He'll Be Missed
Psychologist/economist Daniel Kahneman died this week. His book, Thinking Fast and Slow, was one I found to be extremely useful. Kahneman’s System 1 was what gets us through most days as we use our gut to navigate quick decisions. System 2 is for decisions that require more careful deliberation and the thoughtful and researched pros and cons involved in the critical choices we find ourselves facing. As you can well imagine, we get into trouble when we use System 1 to address a decision situation suited for System 2.
I observe that, in this “transactional” time we are living through, a greater understanding of and appreciation for the discipline required of System 2 is in order.
One-time years ago I read that, on average, men tend to deliberate more over which model of car they purchase, than who they are going to marry. Warren Buffett, another smart fellow, has spoken about how a marriage partner is one of the most consequential decisions a person will ever make.
Kahneman’s work played an important role in emerging field of behavioral economics. We can learn not to let emotions hijack our better sense when the path gets bumpy, as it inevitably will from time to time. I saw a meme this week which said that looking at the value of your retirement portfolio each day is like putting up a webcam to check each day the growth of trees. Makes good sense. RIP.