Dr. Daniel Kahneman, winner of the 2002 Nobel Prize in economics, joins us to discuss his book, Thinking, Fast and Slow.
In this video segment, Kahneman explains how his work in psychology and behavioral economics has affected his own life, and the life lessons he feels it offers to all of us. The full version of the interview can be watched here. A full transcript follows the video.
Morgan Housel: You've also written about that we want our experts and our leaders to be optimistic. We would rather they be optimistic than realistic, which sounds crazy. Why is that?
Daniel Kahneman: We tend to take people, to a very large extent, as how they present themselves. If people are assertive and confident, we trust them. Sometimes we trust them more than we should.
We have a special taste in leaders. I think that, by and large, people like leaders who are very decisive and quick and not too deliberative, not too slow. We like people to be optimistic, and we like them to be confident.
The idea of leadership that admittedly doesn't know what it's doing, you don't want that.
Morgan: How has learning all this affected you, personally? Do you view the news differently? Do you look at money and politics differently? How has it changed your behavior?
Kahneman: It really is hard to tell. I've been studying that stuff for so long. I don't know that it's changed things fundamentally for me. I do have that deep sense that I don't understand anything, or very, very little, and that certainly I cannot forecast anything beyond a fairly short horizon.
That I'm clearer about than I think I was. I'm also a pessimist, but I always was, so that's genetic.
Morgan: This hasn't made you more pessimistic, though?
Kahneman: No, you couldn't be more pessimistic than my mother.
Morgan: To put it in a practical sense, what are some things that I can do, and everyone else can do to help live a better, more fulfilling life based on some of the stuff that you have found?
Kahneman: I would say there are a number of things, actually, that you can do.
One of them is, we do tend to neglect our Experiencing Self. I think we do too much to build up a resume, and I don't mean that in a narrow way. The resume, what I mean by that, is each of us has a story, has a narrative; the narrative of our life. It's our prized possession and we do a lot to keep it looking good. We may be doing too much for it.
There is also a matter of living, of living your life. There are decisions that you might make differently. For example, in the life-work balance, there are decisions you might make differently if you are thinking of the Experiencing Self and not only of accomplishments and goals, and things like that.