As a Nobel laureate in economics, Daniel Kahneman distinguished himself not by formulas but by the compelling narratives he used to elucidate human decision-making processes. His seminal work is filled with everyday characters and dilemmas, designed to unveil the often-irrational nature of our choices. For instance, Kahneman introduced a child with an IQ of 150 in a city averaging 100, and Mr. Tees, who missed his late-departing flight, to challenge our perceptions and highlight cognitive biases.
Kahneman’s approach was groundbreaking. He transformed abstract psychological insights into vivid stories that resonate with everyone, from scholars to laypeople. His ability to craft these narratives stemmed partly from his rich, cautious upbringing as a Lithuanian Jew in pre-war Paris, where assessing trustworthiness was a survival skill.
His popular book, “Thinking, Fast and Slow,” targets not decision-makers but the observers of those decisions—the critics and gossipers. Kahneman understood that decision-makers are often too entrenched in their cognitive efforts to recognize their biases. Instead, he aimed to enlighten those around them, empowering observers to challenge and correct flawed thinking subtly.
Kahneman’s legacy extends beyond his written work. He endeavoured to embed psychological insights into Israel’s educational system, though bureaucratic hurdles prolonged the initiative. His “prospect theory,” developed with Amos Tversky, introduced a new model of economic decision-making that emphasizes the psychological response to changes in wealth relative to a neutral reference point.
Kahneman’s contributions have reshaped economics, introducing concepts like “hedonometers” to measure moment-to-moment pleasure and pain. His research illustrates how our “remembering self” may dominate our narrative, overshadowing the actual experiences of our “living self.”
Now, as we remember Kahneman after his passing, it is our responsibility to continue exploring the narratives he used so effectively to describe our complex psychological landscape. Through his stories, Kahneman not only changed economics but also enriched our understanding of the human mind.
Josep Ma Romances, President and Founder of Closa Capital.
