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You might be surprised by what occupies Daniel Kahneman’s thoughts. “You seem to think that I think of bias all the time,” he tells Tyler. “I really don’t think of bias that much.” These days, noise might be the concept most on Kahneman’s mind. A forthcoming book, coauthored with Cass Sunstein and “a brilliant Frenchman you haven’t heard of” is about how random variability affects our decision-making. And while we’ve spent a lot of time studying how bias causes error in judgment, Kahneman says, we aren’t thinking nearly enough about the problem of noise.

In November, Kahneman joined Tyler for a live conversation about bias, noise and more, including happiness, memory, the replication crisis in psychology, advice to CEOs about improving decision-making, superforecasters, the influence of Freud, working in a second language, the value of intuition, and why he can’t help you win arguments with a spouse. 

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00:00:00We Oh hi everyone And thanks for your listenership Conversations with Tyler has grown bigger than ever this year and I hope in some ways at least better than ever Now there's a new way you Khun support the show today through the end of the year You Khun visit
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00:02:01transcripts and upcoming dates Is it conversations with tyler dot com Thank you for coming Danny You've worked on so many topics Let me start with the issue of happiness If you have an experience it seems that how happy you are at the end of the experience depends on
00:02:30the end of the experience And how good was the peak or how bad was the bottom Given that result should we aim to deliberately structure our experiences So they give us more happiness Well I mean if you want good memories good endings a really important The question is
00:02:52how important good memories are relative to the experience itself but no question And the very important there particularly important in the context of gold striving that is whether you achieve a goal don't achieve a goal collars the whole experience of trying to get it to get to it
00:03:14S O N ds are very important for memories So do people structure their vacations to meet the standard or there's a kind of market failure If they listen to you they would have better vacations I'm not so sure that people my guess is that people are conscious of
00:03:33you know that they don't want the Pete to be too far from the end that that's my guess And why does duration of pain seemed to matter so little for how we evaluate painful experiences Well you know if you if you were asking whether the evolutionary value than
00:03:50the duration of pain is really not very important what's important at the intensity Because the intensity is a measure the severity of threat The duration is really something eh House It's very striking that it you know it's completely insignificant when people in many situation that's completely insignificant quite
00:04:11striking result You also have the paper unhappiness with Alan Krueger using what you call the day reconstruction method How much people enjoy different experiences And one result from that paper is how much people enjoy spending time with their friends If that's so much more enjoyable it the margin
00:04:28Why don't people do more of it Well all together I don't think that people maximize happiness in that sense And that's one of the reason that I actually let the field of happened not in body in that I was very interested in maximizing experience But this doesn't seem
00:04:47to be what people want to do They actually want to maximize their satisfaction with themselves and with their lives and that leads and completely different directions than the maximization of happiness And do you think that telling people you'll be happier a particular way changes their behavior much or
00:05:06they still stick to maximizing a sense of satisfaction with their lives No idea I haven't tried You know there is a lot of work these days I'm trying to make people happier and I'm trying to coach people in the UK in particular It's a whole you know there
00:05:24is I wouldn't call it an industry but it's it's sponsored by government My friend Lord Layered has started a movement that promotes happiness There's a great deal of that happening and I don't know how successful it is because the criterion for evaluation and it's very difficult to conduct
00:05:45evaluations on those things because people know they have been subjected to interventions cannot really answer those questions honestly or even if they try So the way to test whether things are successful would be to ask a person friends has he become more she become happier and that hasn't
00:06:06been done and that people want to maximize their overall sense of whether life is gone Do you think that is ultimately Darwinian roots Or why is that the equilibrium Happiness feels good right Yeah happiness feels good in the moment but you know it's in the moment what you're
00:06:22left with your memories And that's a very striking thing That memories stay with you And the reality of life has gone in an instant on DH So memory has a disproportionate way because it's with us It stays with us It's the only thing we get to keep If
00:06:43you think of your own life have you maximized happiness or the overall sense of how your life has gone Neither Neither citations No If you miss a flight due to a traffic jam outside your control would you rather be two hours late or just one minutely Oh I
00:07:04mean I'm like everybody else brother be two hours late And you think even knowing about this doesn't change that You can't talk yourself out of the bias You can talk yourself other Some bias is I think I mean I wouldn't generalize on that but it would take you
00:07:21know I could possibly I talked myself out of that one but you know really sort of repeating to myself a stupid it is but it would It would take a lot of work It's not that you can decide once and for all I will be I will not
00:07:36be subject to that Bias doesn't work that way Do you think we over investor underinvesting memories Overall we certainly invest heavily in memories minion of vacations who many people our investment in the formation and maintenance of memories So there is a lot of investment whether it's too much
00:07:58or too little it probably depends a lot on peoples on the amount of consumption of memory that people engage in So I for one I'm certainly bias but I do not consume my memory's a lot And I you know I almost never go back to photographs not deliberately
00:08:17You know if I stumble on something it will move me But the idea of going backto relive a vacation That's not what I do So I have I have a little empathy for for this And if we think about SE sports they're a form of bias right Most
00:08:33people root for our home team or they root for their country In the Olympics Music arguably is a form of bias through soundtrack music It affects how you view the movie even though it's not changing any facts To what extent should we think of bias as the main
00:08:49thing that gives our lives and overall structure just as a musical soundtrack is what gives structure to a movie Well and you know that's a dimension sway of labeling things to call them biases I wouldn't call the effect on music You know the biasing effect It it completes
00:09:07the experience So on what will your other well sports You're consuming bias right You don't actually think your team is better No but you identify I mean you know it's not that there are emotions over which you have very little control and it's a fact that you feel
00:09:25pride when your team went on Fact you feel pride of a stranger who lives on your street Get surprised so that tendency to identify with what's around us and when with things that that we are connected to is very powerful We derive a lot of emotion from it
00:09:43and I wouldn't call that a bias because you can call any emotional bias There's a well known article by John List where he argues if you study how experts trade assets that a lot of what are called bias sees go away and become quite small what's your reaction
00:10:01to his research It's beautiful research I'm convinced that's right And indeed you don't have to go as far as he does to find cases in which people act fairly rationally The people act fairly rationally in routine transactions So if there is a thing that's loss aversion that it
00:10:21plays a large role on DH that's less research in novices they get they get attached to things and then they don't want to sell them and they get over it over time and in routine transactions You know when I go in eh I spent some money to get
00:10:40shoes I feel no loss aversion for the money And certainly the person says Mrs Fuse feels no loss aversion for the shoes It's a routine transactional and it's a whole domain in which no loss aversion doesn't apply How much of your last book is about Bias of course
00:11:01and much of your next book will be about noise If you think of actual mistakes in human decision making how do you now see the relative weight of bias versus noise Well I would say this So first of all let me explain what I mean by noise I
00:11:16mean just randomness on DH It's true within individuals but it's especially true among individuals are supposed to be interchangeable in say organizations Can I spend three minutes for saying that So I'll tell you where you know the experiment from which my current fascination was noise A rose I
00:11:41was working with an insurance company and we did very standard experiment They constructed cases very routine standard cases expensive cases not we're not talking of ensuring cause we're talking of ensuring you know financial firms who risk of fraud But so you have people will We're specialists in this
00:12:03This is what they do So cases were constructed completely realistic the kind of thing that people encounter every day Andi you have fifty people reading a case and putting a dollar value on it And now I could ask you that And I asked the executives in the firm
00:12:23and its a number on with just about everybody agrees So suppose you take two people at random to underwrite a zit Random You average the premium they set you take the difference between them and you divide the difference by the average So by what percentage do people differ
00:12:45Will would you expect people to defer And there is a common answer that you find you know when I just talk to people and ask them or the executives had the same answer It's somewhere around ten percent That's where people expect to see in a well run For
00:13:01now what we found was fifty percent five zero which by the way mean that the those underwriters we're absolutely wasting their time I mean in the inn if you know in the sense of assessing risk So that's noise and you find variability across individuals which is not supposed
00:13:22to exist and you find variability within individual depending morning afternoon Hot called in a lot of things influence the way that people make judgments whether they're full or or whether they've had lunch You haven't had lunch effects judges and things like that No it's hard to say what
00:13:44there is more of noise or bias that one thing is very certain That bias has been overestimated at the expense of voice mean Virtually all the literature and a lot of public conversation is about biases But in fact noise is I think extremely important very prevalent And there
00:14:07is an interesting fact that noise and bias are independent sources of air so that producing either of them reduced improves overall accuracy And so there is room for and the procedures by which you would reduce vice and reduce noise are not the same So that's what I'm fascinated
00:14:28by these Do you think of low intelligence as yet a third independent source of error or is that somehow subsumed in bias And noise You mean plain stupidity In some cases yeah it wouldn't really be necessarily the same as either bias or noise I mean you know getting
00:14:48getting inadequate information or not not getting adequate information is when it's available is a stupid thing to do on a very common thing And it's not exactly a bias And it's not necessarily It would contribute more to noise than Tobias by the way by an art when people
00:15:09collect too little information or are swayed by the first thing that comes to mind You get noise rather than buys and you see the wisdom of crowds as a way of addressing noise and business firms So you take all the auditors and you somehow construct a weighted average
00:15:25Well the wisdom of the crowds will work and pulling opinions will work when errors are independent That is when everybody is inclined to make the same mistake which is then a bias then having multiple individuals engaged in it that they share their biases You'll get the bias it's
00:15:45going to be worsened and everybody will have my try a confidence in their bias views because other people share that So with the mother crowd works and of what specified conditions with respect to the underwriters I would expect certainly that you know if you took twelve underwriter assessing
00:16:04the same risk you would eliminate the noise he would be left with bias but you would eliminate one source of there And the question is just price Google for example when it's elects when it hires people they have a minimum of four in the bed full making independent
00:16:24assessments of each candidate And that reduces this you know that reduces the standard deviation in there at least by a factor of two So is the business world in general adjusting for noise right now our only some highly successful firms You know I don't know enough about that
00:16:43All I do know is that when we pointed out the results the the bewildering results of the experiment on on underwriters and there was another unit people who assess the size of claims again but actually to more than fifty percent like fifty eight percent The thing that we're
00:17:01the most striking was that nobody in the organization had any idea that this was going off so it took people completely by surprise So my guests now that wherever people exercise judgment there is noise And as the first rule there is more noise than people expect And there's
00:17:21more noise than they can imagine because it's very difficult to imagine that people have a very different opinion from yours When your opinion is right which it is So that's that's the way it works So if your quality and by a CEO to give advice and I think
00:17:39sometimes you are how can I reduce the noise in my decisions The decisions of the CEO when there's not a simple way to average the firm doesn't have a dozen CEOs What's your advice My advice is divide and conquer That is there is one thing that we know
00:17:56that improved the quality of judgment I think and this is to delay intuition not I think there is in the audience a friend of mine Gary Klein with violently opposed to what I'm saying but a czar many others But I'm here so so I think the lay intuition
00:18:19is a very good idea and delay intuition until the facts are in hand and looking at dimensions Other problems separately and independently his just is a better use of information and the problem with intuition that it forms very quickly so that you need to have special procedure in
00:18:42place to control it except in those rare cases And Gary Klein and others have demonstrated that where where you have intuitive expertise you don't know that that's true for athletes You know they respond Intuitive leads True Fortress Masters It's true for five fighters captains as Gary Klein is
00:19:06shell so that's intuitive expertise I don't think CEOs encounter many problems where they have intuitive expertise They haven't had the opportunity to acquire it so that better slow down and just take more time on each decision Break the decision up It's not so much a matter of time
00:19:25because you don't want people to get paralyzed by analysis But but it's It's a matter of planning how you're going to make the decision and making it and stages and not acting without an intuitive certainty that you're doing the right thing But just delay it until all the
00:19:43information is available And does noise play any useful roles either in businesses or in broader society Or is it just a cost we would like to minimize Well I mean you know there is one condition under which noises they're useful and that if there is a selection process
00:20:00you know evolution it works annoys you have random variation and then select action But when there is no selection was is just the cost But tell you were always transparent Who would be the winners and who would be the losers from a given decision Wouldn't we be too
00:20:14emotional too polarized engaging in too much rent seeking and having an ambiguity as to cause and effect is in part what allows us to get along with each other And you are You're sort of making a lot of assumptions I'm not used to in this in this question
00:20:32You're you seem to assume that you know there is something very competitive that could be alleviated But there's the old saying say from the Soviet Union that meritocracy is very hard to live under that If you really know how many people are better than you are which say
00:20:48a chess player might there's something psychologically oppressive to being downgraded Where's noise you Could you Khun be overconfident more easily and we all know everything You don't need noise for that You know bias will do it for you on DH and there is a lot of bias in
00:21:06that direction I mean people clearly overestimate but they can do and how good they are And that's a blessing Undoubtedly Are there groups of people you feel or less subject Tobias ese So there's some papers for instance showing that autistics they have weaker framing effects smaller endowment effects
00:21:25Maybe because top down processing works in a different way You have an opinion on that literature No I don't know it well enough If you think of the literature on what are called cognitive disabilities so eighty eight do you think of that as bias or somehow in a
00:21:40different logical category Or I mean you know I don't think it's a bias No I think it's an attention deficit So it means that people have difficulty controlling their attention focusing on what they want to focus on and staying focused Aye that's neither by snow noise You know
00:21:58Bison knows do not cover the universe No other categories And if you think about the issue of when people think about the world They find some kind of transactions repugnant so sometimes they just don't like to sell what they have Other times they seem to object to market
00:22:16saying kidneys or kidney transplants He viewed that as bias or where does that come from Well I mean you know in the sense that this is a norm on DH you know there are things that we're trained or socialized to find disgusting to find repugnant and on So
00:22:35there are repugnant transactions and you know you you have to treat them as you treat every other moral feeling You know we have lots of moral feelings things that we find unacceptable without without any ability to really explain why they were unacceptable There is the researcher thing is
00:22:54more on emotion There is such a thing is indignation is moral disgust And that's what we're talking about here So you're pessimistic about the ability of psychologists to develop structural explanations of where feelings of repugnance come from Well in some cases we know and you know you can
00:23:16do that associative Lee I mean it really depends on the associative structure that is imposed by given culture So you know to give you a sense of the way that works There is psychologist Paul Rose and who's done some brilliant experiments on that then in in one of
00:23:34the experiments So he has people and they're given the other glass of orange juice and they have a sticker on their us to write on that stick of cyanide and to sic it on the juice and then to drink the juice And they don't want to know the
00:23:50that's This is something It's an emotion of which people have no control And all socialization has created those emotions in us and you know we're conditioned to have them on some conditions Other cultures are disgusted by others things Philip that lock has argued that if we set up
00:24:09long run tournaments with forecasting and we measure results and we test teams against each other that we can in the longer run reduce I think both the noise and bias do you agree And you think there are factors he's overlooking and how his tournaments air set up I
00:24:24mean filled That log is another friend but he's also a hero I mean I think this is beautiful research I think it's proved beyond the shadow of the doubt that when when you have people making forecast for the medium term you know up to six months in many
00:24:41situations you can have people thinking carefully without any training who do better than CIA analysts You know that's fundamentally what he is But he has shown and he he really knows why Or he knows how they do it And and the tricks are very simple I mean you
00:25:02know if you made a list of intelligent ways to go and problems that's what people do So you know they they view the problem is an instance of the category and then they switched to looking at the problem from the inside and and essentially they adopt different point
00:25:17of view It's not the same thing is what I was saying earlier about breaking up problem in two dimensions and averaging There's no averaging but there is looking at a problem from multiple dimensions and collecting a lot of information And that's basically what creates a BA forecasters So
00:25:36if you're picking the Daniel Kahneman Super forecasting team what qualities are you looking for in individuals Well you know filled that looked really has a comprehensive list which I'm not going to remember But the margin here what you might like It will be intelligent There will be numerous
00:25:54They will be open minded their bi curious interested in learning eager to train their mind But is there a bias left and how Tesla Keown's pick their teams He picks the themes by results So what What he has Hey has people competing in making probabilistic focus of strategic
00:26:15or economic events in the medium intro tube And some people are more accurate than others and after a year of that you select the top two percent and you call them super forecasters and that gives them a very good feeling you know to be labeled super forecasters and
00:26:33they do not regressed to the means that there's a second year They're just the brothers Good at the first year That's the basic finding If you're picking doctors where maybe results are hard to measure in some cases what do you look for when selecting doctors in broad terms
00:26:48Well you know I will do the conventional thing I will ask for the about the reputation because that's the best you know that's the best measure of we have If it's a surgeon that I'm looking for then there really indices the main one being the number of times
00:27:05has performed the operation in question so that you know that you know this is what you've got to examine because people really do get better over time and in so measuring how much practice they've had and the practice is fairly specific on different operations I think I would
00:27:25know how to pick a surgeon There's a good deal of evidence that people in businesses air overconfident But do you think they're more overconfident than they should be Well overconfidence has many virtues I mean you know in the first place it's nice I mean it's a pleasure to
00:27:40be overconfident especially if you're an optimist The minute optimism is valuable much more than overconfidence Overconfidence is sort of of a side effect But to exaggerate the order success is a very useful thing for people It will make them more appealing to others They will get more resources
00:28:02and they will take risks And it's not necessarily good for them The expected You expected utility you know of taking risks in in the economy is probably marginally negative But for society as a whole to have a lot of optimists taking risks that's what makes for economic progress
00:28:25So I call that the engine of capitalist really in that that sort of optimism there's a collaboration between a human being and a machine and occasionally the human being overrides the machine You feel the human beings in those situations are on average either too overconfident or too optimistic
00:28:44Well I mean you know there's certain criteria that you would want to apply before you put the machine to work and I thought you want to validate that But once you have a machine making decisions the conditions under which it's a good idea for humans who override them
00:29:02are really well no and will understood And and it's not that when you get a feeling that the machine is wrong that's not enough You it has to I'll give you an example where it would be okay to override a machine So suppose you have a computer that
00:29:21approves loans and then you're the banker and you see that the person who you know was approved for a loan has just been arrested for fraud then you will you know you will override the machine That's about the conditions under which it's worth It otherwise have been many
00:29:39experiments and when people override formulas by and large they do worse than if they hadn't intervened So do you side with the analyst such as Martin Ford who see really a very large number of jobs being potentially automata ble with artificial intelligence machine learning Or will we always
00:30:00need the human beings to work with the machines that we will need Human beings is I think an illusion Yeah it's really very I mean take take chess for example So Casper of was beaten you know twenty years ago and he went on for a while And it
00:30:19was true for a while saying the teams of tres players with grand masters Ah programs with with grand Masters would be stronger than either and it was true for a while It is true No longer The programs do not need the grandmasters and you know how it happened
00:30:42And it's likely to happen in many other fields I mean it's happening in dermatology the mythology that diagnosis is not better done By programs than by people And they are not going to need the person very often that is to have a person into Venus with the right
00:31:02to intervene They were sometimes correct mistakes but they were more often I think introduce the sticks So when you have a well running program leave it alone So we asked Professors won't need to great exams anymore and I don't just mean multiple choice You're on machine learning on
00:31:18papers you find what car related Good paper You put the paper through the program You know Look I mean the point is there's so much noise in S a grading that it's quite easy to imagine a program that would look at various indices and that would do better
00:31:35than you know hurried and tired professors If you consider people working in psychology or maybe economics or just social sciences do you think people persist with their professional and research projects too long or not long enough Where is the bias My guess is too long but you know
00:31:55it's a personal bye because of some costs because of some calls And I think some costs is really the enemy when you're doing research to innovative research You're too recognized that something isn't working and just move on And you know they're different views on that But my sense
00:32:13is that this is the direction of the bias here Some cause Michael Nilsson who is a scientist and he works at Y Combinator He tweeted today If it weren't for sunk costs and my respect for them I wouldn't ever get anything done What do you think huh I
00:32:30mean you know something keeps you at things Are you keeps you at things You stay loyal to your friends you become more trustworthy Well that's not You know when we talk about some costs we talk about something else So it is not true that that growing attachment to
00:32:47things that you're familiar with and that you like and love them and increasingly trust you know that's not some costs that something else and then you know some costs There's a fairly specific things that is that you are putting a different value on the movie or an investment
00:33:06that you make because of investment that you have already made Then you would if you were looking at that The noble on some cost By and large I think on our negative we know that you know when you when you get a new CEO in place in organizations
00:33:24the new CEO has one big adventures is got no sunk costs with respect to poor ideas that had you know that the exiting CEO had and couldn't couldn't let go up if you had a perfectly rational pure Basie And what anyone else trust that person Well you know
00:33:44I mean would he be nice I don't think so You know that's what put matter I think you know if you could get me a nice baby um that would be fine Some questions about psychologists outside of what you've worked on but maybe related Freud What do you
00:34:03think of Freud's body of work and has it influenced you at all Well if I think Freud's to principles of mental functioning right the notion of pleasure principle reality principle it's a little bit like thinking fast and slow in some ways with big differences Well I mean you
00:34:19know all dichotomies are like you know in some ways and yeah you know there are similarities are Oddly enough there is one aspect of Freudian work that I think that influence me And he has for some reason when I was a graduate student it's too long a story
00:34:39But I was I was exposed to Chapter seven in the interpretation of Dreams and I spent a summer studying trap to seventh at the interpretation of Dreams And then in Chapter seven there is basically a theory of attention And like twenty five years later I published the theory
00:34:58of attention And when it was done I realized that it resembled Chapter seven You know quite a bit So yes personality psychology and five factor personality theory is that for you a useful way of thinking about human beings Well you know it's a proven way of thinking of
00:35:16it's sort of boring the butt on And I mean that seriously that this five factor thing You know that's about twenty years old and it dominates personality psychology because it works But it will render that and it's sort of you know it It used to be more exciting
00:35:35to have more complicated mechanisms But you have something that that seems to work What did you draw from Herbert Simon directly Nothing indirectly a lot and retrospectively a lot When I mean by indirectly is that you know the air I breathe was influenced by Herbert Simon You know
00:35:59he had the notion of purest sticks and it was in the language and and it affected me Of course he had affected the whole zeitgeist It affected the whole culture and read respectively when I learned Simon But you know But that was after I was in the field
00:36:16and after had made some contributions to the field I discovered that I was following in his footsteps But you know that's not what I had been doing originally hadn't viewed myself And in fact I wasn't following in his footsteps Retrospectively You find Julia this's what I did you
00:36:33know in the historical perspective and also from classical psychology either young or PJ Did you draw anything from them Or is that just off afar and stream just completely for it Completely foreign If you think about your early work on vision and on his rally bus drivers how
00:36:51did your later work on biases and thinking fast thinking slow come out of your very earliest papers It didn't It was a completely separate thing I worked originally on a concept for for quite a few years on the notion of effort mental effort and when I started work
00:37:11on heuristics and biases with Amos Tversky that wasn't on our mind And it had very little effect when I wrote thinking fast and slow like ten years ago when I was doing that Then it turned out that I put together in all my life's work and the early
00:37:27work did get into thinking Fasten slow but it had no it effect on my work with a Mr Ski But the idea of attention switching costs so Israeli bus drivers it takes time for them to switch attention from one event to another Is that not an underlying micro
00:37:44foundation of your say nineteen eighties papers on bias The people aren't switching their attention to the new problem No no you know it's not We didn't think of it That really happens a great deal and quite often it happened in a different way It happened when somebody is
00:38:01insulted because he didn't cite it And so you know he looks at your work and he says that's just the same as what I've said before but and and in some way maybe true There may be some resemblance but it may be true and yet you were completely
00:38:16uninfluenced by that And it's the same thing I was on influenced by my earlier work I think now your basic distinction between system on and system to thinking fast and thinking slow to the extent that particular results do not replicate Do you view that is undercutting the system
00:38:34one versus system to distinction or is that immune to the degree of applicability Well I think you know that there were whole sets of results that I publish in thinking fast and slow that I wish I hadn't published because there then not reliable Whether it undercuts the the
00:38:54idea of two systems is really anchored in a basic sort of fact of experience that the process by which you know you'll get two plus two is fundamentally different from the way that you get seventeen by twenty four And so one of them happens automatically associative Lee quickly
00:39:18You have no control The other demands effort on this slow and so that's immune to replication But if there's a bias in individuals and noise Why should we trust our experience about this apparent sense of having two methods Well you not for it is not only what's in
00:39:36the first place goes out those are extreme That doesn't mean that there aren't others It doesn't mean that there is not a continuum but but there is at least a continuum to be explored Of those two extremes of that I'm quite confident Do you think that working outside
00:39:54of your native language in anyways influenced your ideas on psychology It makes you more aware of thinking fast versus thinking slow Are or not It's something I used to think about in the context You know I'm from Israel on DH and it was thinking whether there was something
00:40:09in common to Israeli in two actuals operating in the in a second language And I thought that in a way it can be an advantage to operate in a second language that there are certain things that that you can You can think about the thing itself not through
00:40:28the worlds that it's like lower son costs In a way I don't know exactly how to explain it but I haven't Bean I thought that this was not a loss for me to do psychology in a in a second language Do you have thoughts on the potential cognitive
00:40:45advantages of bilingualism or trilingual ism You know it's an empirical matter It's not a matter of thinking and I don't know enough It appears to be a contagious but I don't know the literature If we think of therapists psychiatrists internists who were trying somehow to fix improve our
00:41:02cure people Are they under investing in a knowledge of what might be called behavioral economics or your work on psychology Should they be using more of it is that they're bias I haven't opinion on that I think it is It is supported by evidence but there is one
00:41:20line of therapy that clearly works on It's evidence based and it's supported time and again And that is one style and its cognitive behaviour therapy that works and we know it does Other things work and we don't some of them do Some of them don't And it's primarily
00:41:39seems to depend on the personality of the therapist and on the interaction between the personality of the therapist and the personality of the patient whereas Kanda behaviour therapy is is a technique and it's a technique that works So that's a fact on Dearest is a lot of buys
00:41:59in a society such as Argentina that relies so heavily on psycho analysis As a psychologist you see that is bias isat a placebo Is there a placebo effect It's like Oh analysis You know you seem to attribute You seem to think that they think of bias all the
00:42:16time I can't imagine like six over time I really don't think of bias that much But you know if you want to apply them clearly there is a lot of psycho analysis and you know Argentina And you know there's no indication that it makes them more saying if
00:42:38you were to express what is the question about gender and your own work that interests you the most Maybe you've never done it But what would that be Because I have really never been interested in anything to do with gender So I am I have never studied looked
00:42:58at differences between gender in the kind of research we did I've never bean very interested individual differences on DH on not engender either So I don't know So it's the means really that interests you the most It's yeah it's the means and it's some extremes but it's not
00:43:18you know cutting and icing into categories being in his rally And surely you've traveled to many many countries at the very least Sweden right among others There are papers on cross cultural differences in bargaining or indecision Bias sees How much stock do you put in those results Oh
00:43:35I mean I think there's no question that there are cultural differences For one thing for example there are major cultural differences in the attitude to optimise to optimism I mean in quite a few European countries optimism is considered for the foolish You know it's for children Yes man
00:43:57in the United States Optimism is clearly desirable trait And and similarly their differences on whether it's taking is considered the good thing or a bad thing And so there certainly cultural difference And you think of those in functional Sturm's So some people might argue Ellis rallies They have
00:44:17a tendency to speak directly because they've had a lot of crisis situations where you can't beat around the bush You need to say what you think or we don't know I don't I don't like those kinds of explanation They look you know fast I'll to me right now
00:44:33in psychology in your own work What are the open questions you're most interested in Well I mean like you know like everybody else I think like many others there too Exciting developments now that one would want to know about I mean when would want to know how the
00:44:49brain works or to know more about how the brain works than we do and what would would want to know about artificial intelligence and when it and if when and how it will become more human like in what it can do and you're optimistic on that front or
00:45:11I'm optimistic and virtually nothing But you know that is developing faster than anybody could have anticipated no question And so if it continues to develop but at that rate meaning a lot faster than we expect then then things are going to happen relatively quickly And what do you
00:45:34think are the main obstacles to some People in Tilikum Valley will argue a Iess stock it a kind of local optimum driverless cars Although they were ahead of the pace we thought ten years ago there may be behind the pace we thought two years ago There's always a
00:45:47problem with emergency situations of policemen waving you on the last one percent maybe is very very difficult Yeah I mean I can't evaluate that That's a technical problem You know how long it will take to get to clean up the last one percent The question that are of
00:46:05interest that the psychologist is when can you simulate common sense You know when you know there is The really serious question and the people raise about computers is whether they know what they're talking about You know whether they understand what they're talking about and without sense organs And
00:46:24without the perceptual apparatus that we have and and the ability to cause things by acting on the world they can be exactly like us so But that sense of understanding nobody actually today would I think claim that even the most sophisticated programs of it and you think we've
00:46:48learned anything general about common sense by having some artificial intelligence What we have learned that our basic ideas about what's difficult and what's easy what's going to be simple and what's going on I have undergone a Siri's of sort of revolutionary changes So we used to think that
00:47:08perception would be easy and thinking would be difficult that thinking it was relatively easy and perception was difficult Now there are ways of handing perceptual problems And so thinking is difficult again And it's a very interesting say developing thing moving the chess pieces often harder than figuring out
00:47:30the best move for the program Looking back on your collaboration with Amos Diversity which has been written about widely of course this the famous Michael Lewisbook But what is there about that collaboration or about Amos that you feel one could read everything that's out there but still has
00:47:46been underappreciated or undervalued I mean you know so much has been written that I couldn't point out to anything that people have completely ignored You know it was just actually the thing that when I think about him it was the mental energy just the drawing of thinking and
00:48:06the mental energy And that made him very charismatic And he was also very funny And being funny is a major asset and in social life And it turned out to be a major asset in our work because I work our joint work at a touch of irony to
00:48:25it And the fact that we were laughing continuously as we were doing the work was very important to the nature of what we did And that stimulates discovery It breaks down some cost bias or what does it do in formal terms I mean with it What it does
00:48:41is it makes you look for funny things about the for us what it did for us I can't generalize for us We were examining our own thinking and finding stupid things in their own thinking and finding that delightful and on very funny So we were very lucky in
00:49:02a choice of topic In many ways our choice of topic you know lent itself to a lot of things that are virtually impossible in other fields and your current collaborators on the noise book How would you describe that collaboration and tell us who they are Well one of
00:49:19them is Kasam Steen who is a very famous juris than and also known for writing like three or four books a year So he writes they're easily and I write with difficulty And so it's not an accident that we teamed up on DA and my the Other Collaborators
00:49:37a brilliant Frenchman that you haven't heard up He was for twenty five years at McKinsey and he became a director McKinsey And then he got bored with that and he got a phD and features on DH hears just extraordinary So I'm very lucky And what will the main
00:49:55theme of that book be Well it will be It will be that noises and underestimated problem And it will be that that there is something deep about two ways of thinking that I was working on and thinking fast and slow which I called statistical vs Causal and noise
00:50:17is clearly a statistical way of looking at things and bias is inherently causal And so the interplay of those forms of thinking and then the idea that if you want to if you want to reduce noise we we have a pretty good idea of what you should do
00:50:40in order to and use greater uniformity to overcome So the vulnerability of people to all sorts of irrelevant influences And when will that be out Who knows Ah ah it was supposed to be out in the fall of twenty twenty and I think our publishers just remember that
00:51:02there is going to be in a presidential election at that time and that probably a lot of other more interesting books are going to be appearing And so they're postponed it to spring twenty twenty one We now have some time for questions but Daniel Kahneman thank you very
00:51:18much I have my hearing aid on But if I can't hear the questions your I will repeat But people will go up to the mikes There are mikes on each side I will call on you and please questions Only This is our chance to hear from Danny Conman
00:51:37If you start making a long speech or statement I will cut you off And I also have questions from the iPad So please get in line If you would like to start with the questions here Ah first question could prediction markets reduce both bias and noise Well noise
00:51:57certainly But then averaging does it on whether prediction markets consistently beat averaging is I think not yet fully established bias No If there is a general bias unless the people are on by I also know that their unbiased mean unless they have a way of being sure so
00:52:22that they can invest more than others and move the price toward the correct answer But without that without this asymmetry of knowledge if there is a bias that we're not going being it won't be reduced Noise will be reduced First question Over here Good evening I have two
00:52:43questions but they're short My first question is you briefly talked about moral emotions Do you see any benefit to shame Because Everitt conflicting theories there So the moral emotion of shame in your thoughts and two What is the impact of counterfactual thinking on happiness in your study Oh
00:53:05about shame I really I have no idea You know it's there so I don't should one wish that it weren't It's probably a force that in uses better behavior in lots of people cannot be would not be controlled in other ways So I don't know how important how
00:53:26useful it is It's painful to the people who feel it and it might be useful to others who might be affected by bad behavior as a counterfactual tze and happiness I think that what you referred to there are counterfactual emotions Regret is a counterfactual emotion Guilt is a
00:53:47counter factually more and and you can ask in the sense that they're driven by something that didn't happen that could have happened But then and some of these emotions seem to be completely superfluous like regret And you know they and I think people by and large would be
00:54:10better off without regret But but it may also d'you mean notice what redress is Regret is what happens the next morning and on And you know if we didn't have it then who knows what we might do So next question over here Yes sir On this topic of
00:54:33delaying intuition And I'm delighted that Mr Klein is an audience because I spent over a decade myself as an intuitive expert and found myself mostly using recognition primed decision making And I'm curious how much you think availability bias confirmation bias etcetera was still affecting my recognition prime decision
00:54:52making and is recognition problem decision making still useful Is it just the best option in a temporally constrained environment Oh you know I I think obviously recognition prime decision making is going to be wonderful if people really can recognize things accurately So if they can diagnose the situation
00:55:16accurately and and do it quickly and act intuitively on that basis And of course it's been official And and there are conditions in there with the supplies Gary Klein and I became friends or a period of six years when we were trying to find out what other boundaries
00:55:37I mean you know I'm sort of a critic of intuition and he is very much in favor of intuition of expert intuition And we were trying to find out you know what are the boundaries Because it's clear that sometimes you know intuition is wonderful And sometimes it's awful
00:55:54And we ended up with a silly obvious set of conclusions about what it is you're going to have Gary Klein type intuition expert intuition If you have a regular world that's condition number one There are regularities that you can pick up and if you have a lot of
00:56:15a lot of aeons and if the feedback is rapid and unequivocal and if you have those three conditions were child true for tres players and their true form spouse's recognizing the emotion of their spouse on the telephone to give you a completely different example then intuition will be
00:56:37developed and it will be perfect if those conditions do not develop I don't think that we can trust people say that they're experts Another iPad question Tech entrepreneur Daniel Gross suggested that growing up in Israel was a forcing function for the tech sector How much was Israel A
00:56:56forcing function for your thinking I don't really completely understand the term forcing function in this gun In this context I know that Israel afforded many opportunities when I was growing up and it probably still does I grew up very early in the history of Israel when the state
00:57:20was small and everyone could make a difference and you really could make a difference I mean I was a za lieutenant in the Army aged twenty one twenty two I made a difference I created an interviewing system for the whole army So those kinds of experiences that you
00:57:39can do things and that seemed impossible or unlikely that is certainly very liberating and encouraging and induces creativity And I think some of that is actually present now that the state is bigger and more established I said I think I was telling you earlier how my grandson and
00:58:01the Israeli army the kinds of experiences that he has as a sergeant he feels very free you know and in an intelligence unit he feels that he can use his mind and like you can speak his mind and it's going to be wonderful Go for his future Next
00:58:19question over here You mentioned earlier that you view many things in the world through a basic lens of pessimism But if you were going to challenge yourself to identify something going on in the world now or in the near term ah about which to be optimistic if not
00:58:34for yourself for your grandchildren say or very young people what should they be optimistic about I'm going to pass over here I'm curious about what beliefs you currently hold that you think in the next five to ten years might be proven incorrect and alternatively the same question of
00:58:55social science Broadly Well you know if if I knew how it would change my mind I would I would have trained my mind So my guess is that there will be completely different frameworks There will be different ways of thinking it's not going to be this or that
00:59:13detail it's going to be And this is what happens to the ideas of the frameworks They at some point become irrelevant This is you know and I know that this is going to happen to everything that I believe that you know give it a few decades It's going
00:59:32to be irrelevant And I wish I You know I wish I could peer into the future and know what comes next But you know I can't from the iPad Why did the replication crisis take so long to arrive in social psychology I would question that It didn't take
00:59:50very long I mean the replication crisis started Ah studied first in medicine and where they were provocative claims by Stanford I don't know It's not a statistician ISI They were provocative claims that most published research in medicine or force and it started there and then psychology came very
01:00:16soon after I mean and in fact psychology is considered to have been quite rapid in adopting it And there was a crisis and many results were questioned I think correctly they were aggressive and they were defenders and both sides I think behaved quite often quite badly But but
01:00:40the result in psychology and its amazing Within a decade psychology has changed many areas of psychology of change and it's clearly is the better science than it was ten years ago because of the replication prices Next question I have to question the first one is the one that
01:01:00you just answered Not exactly the same It's the What do you think about the replication creases in security that is happening recently Ah and the second wise The psychologist Martine's Alabama who is also working on happiness for four years And he believes there are several dimensions that consists
01:01:18happiness Do you share the same opinion or not The second question was Marin Seligman His work unhappiness that there were several dimensions of happiness Do you share his opinion or not And the first was just more on the replication crisis No Next question Over here I have a
01:01:40question about bound irrationality over time with the rise of the Internet the rise of more readily available information you have so many prices things you can see on Amazon All this price discrimination and differentiation across parks has grown with that Do you think that people's biases are improving
01:02:02or getting worse over time Has more information for example over the past twenty thirty years has become more readily available Well I mean you know to the extent that you think of biases as representing you know human nature in a broad cultural context It's hasn't changed over of
01:02:20the last thirty years Human nature hasn't changed the in certain domains It's much easier to be rational you know when you can look things up So when you can search on the computer instead of going out and searching you know as you had to and I was the
01:02:37young person Then of course you can achieve more rational results than you could But whether it has changed anything significant I doubt it And what is very striking over the last few years that it's not only information that is readily available it's misinformation is also readily available So
01:02:58the net effect You know it used to be very clear that this is all to the good But what we're seeing in the last few years is that there is very heavy cost the availability and the ease of expression that's transmit itself over the Internet Next question I'm
01:03:19aware that I suffered from biases and I tried to hold myself to a count and think better And I I'm resistant to that of course because I always want to think that whatever thought I'm having at the moment is the exception and I'm thinking it for good reasons
01:03:32But I fight against that when I'm trying to persuade somebody else to listen to one of my opinions with an open mind Is there some particular technique that you would recommend for persuading other people to do battle with their own biases Because of course they're even Mohr resistant
01:03:48to that than I am When I challenged myself You know it's a game when primarily plays with one spouse and I and it doesn't work I think by buying related question from the iPad how can we use behavioral economics to reduce political polarization It's not that I have
01:04:10an answer I am suppressing it Here is a topic where I'm optimistic but I had no idea You know I don't have an answer but I think that kind of thinking that is going on gone where you're trying to look at practical manipulations that can be a practice
01:04:28The word manipulation is about word that they intended There's a good thing when you look at the practical moves that can make a difference in the way that people think that way of thinking should be effective in and improving the quality of life and improving the quality of
01:04:50how hung polarization can be reduced to still be a problem for me And I think currently for behavior economics Next question On a practical note my high school psychology students ask how they could best use your research to make choices about college and career I mean that's you
01:05:08know that's not my research has absolutely nothing to this You know there There are sensible ways of choosing colleges on DH I think you know they're well known and and you have to collect a lot of information and you have to ask yourself what the scene really wants
01:05:25and where you know she's here she will really fit And so there are obvious ways of doing this I have nothingto but still you have a student who has a gut feeling that he or she ought to go to some college for a reason he or she cannot
01:05:38articulate Are you telling us they should dismiss that feeling and defer to the algorithm the general route I would try to probe and understand You know why Where does that feeling come from I mean I don't think Are you asking me as a parents They imagine Parent you
01:05:56know I would really probe would feel free if that's a very expensive college and you know strong I think I would feel free to probe Where does that strong wish come from and can we discuss it Next question So many behavioral economists use the notion of rationality and
01:06:17neoclassical economics has a normative benchmark and you have said that you don't think that's literally a good normative benchmark And instead something like reasonable nous is a better way to think about those things Could you say more about how we might identify or or define and identify this
01:06:35reasonableness The rational agents models are built on the notion of consistency being the one guiding principle so your beliefs and your preferences have to be internally consistent Nobody can tell you what to believe Nobody can tell you what you want but your beliefs and the only thing we
01:06:58know is that you ought to be consistent Otherwise you're not rational You know that's as a normative principle That consistency is the on ly normative principle that strikes me as pretty odd There are other things that seemed to matter There is there is human nature and human nature
01:07:17is not consistent mean We are context dependents or emotions or context dependent We ought to have normative theories that are adapted to who we are as people as humans And the idea of consistency is an infeasible It's completely unfeasible for the finite mind Then we have finite minds
01:07:43So on that ground alone you know it would be questionable as the principal for a normative model But when would want the normative theory that takes into account human nature and which the principle of consistency doesn't next question over here So you talked a little bit about like
01:08:03cultural differences I was just wondering Do you think that there are like some cultural aspects that are costly and some that are really good And do you think that something like increased migration or open borders would kind of push it would dissolve these cultural differences and pushed a
01:08:20word like a mohr thermal equilibrium No way beyond what I can talk about You know responsibly You know that migration automatically causes you know cultural amalgamation You know that's questionable I have no idea how to answer your question Next question Over on this side we've run out Daniel
01:08:49Thank you very much It's been a great honor to have you Thanks for listening to conversations with Tyler Please don't forget to visit conversations with tyler dot com slash donate to support the show before the year's end

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