'We're blind to our blindness. We have very little idea of how little we know. We're not designed to'

From The Independent:

Daniel Kahneman, 77, is the Eugene Higgins Professor of Psychology Emeritus at Princeton University. In 2002, he was awarded the Nobel Prize in Economics for his analyses of decision-making and uncertainty, developed with the late Amos Tversky. His work has influenced not only psychology and economics, but also medicine, philosophy, politics and the law. In his new book, Thinking, Fast and Slow, Kahneman explains the ideas that have driven his career over the past five decades, providing an unrivalled insight into the workings of our own minds. Nicholas Nassim Taleb has called it “a landmark book in social thought”.

“Fast” and “Slow” thinking is a distinction recognised in psychology under various names, such as system one [intuitive thought] and system two [deliberate thought]. The subtitle for my talks on the subject is: “The marvels and the flaws of intuitive thinking.” We act intuitively most of the time. System one learns how to navigate the world, and mostly it does so very well. But when system one doesn't have the answer to a question, it answers another, related question.

A study was done after there were terror incidents in Europe. It asked people how much they would be willing to pay for an insurance policy that covered them against death, for any reason, during a trip abroad. Another group of people were asked how much they would pay for a policy that covered them for death in a terrorist incident during the trip. People paid substantially more for the second than for the first, which is absurd. But the reason is that we're more afraid when we think of dying in a terrorist incident, than we are when we think simply of dying. You're asked how much you're willing to pay, and you answer something much simpler, which is: “How afraid am I?” Some students were asked two questions: “How happy are you?” and “How many dates did you go on last month?” If you ask the questions in that order, the answers are completely uncorrelated. But if you reverse the order, the correlation is very high. When you ask people how many dates they had last month, they have an emotional reaction: if they went on dates, then they're happier than if they went on none. So if you then ask them how happy they are, that emotional reaction is going on already, and they use it as a substitute for the answer to the question. On the most elementary level, what we feel is a story. System one generates interpretations, which are like stories. They tend to be as coherent as possible, and they tend to suppress alternatives, so that our interpretation of the world is simpler than the world really is. And that breeds overconfidence.

More here.