Daniel Kahneman, who never took an economics course but who pioneered a psychologically based branch of that field that led to a Nobel in economic science in 2002, died on Wednesday. He was 90. His death was confirmed by his partner, Barbara. She declined to say where he died.
Kahneman, who was long associated with Princeton University, employed his training as a psychologist to advance what came to be called behavioural economics.The work, done largely in the 1970s, led to a rethinking of issues as far-flung as medical malpractice, international political negotiations and the evaluation of baseball talent, all of which he analysed, mostly in collaboration with Amos Tversky, a Stanford University cognitive psychologist who did groundbreaking work on human judgment and decision-making.
As opposed to traditional economics, which assumes that humans generally act in fully rational ways and that any exceptions tend to disappear as the stakes are raised, the behavioural school is based on exposing hard-wired mental biases that can warp judgment, often with counter-intuitive results. Kahneman delighted in pointing out and explaining what he called universal brain “kinks”. The most important of these, the behaviourists hold, is loss-aversion: Why, for example, does the loss of $100 hurt about twice as much as the gaining of $100 brings pleasure? Among its myriad implications, the theory suggests that it is foolish to check one’s stock portfolio frequently, since the predominance of pain experienced in the stock market will most likely lead to excessive and possibly self-defeating caution.
This new school of thought did not get its first major public airing until 1985, in a conference at the University of Chicago Graduate School of Business, a bastion of traditional economics. Kahneman’s public reputation rested heavily on his 2011 book “Thinking, Fast and Slow”, which appeared on bestseller lists in science and business. The book presented a comprehensive view of the mind as containing two systems, one fast and intuitive, the other slow and more rational. It offered advice for making better decisions, starting with: “Recognise the signs that you are a cognitive minefield”.
Kahneman propagated his findings with an appealing writing style, using illustrative vignettes with which even lay readers could engage. Shane Frederick, a professor at the Yale School of Management and a Kahneman protege, said in 2016 that Kahneman had “helped transform economics into a true behavioural science rather than a mere mathematical exercise in outlining the logical entailments of a set of often wildly untenable assumptions”.
Kahneman was born on March 5, 1934, in Tel Aviv, where his mother was visiting relatives. The family lived in France, having emigrated there from Lithuania. His father, a Jewish chemist, was arrested because of his religion during WWII, then released. After the war, the family moved to then British-controlled Palestine. Kahneman received a bachelor’s degree in psychology from Hebrew University in Jerusalem in 1954. Later that year, he joined the Israel Defence Forces, where he was assigned to the psychology branch and put in charge of evaluating recruits. He received a Ph.D. from the University of California at Berkeley in 1961 and returned to the Hebrew University to teach psychology. In 1969, he met Tversky, his collaborator for over a decade in his Nobel Prize-winning work. Economists say Tversky would have shared the prize had he not died in 1996.
Kahneman, who was long associated with Princeton University, employed his training as a psychologist to advance what came to be called behavioural economics.The work, done largely in the 1970s, led to a rethinking of issues as far-flung as medical malpractice, international political negotiations and the evaluation of baseball talent, all of which he analysed, mostly in collaboration with Amos Tversky, a Stanford University cognitive psychologist who did groundbreaking work on human judgment and decision-making.
As opposed to traditional economics, which assumes that humans generally act in fully rational ways and that any exceptions tend to disappear as the stakes are raised, the behavioural school is based on exposing hard-wired mental biases that can warp judgment, often with counter-intuitive results. Kahneman delighted in pointing out and explaining what he called universal brain “kinks”. The most important of these, the behaviourists hold, is loss-aversion: Why, for example, does the loss of $100 hurt about twice as much as the gaining of $100 brings pleasure? Among its myriad implications, the theory suggests that it is foolish to check one’s stock portfolio frequently, since the predominance of pain experienced in the stock market will most likely lead to excessive and possibly self-defeating caution.
This new school of thought did not get its first major public airing until 1985, in a conference at the University of Chicago Graduate School of Business, a bastion of traditional economics. Kahneman’s public reputation rested heavily on his 2011 book “Thinking, Fast and Slow”, which appeared on bestseller lists in science and business. The book presented a comprehensive view of the mind as containing two systems, one fast and intuitive, the other slow and more rational. It offered advice for making better decisions, starting with: “Recognise the signs that you are a cognitive minefield”.
Kahneman propagated his findings with an appealing writing style, using illustrative vignettes with which even lay readers could engage. Shane Frederick, a professor at the Yale School of Management and a Kahneman protege, said in 2016 that Kahneman had “helped transform economics into a true behavioural science rather than a mere mathematical exercise in outlining the logical entailments of a set of often wildly untenable assumptions”.
Kahneman was born on March 5, 1934, in Tel Aviv, where his mother was visiting relatives. The family lived in France, having emigrated there from Lithuania. His father, a Jewish chemist, was arrested because of his religion during WWII, then released. After the war, the family moved to then British-controlled Palestine. Kahneman received a bachelor’s degree in psychology from Hebrew University in Jerusalem in 1954. Later that year, he joined the Israel Defence Forces, where he was assigned to the psychology branch and put in charge of evaluating recruits. He received a Ph.D. from the University of California at Berkeley in 1961 and returned to the Hebrew University to teach psychology. In 1969, he met Tversky, his collaborator for over a decade in his Nobel Prize-winning work. Economists say Tversky would have shared the prize had he not died in 1996.