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#38 Thinking Fast? Think Slower. Daniel Kahneman on Decision Making.
October 19, 2021
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Nobel prize-winning economist Daniel Kahneman has come up with a lot of fascinating ideas and conducted ground-breaking research to show how we make choices and learn what makes us happy. Today, we will take a few minutes to summarize his interview with Inc. Magazine where he talks about the ideas in his influential bestseller, Thinking Fast and Slow. Kahneman explains how we can conceive of thought as taking place in one of two systems and why it is important for decision-makers to understand the differences between these two systems.

 

Thinking Fast

Fast thinking is easier than easy. It takes no effort. You may not even notice you are doing it. If Kahneman says “2+2”, there is a good chance the answer “4” will appear in your consciousness, even if it is uninvited. Kahneman calls this “system one”. You have little or no control over it. Thought happens automatically in this involuntary system. A lot of our mental work takes place in this system. We don’t have to worry or actively think about where to put our next foot or what word should come next. And that’s a great thing about thinking fast with system one. You get a lot done with very little effort. But there is a catch. We will get back to that in a minute. First, let’s talk about system two. 

 

Thinking Slow

When we pause to organize our thoughts to come up with a decision, we are thinking slow, using what Kahneman calls “system two”. The important difference is not so much speed as the difference in effort and awareness. Performing complicated computations or using a conceptual framework like SWOT analysis or a RACI matrix are system two “thinking slow” activities. 

 

Knowing The Difference

System one thinking is useful and it allows us to get a lot done with little effort. But because we are largely unaware of our fast thinking in system one, we sometimes do not realize how and why we have made decisions. Kahneman’s research has revealed that if you ask people why they made a decision, they will usually believe they have thought through it carefully and give some explanation. But experiments reveal that people often let fast thinking in system one deliver a quick decision first. Only after they have actually decided do they begin to use system two to develop a rationalization. They mistakenly believe the reasons they thought of after deciding were the impetus for their choice when really some other factor determined the result.

Kahneman points to chess as an example where a master can make good decisions based on skill and learned habits that are perhaps based on system one type thinking fast, but generally, in the real world, complicated problems benefit from the focused and conscious attention of system two thinking. There are often advantages to slowing down your decision-making and taking a close look at your thoughts, allowing you to see things you would miss with a system one fast-thinking viewpoint. 

 

Make The Effort To Think Slow

The intuitive fast thinking system one where most people spend most of their time “operates in a state that you could call ‘cognitive ease’.” System two “requires something you call cognitive strain”. Some mistakes are unavoidable, but others can be avoided with system two thinking. 

Kahneman says “when you are in a sort of free-flow mode of cognitive ease and system one is running the show, you’re going to be more impulsive, you’re going to be more emotional, you’re going to be more optimistic, and you’re going generally to follow your first impressions and your first intuitions.” At this point, the interviewer interrupts to ask “isn’t that good?” Kahneman says no, the first impulse is not necessarily right. So when you have an important decision to make, set aside some time for thinking slow.

 

Tools For Slow Thinking

When you are analyzing your options and planning a course of action, systems and frameworks can help clarify the risks and benefits of your choices. We have several articles that can help, including one on the RACI matrix for assigning responsibilities, the STAR SWOT analysis for getting a strategic overview, and the Boston Consulting Group Matrix for assessing market opportunities.