I want to pay tribute to the economist and psychologist Daniel Kahneman by applying some of his ideas to South Africa today. I’m not sure this is going to work and I should say from the start that I don’t know an enormous amount about Kahneman, who died this week at the age of 90. I have read his book Thinking, Fast and Slow, which was a summation of his work that led to a Nobel Prize in economics in 2002.

Thinking, Fast and Slow is a very slow-moving book, deliberately I suspect. It’s funny. But I suppose when you write a book with that title and downgrade the notion of thinking fast, you can’t make snap judgments! Kahneman is careful, very clear and descriptive about his ideas. The book is a catalogue of the mistakes we tend to make in our thinking and decision-making.

This central idea of how and why we make decisions opened up a huge new field of economics more or less collected now under the heading of behavioural economics. Others have taken the ideas into different arenas, but Kahneman’s core proposition, if you want to call it that, is that the world makes much less sense than we think. 

“We’re not designed to know how little we know,” he wrote once. And because we are not designed to know how little we know, we make assumptions to fill in the gaps and complete the picture, often wrongly.

This idea of a life more complicated was critical to his thinking and his experience. Wikipedia records that Kahneman decided to become a psychologist when he was trying to survive as a Jew in Nazi-occupied France. Jews were required to wear the Star of David and obey a 6pm curfew. 

As a child, one day he stayed out too late and was walking home when he saw a Nazi soldier dressed in black, a member of the SS, coming towards him. He tried to sneak past but the soldier called him over, gave him a hug and some money and sent him on his way. “I went home more certain than ever that my mother was right: people were endlessly complicated and interesting,” he wrote in his autobiography.

And thus began a lifelong effort to demonstrate that people are not as logical as they think they are, and that there are identifiable reasons why this is so. Somewhat inadvertently, he was testing the founding proposition of economics up to that point: the happy notion that in general people respond rationally to incentives. Obviously, they don’t. But why don’t they?

In some ways, thanks to Kahneman, we now know at least some of the reasons. They are plentiful and take on different forms. One is that we use mental shortcuts to help us understand our worlds. These are called heuristics, a word that Kahneman made globally familiar. Just to cite two, there is the substitution heuristic and the availability heuristic. The substitution heuristic describes how we tend to answer an easier question than the one asked because the question posed was beyond us. The availability heuristic explains why you overestimate the probability that something will occur if this outcome is easier to remember.

Kahneman came up with loads of these gemlike rules and lessons about how our thinking goes awry. It’s astounding how many examples he can expose, particularly when he starts thinking about it carefully, as you might expect. And that of course is exactly part of the problem: we are particularly vulnerable when we make decisions fast.

I think it made a huge difference to Kahneman’s reputation that Thinking, Fast and Slow came out just after the 2008 financial crisis. It was almost as though his warnings had gone unheeded and the result was an economic meltdown. So many of the things Kahneman had written about were evident in the crisis: overconfidence; the delusions involved in believing in human rationality; the creation of false images about the state and nature of the world; and so on.

But there were also positive ideas that derived at least partly from Kahneman’s work. His friend Richard Thaler pioneered the idea of “nudges”, which can help change the environment for making decisions and can be very effective in making people do things differently. Nudges are now everywhere, from letters asking you to pay tax, to personalised thank you notes, to using social influence, and using something called the peer effect. This all stems from the insight that the context of decision-making is a major part of the decision itself.

It’s worth asking what critics of Kahneman have argued. I suspect their quarrel would be that he overestimated how often people get things wrong. Of course, we do seek out and favour information that confirms our existing beliefs. Obvs. But humans can be rational too, particularly if they consider their own biases when making their decisions, something Kahneman naturally encouraged. Thinking slowly can be read as a plea to think more deeply, in a more detailed, complete way.

How does this all play into SA now? It’s so easy to see, isn’t it? South Africans, particularly our politicians, do not understand how their worldview differs from the actual world. There is too much overconfidence, insufficient energy being devoted towards thinking hard, and far too many assumptions rooted in past notions.

I have to say, I’m as guilty as the next person in all of this. I’ve always considered my gut responses to be the most valid, the most genuine, and the ones I should rely on when in doubt. These snap judgments can be about events, which is bad enough, but also about people, which is unforgivable. I suspect that’s why we need academics to point out to us, using very specific and obvious examples, why doing things this way is dangerous.

We need to think slowly and act fast, as opposed to thinking fast and acting slowly. Kahneman taught us that, and what a grand legacy of thought that is. DM