Daniel Kahnemen wrote this book published in 2011 and it is the best business book I’ve ever read.  Only it’s not really about business.  It’s about humans and how we think.

ThinkingThis book’s many, many lessons on human thinking, heuristics, fallacies and ideas are mostly premised on two “systems” of human thought.  System 1 is our knee jerk, act first, consider later system.  It’s near instantaneous.  System two is our in depth, deep analysis, do the work system.  It’s what allows us to do complex math problems or build out a logical rationale regarding a nuanced subject.

Neither of these systems are mapped out anatomically speaking.  They don’t exist as part of our physiology.  They are a black and white creation in a world of grey.  Yet they are an excellent way to explain what we, the most advanced beings known to our little planet, utilize when faced with stimuli.

The results ain’t pretty.  When put into scientifically crafted experiments to test the psyche, humans are proven to make decisions that often times go completely against what they should decide, or what they’ve stated they believe, or what they’ve previously decided.  It’s altogether fascinating.  Kahnemen spent his career creating and testing psychological evaluation and attempting to prove out differentials in what many in his profession and other similar studies thought were the case versus what actually happens.

My problem with the book is that it’s SO good and SO full of lessons I don’t know that it’s really all that easy to blog it’s importance.  Anyone who works in a professional environment and has to get groups of people to make decisions should read this.  It’s incredible.

Here are a few lessons covered:

  • Attention and Effort:  how often humans faced with difficult decisions or in depth decisions simply skip it for the easy path
  • Mental Energy:  how certain mind states and times can lead to less critical thinking
  • Prior Mindsets:  how humans use their preconceived notions to find the evidence that supports their prior conclusion
  • Cognitive Ease:  how a more complex subject or argument is found less attractive due to difficulty
  • Causes:  how people build a story around something they want to believe, regardless if it’s true or not
  • Jumping to Conclusions:  how people have illusory understandings based on what they see and know, they are incapable of seeing outside of their current understanding and anchor there
  • Anchoring: how humans use a frame of reference as a starting point and gravitate toward it
  • Small Samples:  how extremely poor humans are at statistical validation due to believing small sample sizes are representative despite not matching base rates
  • Availability:  how we misrepresent recent or highlighted phenomena as more common than actual happenings
  • Halo Effects:  how we take performance or appearance in one area and apply it to others without actual proof
  • Snowflakes:  how humans always assume their case is different and that statistics don’t really apply to them
  • Statistical Errors:  near all humans are not good with statistics, it would seem our brains simply aren’t wired well for it
  • Regression to the Mean:  how humans assume that a particular happening is average when it’s actually an outlier and ensuing happenings will regress toward the actual average
  • Overconfidence:  how overconfident people are more typically the worse performers of a group (not to mention they brush off results as not representative)
  • Formulas:  how replacing humans doing an exercise with a formula replaces human error and creates a statistical certainty of what’s being measured
  • Intuitions:  how humans use feeling and intuition to ignore base rates without good reason
  • Prospector Theory:  how costs are regarded more negatively than gains are positively
  • Endowment:  how quickly humans internalize novel gains as the norm

There are more.  This book took me about six months to read, which is a long time, but it’s 420 pages and extremely dense with ideas that are critical.  I really can’t recommend it enough, but go in eyes wide open as it is not an easy read.  It’s worth it though.