Sunday, December 18, 2016
Psychology’s Lennon and McCartney
Amos Tversky, left, and Daniel Kahneman in the back garden of their first house in Stanford, California in the late 1970s. Photograph: Penguin Random House
All love stories involve the science of decision making – for better or worse, richer or poorer. No romance has been as alive to the fallibility of that process as the one described in this book. Amos Tversky and Daniel Kahneman were both the grandsons of eastern European rabbis. Chance and fate brought them together in Tel Aviv in the 1960s. Their subsequent deep friendship and intellectual collaboration – a bromance that invented “behavioural economics” and established cognitive rules for human irrationality – has arguably done as much to define our world as, say, the intertwining between Francis Crick and James Watson.
One of the Israeli duo’s observations was that “no one ever made a decision because of a number – they needed a story”. Kahneman and Tversky argued and proved that in the main humans decided things emotionally, not rationally – the trick was to recognise those habits, and not confuse one for the other. Practising what they preached, their scientific papers were rigorous with fact and research but laced with memorable parable and anecdote. They never made the mistake of thinking that the behaviour they described – of subconscious biases and illogical choices that skewed markets and misunderstood risk – did not also apply to themselves.
Tversky was a brilliant shaper of ideas, not an instigator, and recognised in Kahneman’s mind the raw material he needed
Michael Lewis, with his great gift for humanising complex and abstract ideas, is exactly the storyteller Tversky and Kahneman deserve. He came to their story surprisingly late. Lewis’s landmark 2003 book Moneybag described the ways in which the Oakland Athletics baseball team had employed scientific data analysis rather than instinct and experience to mould a successful team. That strategy, unbeknown to Lewis, had its intellectual roots in papers written by Kahneman and Tversky 30 years earlier, but which were only then becoming mainstream thinking. Lewis’s omission was made clear in a review by Richard H Thaler, the Chicago professor and co-author of Nudge, who had done much to promote and extend the Israeli pair’s thinking.
It was only after that review that Lewis read Kahneman and Tversky’s work and realised the limitation of what he had written in Moneyball (which itself became a phenomenon): “I’d set out to tell a story about the way markets worked, or failed to work, especially when they were valuing people,” he says. “But buried somewhere inside it was another story, one that I’d left unexplored and untold, about the way the human mind worked, or failed to work, when it was forming judgments and making decisions.” This book puts that omission right.
It is rooted, brilliantly, in the biographies of the two men (Tversky died in 1996; Kahneman has clearly spent a lot of time talking to Lewis). Anyone who has read Kahneman’s Thinking Fast and Slow will know a few elements of this biography – that he developed some of his theories while creating performance tests for the Israeli army, for example – but much of it is revelatory. Lewis presents the pair of academics partly, like all the greatest double acts, as star-crossed lovers – in their formative years, each of them seems, in retrospect, to have been waiting for the other to arrive in order to find out exactly what he was capable of.
Both had dramatically challenging rites of passage. Kahneman was the son of a chemist who worked for the L’Oréal factory in Paris. When war broke out his father was interned as a Jew, but saved from transportation to the gas chambers by the president of the perfume company (who was in other respects a Nazi collaborator). With his family fearing that the pardon wouldn’t hold, they escaped from Paris, holing up in the south of France where they lived through one winter in a chicken coop. Kahneman was seven. His father died of diabetes towards the end of the war and with his mother and sister Daniel ended up in Jerusalem on the front line of the conflict that attended the creation of Israel. Not surprisingly, having been “hunted through his childhood like a rabbit”, he developed a survivor’s instinct, and a constant fear of the worst – habits he carried into his academic training as a psychologist.
Tversky, three years Kahneman’s junior, was a fighter rather than a survivor. A slight, skinny kid, with genius-level intelligence, he volunteered as soon as he could for commando training in the Israeli army and became a fearless soldier, commended for bravery by Moshe Dayan. More than his patriotic heroism, though, it was his insouciant intellect that singled him out. By the time he met Kahneman, Tversky was long used to being the cleverest man in any room. Colleagues spoke of his ability to converse on equal terms with Nobel laureate physicists, with only passing acquaintance of their fields. He also enjoyed pricking pomposity. After a talk by Murray Gell-Mann, discoverer of the quark, he remarked: “You know, Murray, there is no one in the world who is as smart as you think you are…”
Tversky and Kahneman saw in the other something that they lacked. Kahneman had moved in his academic career from one idea to the next, never focusing. In a world of specialism, he distrusted narrowness. Tversky was a brilliant shaper of ideas, not an instigator of them, and he recognised in Kahneman’s scattershot mind exactly the raw material he needed. “Amos almost suspended disbelief when we were working together,” Kahneman said. “And that was the engine of collaboration.”
They were, in this sense, the Lennon and McCartney of behavioural psychology: they understood each other better than they understood themselves. Their first paper was about how people were routinely drawn to extrapolating conclusions from statistically insignificant samples: “Belief in the Law of Small Numbers” – a faith that if a coin came down heads twice in a row, the next toss was more likely to be tails. That kind of thing. “Even the fairest coin, given the limitations of its memory and moral sense, cannot be as fair as the gambler expects it to be,” they wrote.
For a decade or so after this they compulsively counted the ways in which we habitually build pattern into random experience, seeing trends in the past, prophesying the future, detailing our general inability to live with uncertainty and doubt, and the consequences for our politics and our economics. “We study natural stupidity not artificial intelligence,” Tversky said.
As with all highly creative partnerships, cracks and jealousies began to show. Having established this one’s seductive chemistry Lewis’s story details its explosive break-up in all its painful inevitability. “People don’t choose between things, they choose between descriptions of things,” Kahneman observed. And though we all make mistakes, some prove more forgivable than others.