Best-selling psychologist and Nobel laureate economist Daniel Kahneman dies at 90ExBulletin

Daniel Kahneman, who received the Presidential Medal of Freedom in 2013, has died. He brought together psychology and economics to help launch the growing field of “behavioral economics.”

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Daniel Kahneman, who received the Presidential Medal of Freedom in 2013, has died. He brought together psychology and economics to help launch the growing field of “behavioral economics.”

Mandel Ngan/AFP via Getty Images

Daniel Kahneman, who recognized that not all economic decision-making is strictly rational, has died aged 90. His research, which focused on the ways in which human psychology can distort rational thinking, was recognized with a Nobel Prize in 2002 and helped give rise to the burgeoning field known as “behavioral economics.”

“Dani was a giant in this field,” said Eldar Shafir, a professor at Princeton where a research center is named for Kahneman. “A lot of fields in the social sciences just haven't been the same since he arrived on the scene.”

Kahneman, who also received the Presidential Medal of Freedom in 2013, credited much of his success to good luck.

“My life was transformed by sheer luck,” Kahneman said NPR's Hidden Brain in 2018. “Finding a partner, an intellectual partner, with whom we got along very well and did a lot of work.”

Kahneman's longtime collaborator was Amos Tversky, who died in 1996. They were both trained as psychologists, and together they challenged the academic orthodoxy that people's economic behavior is strictly guided by rational thought. They identified many examples where decisions are shaped in ways that are irrational but understandable, such as judges who grant bail more often after lunch than when they are hungry.

Another Nobel laureate, Richard Thaler, says Kahneman and Tversky expanded our understanding by asking a different question than most economists, who were steeped in mathematics, not psychology. Instead of asking what is the best or most efficient way to do something, and assuming that this is what people do, they asked how people really behave.

Kahneman summarized those findings in his 2011 bestseller, Thinking, fast and slow.

Some decisions are made slowly and deliberately, he wrote, in many ways that standard economic models describe. But others are affected by snap judgments or shortcuts, which fall into predictable patterns. A gambler or an investor, for example, may take more risks after losing money in hopes of breaking even.

Sometimes, psychology tells us, the framing of an economic choice makes a big difference. Many consumers welcome the idea of ​​a restaurant discount on certain nights of the week, but balk at the notion of paying a surcharge on other occasions, as Wendy's recently discovered, even though in strict economic terms, it makes no difference .

By accounting for these features, behavioral economics seeks to better understand people's decision-making and, in some cases, nudge them in more desirable directions.

“Clearly, the decision-making we rely on in society is flawed,” Kahneman said All things NPR considered in 2011. “It's very wrong, and we need to know that.”

Kahneman had his own psychological short cuts, Thaler says, describing his friend as a “fiery pessimist.”

“He always thought the worst was going to happen,” Thaler recalled. “He claimed that this was rational because he would not be so disappointed with the results of life.”

Thaler, a self-described optimist, says he tried in vain to convince Kahneman to spend less time worrying.

“The fact that he lived to be 90 in reasonable health should have proved me right, but I made no progress in changing his mind.”

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