In last week’s blog I mentioned my recent trip to the Rocky Mountain Economic Summit in Jackson Hole, Wyoming (my reporting on the Summit will appear on ThinkAdvisor starting early this week). Although, I don’t do a great deal of traveling, when I do, two things tend to occur. First, I meet some of the most interesting people and second, I find some of the best books in the airport book stores. This trip was no exception.
During my trip I met an international pilot for Delta. He had many stories about living in the area near the Green Bay Packers and how he bought a condo from one of the Lambeaus of Lambeau Field fame. Being a closet Detroit Lions fan, I kept the conversation away from football. I also met a retired economics professor from Denmark who was traveling with his wife and grandson. We had an interesting conversation as that happens to be one of my favorite subjects. I also found a book entitled, “Thinking Fast and Slow,” by Daniel Kahneman.
In case you are unfamiliar with the author, he won the Nobel Prize in Economics in 2002. He is noted for his work in behavioral economics, cognitive biases and decision-making. This book deals with all three. If you’ve ever wondered why people hold certain erroneous conclusions, this book will shine light on the subject. In short, it’s one of the most amazing books I’ve ever read on the subject of the human behavior.
The underlying theme of the book is that we all have two systems: System 1 and System 2. The first is the spontaneous part of ourselves and the second is the more thoughtful, effortful part. We have no control over System 1 as it’s what we do instinctively. If I ask you to complete the equation: 2+2, you would have no problem providing the correct answer. This and other simple tasks are a product of System 1.
However, if I asked you to multiply 587 x 61 (in your head) it would take much more effort. Most of us would probably just give up. These type of tasks are governed by System 2.