in fact these artificial things are only giving us a very short boost of fullfilment of emotional need, we need to repeat it over and over by buying more and more stuff, which in it’s turn is using up more and more of our natural ressources..
      If this spiral is not stopped, and we don’t learn to go back to the real basic needs, I strongly believe we will at a certain moment have lived up most or all of natures ressources, and it will plumit us into an abyss, out of which it will be hard to get out of..
      I strongly believe we need to think about another economic system focussing on things like sustainment of our natural ressources, re-usability, ecologic energy production and consumption, and using globalisation for what’s really needed, providing goods and services which are only possible to produce abroad (at a price that reflects the real economic value of transportation cost for example).
      Why are we producing all this stuff in Asia, where as we could do it ourselves,indeed maybe at a higher costprice, but if the real price of transportation would be added to stuff fabricated in Asia, we would have competition between things produced in Europe, the US and things produced in Asia. We should stimulate people buying things & food that has been produced locally, simply by increasing the real ecologic cost to our fuel consuming globalised production.. Another downside of this now is that Asia is becoming the cash holder and financial supplier of the rest of the world, as prices are plummeting for Assets (Energy, Transportation, Banks), and China and India have plenty of money in cash to spend, they have already started buying up all our currently underpriced assets, and all this simply because we cannot control our urge to buy on credit..

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  8. Brian S. McGowan PhD (@BrianSMcGowan) says:

    Problems in healthcare quality may be getting worse before they get better and there are countless difficult decisions that will have to be made to ensure long-term system improvement…but on a daily basis doctors and nurses and patients are each making a variety of decision that shape healthcare on a smaller but more tangible level.

    How can the essence of Thinking, Fast and Slow be extracted and applied to the individual decisions that patients and providers make so that the quality of healthcare is optimized?

    Thank you,

    @BrianSMcGowan

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