Thinking, Fast and Slow

by Daniel Kahneman

The intense aversion to trading increased risk for some other advantage plays out on a grand scale in the laws and regulations governing risk. This trend is especially strong in Europe, where the precautionary principle, which prohibits any action that might cause harm, is a widely accepted doctrine.

Resisting the inclination of System 1 apparently involves conflict.

The experiencing self does not have a voice. The remembering self is sometimes wrong, but it is the one that keeps score and governs what we learn from living, and it is the one that makes decisions.

This is the tyranny of the remembering self.

“You are thinking of your failed marriage entirely from the perspective of the remembering self. A divorce is like a symphony with a screeching sound at the end—the fact that it ended badly does not mean it was all bad.”

Odd as it may seem, I am my remembering self, and the experiencing self, who does my living, is like a stranger to me.

“She is an Alzheimer’s patient. She no longer maintains a narrative of her life, but her experiencing self is still sensitive to beauty and gentleness.”

It appears that a small fraction of the population does most of the suffering—whether because of physical or mental illness, an unhappy temperament, or the misfortunes and personal tragedies in their life.

It is only a slight exaggeration to say that happiness is the experience of spending time with people you love and who love you.

The satiation level beyond which experienced well-being no longer increases was a household income of about $75,000 in high-cost areas (it could be less in areas where the cost of living is lower). The average increase of experienced well-being associated with incomes beyond that level was precisely zero. This is surprising because higher income undoubtedly permits the purchase of many pleasures, including vacations in interesting places and opera tickets, as well as an improved living environment.

A plausible interpretation is that higher income is associated with a reduced ability to enjoy the small pleasures of life.

one recipe for a dissatisfied adulthood is setting goals that are especially difficult to attain.

the essence of the focusing illusion, which can be described in a single sentence: Nothing in life is as important as you think it is when you are thinking about it.

The central fact of our existence is that time is the ultimate finite resource, but the remembering self ignores that reality.

The only test of rationality is not whether a person’s beliefs and preferences are reasonable, but whether they are internally consistent. A rational person can believe in ghosts so long as all her other beliefs are consistent with the existence of ghosts. A rational person can prefer being hated over being loved, so long as his preferences are consistent. Rationality is logical coherence—reasonable or not.

As interpreted by the important Chicago school of economics, faith in human rationality is closely linked to an ideology in which it is unnecessary and even immoral to protect people against their choices. Rational people should be free, and they should be responsible for taking care of themselves.

Freedom is not a contested value; all the participants in the debate are in favor of it. But life is more complex for behavioral economists than for true believers in human rationality. No behavioral economist favors a state that will force its citizens to eat a balanced diet and to watch only television programs that are good for the soul. For behavioral economists, however, freedom has a cost, which is borne by individuals who make bad choices, and by a society that feels obligated to help them.

The attentive System 2 is who we think we are. System 2 articulates judgments and makes choices, but it often endorses or rationalizes ideas and feelings that were generated by System 1. You may not know that you are optimistic about a project because something about its leader reminds you of your beloved sister, or that you dislike a person who looks vaguely like your dentist.

And I have made much more progress in recognizing the errors of others than my own.

There is a direct link from more precise gossip at the watercooler to better decisions.