Nobel Prize for Economics.

Kahneman is a psychologist who won the Nobel Prize for Economics.
One of the innovative ideas he has proposed is between two different ways we think
◦ He calls these System 1 and System 2
◦ These are not supposed to be actual separate systems in our brains.
◦ Instead, he is pointing out that we often rely on very fast, automatic, and effortless processes
when we think (System 1) and other times we have to slow down and carefully think through
things with effort (System 2)
◦ For example, if I ask you what 2 + 2 equals, the answer pops in your head automatically, but it would probably take you
some effort to figure out what 3,452, 345 times 1,234,758,132 is.
The Law of Least Effort
In one of his books, Kahneman also refers to the Law of Least Effort
The idea here is that we will naturally tend to rely on System 1 processes, which
require less effort, so long as they appear to work for us reasonably well.
Likewise, we will tend to only put effort into our thinking when it seems clear that
we need to do so.
The Tradeoff
System 1 is helpful because it is efficient. It gives us quick answers without a lot of
effort.
Speed is often important to us, especially when we have limited time.
And System 1 often works quite well.
◦ For example, if I ask you whether it is okay to torture somebody for the fun of it, presumably you
immediately think that it is obviously not.
◦ In this case, the right answer comes to you automatically without any work.
◦ In general, though, there is a price to pay: to go faster, you have to cut corners, and that means
that your answers may not be as reliable.
Partisanship
Many of us align ourselves with particular causes or political parties.
This can produce a tendency to agree with whatever position our group is currently
in favor of.
This makes some sense, given that you don’t want to put in the time and effort to
think through every issue for yourself.
But it can also create an irrational bias called partisanship, since we are just repeating
the party line instead of thinking for ourselves.
Global Warming and Gay Marriage
For example, Kahneman did a study several years ago that found a strong correlation
between beliefs on gay marriage and beliefs on global warming.
People who were opposed to gay marriage also tended to reject global warming and
people who accepted gay marriage tended to accept global warming.
There is no clear connection between these issues, except that these combinations of
positions reflected the prevailing views of the Republican and Democratic parties at
the time.
So it appears that people were simply agreeing with their political parties instead of
carefully evaluating the available evidence.
Belief Bias
Kahneman also discussed a study that seemed to demonstrate another common
bias.
In the study, people were asked to consider whether the following argument makes
logical sense:
◦ All roses are flowers.
◦ Some flowers fade quickly.
◦ Therefore, some roses fade quickly.
People seem to have trouble seeing that this is a bad argument. Can you spot the
mistake?
Compare
All roses are flowers.
Some flowers fade quickly.
Therefore, some roses fade quickly.
All dogs are animals.
Some animals meow.
Therefore, some dogs meow.
What’s the difference?
For most people, it is hard to see that the roses argument uses bad reasoning, but it is easy
to see that the dogs argument is flawed. Why?
We tend to exhibit belief bias.
You find the conclusion that some roses fade quickly very plausible, and so you are likely to
find the argument here compelling even though it uses bad reasoning.
You don’t think that dogs meow, and so you are not tempted to accept that argument.
Basically, if you already believe something, it is easy to convince you to accept it, even with a bad argument.