Remembering the Life and Work of Daniel Kahneman

Daniel Kahneman, the renowned psychologist best known for his groundbreaking work on the psychology of human judgment and decision-making, died this past Wednesday at the age of 90.

Dr. Kahneman is widely regarded as one of the intellectual founders of the behavioral science discipline now called behavioral economics. He was awarded the Nobel Prize in Economic Sciences in 2002 even though he never took a course in economics.

Dr. Kahneman earned his PhD in psychology at the University of California, Berkeley. He began his academic career as a lecturer in psychology at The Hebrew University of Jerusalem in 1961. He later taught at the University of British Columbia, the University of California, Berkeley, and Princeton University.

At the time of his death, Dr. Kahneman was Professor of Psychology and Public Affairs Emeritus at the Princeton School of Public and International Affairs, and the Eugene Higgins Professor of Psychology Emeritus at Princeton.

Dr. Kahneman gained prominence in the 1970s when he and fellow psychologist Amos Tversky published several scientific papers describing their research on human decision-making under uncertainty. 

Kahneman and Tversky challenged the long-standing notion that people make economic decisions on a purely rational basis. They argued that people regularly rely on mental shortcuts known as heuristics that make us subject to several cognitive biases.

In his 2011 best-selling book, Thinking, Fast and Slow, Dr. Kahneman described his views regarding human judgment in non-academic terms and introduced his now-famous "System 1-System 2" model of human decision-making. Thinking, Fast and Slow has achieved seminal status, and in my opinion, it should be required reading for all business, marketing, and sales leaders.

Like thousands of others, I have been greatly influenced by the views advanced by Daniel Kahneman. When I learned of his death, I looked back at the posts I've published here and found that I've discussed or referred to his work in no fewer than 20 posts.

One of my earliest discussions of Dr. Kahneman's work was published in March 2015, and to commemorate his life and work, I've reproduced that post below. Even after nine years, the material in the post is still remarkably relevant.

Fair winds and following seas, Professor Kahneman.

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Why You Need Marketing Content for Two Ways of Thinking

This is the second of several posts about the role of behavioral economics in marketing, particularly in content marketing. In my first post, I introduced the topic of behavioral economics and argued that it's critical for marketers to understand the psychological aspects of human decision-making and to incorporate those factors into marketing strategy and marketing communications.

Behavioral economics challenges a fundamental assumption of mainstream economics. For decades, economists have assumed that people make economic decisions rationally. The traditional view says that people weigh the economic costs and benefits of proposed actions, have relatively stable preferences, and usually act to maximize their economic self-interest. Behavioral economics holds that people don't always make rational economic choices because they unconsciously use heuristics (mental shortcuts) that produce several cognitive biases.

In his landmark book Thinking, Fast and Slow, psychologist Daniel Kahneman - whose research with fellow psychologist Amos Tversky laid the foundation for behavioral economics - argues that heuristics and biases originate in the ways we think and learn. Kahneman says that the cognitive processes used by humans can be thought of as two "systems."

• System 1 (fast thinking) operates automatically, quickly, with little or no effort, and with no sense of voluntary control.
• System 2 (slow thinking) consists of thinking processes that are reflective, controlled, deliberative, and analytical. 

According to Kahneman, when we think of ourselves, we identify with System 2, our rational self, but System 1 actually originates many of the impressions and feelings that are the sources of the explicit beliefs and deliberative choices of System 2. 

Kahneman puts it this way:  "System 1 continuously generates suggestions for System 2:  impressions, intuitions, and feelings. If endorsed by System 2, impressions and intuitions turn into beliefs, and impulses turn into voluntary actions. When all goes smoothly, which is most of the time, System 2 adopts the suggestions of System 1 with little or no modification."

Therefore, System 1 exerts a powerful influence on the economic decisions we make, including decisions about the purchase of products or services.

System 1 thinking is valuable and, in fact, essential to our well-being. We live in a world that is both complex and rapidly changing, and we don't have the time, energy, or information-processing capacity to consciously and deliberately analyze every event or circumstance that we encounter. If we didn't have a mechanism for thinking fast, automatically, and effortlessly, we simply couldn't function effectively. The good news is, System 1 is generally good at what it does - the "suggestions" that it makes to System 2 are usually accurate and appropriate.

However, System 1 also has biases. It tends to make systematic and predictable logical errors in certain circumstances. In Thinking, Fast and Slow, Kahneman identified 22 characteristics of System 1 thinking that can contribute to biased decision-making. All of these characteristics are important for marketers, but some of them are particularly relevant for creating engaging and persuasive content. For example, System 1:

• Links a sense of cognitive ease to illusions of truth - if something is familiar and easy to understand, we are more likely to believe it is true
• Responds more strongly to losses than to gains, which makes framing content messages the right way particularly important
• Infers and exaggerates consistency (the halo effect)
• Sometimes substitutes an easier question for a difficult one

In upcoming posts, I'll discuss how marketers can use these characteristics of human thinking to make marketing content more compelling.

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Image courtesy of nrkbeta via Flickr (CC).