A book I’m reading now: Thinking, Fast and Slow

A book I’m reading now: Thinking, Fast and Slow

I’ve generally moved writing book reviews to my

Goodreads feed

but this is a case where I think the book has a lot of bearing on topics we discuss here. I’d go so far as to say it is one of the most important books I’ve ever read…although it tells you why it won’t have as much impact on you as  it might.😉

It’s

Thinking, Fast and Slow (at AmazonSmile: benefit a non-profit of your choice by shopping*)

by Daniel Kahneman, who won the Nobel Prize for economics.

This is not really a book about economics, though.

It’s about how you (and other people) think.

I have to say, I read quite a few books like this. This one is not only largely counter-intuitive, it’s backed up by science. I love when the author writes an exercise to prove something…and then (largely accurately) tells me how I felt doing it!

I’m 53% through it, and there have already been several concepts that may change my life.

As many of you know, I’m a trainer. I also do process improvement.

Let me give you one example of something that shows that a lot of what we do at work may not be doing what we think (in the process improvement part).

Some of you will know this, but it is “regression to the mean”.

Here’s the basic idea:

Let’s say that there is something that you are doing which has a significant “luck” element. We’ll call it “luck”, but let’s consider it something that can randomly help you or hurt you (like…the wind when you are playing golf).

We’ll say that the task is 25% dependent on luck (which is lower than is often the case).

I’ll propose a task: getting to work on time. 75% of that is controllable by the employee…leaving on time, knowing the route, having the car fueled up, and so on. 25% of it is just luck: traffic accidents, road closures…again, that’s probably a small percentage.

You look at one month’s worth of data.

You identify a group that is 100% on time, and a group that is 50% on time.

You give the people who are 100% on time a bonus, to reward their good behavior.

The 50% group? They get remedial training.

The next time you measure that 50% group, you see that they are on time 75% of the time! What a great improvement, right?

Not necessarily…

Both of those groups could have already been performing their part of the task perfectly…75% success was due to that.

Then, there was that “luck” 25%.

The people you helped? They just happened to be incredibly unlucky during that month.

The 100% group? They might have been incredibly lucky.

You are going to feel like you helped the poor group…but if you looked at the good group, they probably also slipped towards 75%. They just aren’t going to be that incredibly lucky two months in a row.

The lucky people and unlucky people both move back towards the middle (because their luck doesn’t stay as extreme)…that’s what “regression to the mean” indicates.

I’m sure a lot of consultants make big bucks because of regression to the mean. What company would ask them to measure the 100% crowd again?  They just want them to concentrate on the “remedial” group.

That’s just one idea.

Another really important one, which affects how people feel about Kindle updates, is that people feel loss a lot more than they do gain.

Economists tend to expect people to act rationally. If you can profit by doing something, they expect you to do it.

That’s not the way people actually behave.

Suppose I gave you a choice.

You can flip a coin: heads, you pay me $10. Tails, I pay you $10.01.

The odds are, you don’t want that deal. The loss feels much worse than the one penny gain.

Logically, you should want to flip the coin, right? You could come out ahead…it’s just as likely as you losing the $10.

What if it was heads you pay me $10, tails, I pay you $20?

Would that do it?

It would be much more likely to do it for most people.

The odds, though, are still the same of winning or losing as the first offer.

What if it was $10 loss possibility, and $100 winning opportunity?

Another big thing Kahneman is talking about is reference points…you judge the value of something by your own history, not just as an isolated element.

If I gave you a thousand dollars, and then offered the first bet, you’d be much more likely to take it.

Why?

Because you already think you came out $1,000 ahead. Your reference point for the deal is where you were before we started dealing, not after the $1,000.

There is a lot, lot more to this!

What I’m going to do is recommend the book to you…both to you, and for you to give as a gift.

While I tend to get something valuable out of every book I read, I rarely do that.

I will say that the book took a while to get into more practical things. There is a lot of necessary explanation about the “two systems” of thought that you have…and I’ve found myself referring to that idea just in day to day conversations!

I’m writing about this now because, well, you might want to read it before I finish it.🙂

One more thing: at time of writing, it is $2.99 in the USA Kindle store! That might not last.

If you have read it (or do read it), I’d be interested to know what you think. This is non-fiction, so spoilers aren’t like they are in fiction.🙂

New! Try the free ILMK magazine at Flipboard!

* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) 

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.

9 Responses to “A book I’m reading now: Thinking, Fast and Slow”

  1. Amy Says:

    Thanks for the tip on the good book and the good price, Bufo. One of the reviewers on Amazon from when the book was first published says that the kindle version has so much messed up formatting that the exercises can’t be followed. Have they corrected that problem?

    • Bufo Calvin Says:

      Thanks for writing, Amy!

      I haven’t run into any real issues, but it is worth noting two things. I am reading this on a Kindle Fire HDX which has a nice zoom for images. I also am listening to it with text to speech quite often so I don’t always see the diagrams.

      • Lady Galaxy Says:

        I bought this book awhile back but ended up deleting it because it was hard to read on my K3 running Version 3.3. I meant to try it on my K3 running the most recent software version but then I forgot about it. After reading your review, I finally downloaded it to the K3 running version 3.4. I sampled chapter 8. I discovered that sometimes the graphics accompanying text appeared at the end of the explanations and at other times at the end. I don’t know if that was the way they appear in the print version, but as a visual person I would have preferred to see the graphic before reading the explanation.

        Another problem I noticed is that a lot of information is on charts which get partially cut off if you are reading in larger font sizes. You can click on the chart to make it fully visible, but the print is so small that, for me at least, it isn’t readable. There is a chart in chapter 9 with headings of “Target Question” and “Heuristic Questions.” Only it doesn’t appear to be a chart. It looks like mismashed text. What you see on the page is:

        “How much would How much
        you contribute to emotion do I
        save an feel when I”

        I don’t know how much you are allowed to quote without violating copyright, so I’ll stop here. I think you get the picture. If you don’t realize it’s a chart, you’re left scratching your head and thinking what the?

        It’s much more readable on my “Kindle for Mac” app. It’s also more readable in landscape view on a K3, but I find that awkward because the page turning levers are not in a comfortable spot when reading sideways.

        Of course, as always, my complaint about the formatting in K3 version 3.4 is that the text appears in full page justification, which means there are often gaps of as much as an inch between words, which makes it hard for my eyes to track the text. That’s why I have refused to manually update my other K3 and why I make sure that K3 never goes anywhere it might encounter wi-fi which goes back to your mention that Kindle upgrades are often perceived as downgrades when they change a feature a person really likes, such as left justification!

        Please feel free to edit if this post is too long!

      • Bufo Calvin Says:

        Thanks for writing, Lady!

        I’m sure that’s useful for people to read!

        I’m going to try to take a look at it on our Paperwhite 2…just haven’t had a chance yet.

        As to “how much” and copyright…nobody knows.🙂 That’s an area where the Copyright Office is quite fuzzy, and that’s often the case with them.

  2. T. Says:

    Thanks! I’ve thought about purchasing this book before but your review made me finally buy it. I’m looking forward to reading it.

  3. Amy Says:

    I’ve checked it out on both my Paperwhite 1 and my old Kindle DX (I still love its big screen and clear font). The figure in Ch 8 does come after the explanation in both devices, but I skimmed other spots and the figures seem perfectly legible and formatted okay. It does read much better in the bigger screen of the DX. Columns stay as columns, for example. It looks like they must have fixed the old formatting problems, at least on these devices.

    Thanks for the tip on the book, Bufo. It looks really interesting.

    • Bufo Calvin Says:

      Thanks for writing, Amy!

      Thanks for that field report!🙂

      I am finding the book fascinating…but I do like both data and the way that people think, and some people don’t want to know about either.😉

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