Good Life Project - How to Make Better Decisions | Daniel Kahneman

Episode Date: March 9, 2023

So, you think you’re making good decisions, but are you really? And, what about the hidden scripts and noisy inputs that affect nearly every decision you make, without you being aware of any of it? How do we make better decisions?Today's guest can help. Daniel Kahneman is one of the most influential psychologists and thinkers in modern history, his ideas have literally changed the way we live, work, relate, see the world, make decisions, and build solutions, organizations, industries, societies, and lives. Best known for his remarkable work with Amos Tversky, which explores how we reason and make decisions, his research was, in no small way, seminal in the creation of the field of behavioral economics. He’s been awarded the Nobel Prize, as well as the Presidential Medal of Freedom. His New York Times best-selling book, Thinking, Fast and Slow, has sold more than seven million copies worldwide. And his most recent book, Noise: A Flaw in Human Judgment, explores how unrecognized, systemic influences affect our decisions in ways, both rational and not, that remain completely hidden to us and often lead to profound unfairness and inequality. We talk about key ideas from his research spanning more than 6 decades. But, we also dive deep into the life experiences that shaped him. Fascinatingly, Kahmeman’s curiosity about humans and all our complexities was sparked as a young Jew living with his family in Nazi-occupied France during World War II, and running for years, before fleeing. His sometimes harrowing experiences triggered questions and curiosities that powerfully influenced what would become a lifelong devotion to understand why we do the things we do.We explore those early experiences, and he shares where some of the seeds were first planted that would later grow into the body of research and work that have changed the world. You can find Daniel at: Princeton University | The Nobel PrizeIf you LOVED this episode you’ll also love the conversations we had with Charles Duhigg about how unknown influences and habit and ritual effect our behavior.Check out our offerings & partners: My New Book SparkedMy New Podcast SPARKED. To submit your “moment & question” for consideration to be on the show go to sparketype.com/submit. Visit Our Sponsor Page For Great Resources & Discount Codes Hosted on Acast. See acast.com/privacy for more information.

So we all like to think that we are making good decisions, but are we really? How do we even know? Do you trust your gut or lean on your analytical mind? And what about those hidden scripts and noisy inputs that affect nearly every decision we make without us even being aware of any of it? How do we make better decisions? Well, today's guest, Daniel Kahneman, is one of the most influential psychologists and thinkers in modern history. His ideas have literally changed the way we live and work and relate, see the world,

make decisions, and build solutions, organizations, industries, societies, and lives. His work has profoundly affected my life and the way that I step into being a creator and somebody who contributes to the world. Often cited for his remarkable work with Amos Tversky, which explores how we reason and make decisions. His research was in no small way seminal in the creation of the field of behavioral economics. He has been awarded the Nobel Prize as well as the Presidential Medal of Freedom. Kahneman is a professor emeritus of psychology and public affairs at Princeton University, and he holds honorary degrees from Harvard, Yale, Cambridge, the Sorbonne, and others.

His New York Times bestselling book, Thinking Fast and Slow, it sold more than 7 million copies worldwide. And his more recent book, Noise, A Flaw in Human Judgment, it explores how unrecognized systemic influences affect our decisions in ways both rational and not that remain completely hidden to us and often lead to profound unfairness and inequality. We talk about key ideas from his research spanning more than six decades, but we also dive into the life experiences that shaped him. Fascinatingly, Kahneman's curiosity about humans and all our complexities and his realization that we are all wildly complex people was sparked as a young Jew living with his family in Nazi occupied France during World War II and running for years before fleeing, his sometimes harrowing experiences,

they triggered questions and curiosities that powerfully influenced what would become a lifelong devotion to understand why we do the things we do. We explore those early experiences and he shares where some of the seeds were really first planted that would later grow into the body of research and work that have changed the lives of so many. So excited to share this conversation with you. I'm Jonathan Fields, and this is Good Life Project. The Apple Watch Series 10 is here. It has the biggest display ever.

It's also the thinnest Apple Watch ever, making it even more comfortable on your wrist, whether you're running, swimming, or sleeping. And it's the fastest-charging Apple Watch, Just really excited to dive in, excited to, of course, explore some of the ideas and the concepts from the latest book, Noise, but also some of the broader moments and ideas. I tend to be somebody who is just deeply fascinated by the moments and experiences, the seasons of a person's life that's really affected the choices that they make, who they become. So I'm deeply fascinated at looking at your history.

From what I understand, folks were Lithuanian Jews who came to Paris in the early 20s. You're raised there in the early 30s. And then, of course, the German occupation changes everything. I've also heard you describe certainly the early days in the household as there were a lot of stories, a lot of gossips. You've said of your mom, most of her stories were touched by irony and they all had two sides or more. It sounds like you were raised in a eight years old, early in the occupation, walking home from a friend's house that has stayed with you. Would you share that story?

Well, yes. Although, you know, when I tell that story, people exaggerate it. It's important. You know, select a story and people think, oh, that must have changed your mind. But it was during the occupation. I was wearing a yellow star. I was playing with a friend, and I stayed on too late, and I was after the curfew for Jews. So I turned my sweater inside out, and I walked home. And fairly near home, I actually went back a few years ago just to see if the place is as I remembered it,

and it is. I saw a German soldier walking towards me, and he was wearing a black uniform, which is a DSS uniform, worst of the worst, but there was nothing to do with March on. And so I walked down, and he beckoned me. He called me, and I approached him, and he picked me up. And I was really quite worried that he would see inside my sweater,

but he didn't. And he let me down and took out his wallet and showed me a picture of a little boy and gave me some money. And then we went our separate ways. And I described that as a story about how complicated human nature is. I couldn't realize really the irony of the situation. I was certain. Yeah.

I mean, it also, it speaks to a certain extent to you reflecting on that moment. But I'm also curious because, you know, we're talking, this is something that is so early in your life and that still feels like it's relatively clear in your memory. It's one of those stories that stayed with you. I wonder if you reflect on that as a major story or just one of many, and that happens to be one. No, I mean, you know, you pick up a story, I mean, you know, this happened like 75 years ago,

more than 80 years ago, actually. So we pick a story, it becomes a sort of a legend. And so what you remember is the story as you've told it. I have a visual image, but I don't even, I wasn't sure

whether I was reconstructing the visual image or constructing it. And so a couple of years ago when we were in Paris, I went back to where we used to live and I found the exact place. And it really looks exactly as it did in 1941. And so I was pretty sure that, yes, I do have a vivid memory of that incident. And, you know, it was quite extreme, of course. It was my only encounter with a NISS soldier.

Yeah, I would imagine that would stay with you. Curious, when you went back there fairly recently, beyond just cognitively saying, well, this looks the same, this looks the same, it looks similar, and I can kind of remember the scene, whether you had any kind of somatic experience recalling it? No, I don't think so. You know, nothing extreme. I feel quite distant from that episode. But in a way, I don't think I was terrified during the episode. I was worried. I don't think it was a moment of terror, and I don't understand why, actually, but it wasn't. And almost immediately, I think it became

very interesting, you know, that this is what happened, that that's a soldier, and he's probably a murderer, and he's a little boy. Yeah. I know from there, shortly after that, your family ends up sort of like moving around to different places. Your dad passes, D-Day happens. And shortly after that, you end up in what would soon after become Israel in a very different academic setting also. I know you've described yourself as a very precocious kid, but maybe not quite fitting in earlier in life. But it sounds like once you were settled into Israel, that it was a different experience. You started to actually find mentors and a culture and a community that was more fostering your curiosity and the depth of your curiosity. You know, it's actually different, I think. In a way, I was more of an intellectual in France. What happened was, when we came to Israel, I stayed a grade. I repeated a grade, the eighth grade. I had been sort of advanced in weaker, which I have been all my life.

So the thing that really stands out is that it was just a better experience to be an Israeli than to be a Jew in France, and a better experience to be me in Israel than to be me in France, a lot better. In part, you know, it was because being an Israeli was better than being a Jew. You know, being a Jew, experiencing the war the way I had after the war, I was the only one who thought about it. Because our mentality was the mentality of hunted rabbits. And, you know, when we went to Israel, my sister joined the underground, I think, within weeks and all of life was different. And in some sense, that was a very important part of my experience. Yeah. I mean, how could it not be, right? You know, I'm curious also when you describe yourself as hunted rabbits, you know, I can't imagine it could be anything other than hypervigilance. That state tends to stay with people for very long times until they do something to integrate it or process it. Did you feel like, at least for the next years in life, even in Israel, you were living in that state?

No, not really. I mean, the main thing that I felt was the difference. I mean, you know, I could tell a lot of stories about those years, but the thing that actually affected me most was not the incident with the Germans. It was a different period. When we were in southern France on the Riviera, and we had had a house in Gironic Park, and my father was a chemist for O.A. Alky. He was head of research in holiday branches. And I needed a lab downstairs in Groningen. Then the Germans arrived. It became too dangerous to stay there. And we moved to a village some 10, 15 miles away.

And there we had a house. And I never left the house, I think, almost for an entire year. I didn't go to school because it was too dangerous. But we could see, my mother and I, we could see the bus station. And my father worked still at his lab, and he would come, and we would wait for him. And we were never sure he would make it. That was a very deep experience. And during that period, I was praying to God, I remember. And I was, you know, this was 1943, and the war in Russia,

and a lot of things were going on. And I was telling God that I know that he must be extremely busy, but I was asking for just one more day. So a day at a time, I thought that was a reasonable request. So that was, you know, a formative experience. At the same time, I'm hesitant to tell those stories because compared to what happened to people who were actually caught by the Germans,

this is nothing. You know, this was just being afraid and being worried. to people who were actually caught by the Germans. This is nothing. This was just being afraid and being worried. It wasn't horrible. It was just bad. Yeah, but I think we get into the danger of telling the comparative suffering stories, which it never really leads to a great place. But nevertheless, these are moments that I think shape us even in small

ways in the way that we think about ourselves and the world around us. It sounds like fairly late in your teens, really start to realize that you have this deep fascination with the human condition, with people, with psychology, with how and why they are in the world. And it sounds like by the time you actually end up in university, you already know that maybe you don't know what shape it will eventually take. But you know that this is a sense of where you want to study and focus your curiosity. I think I knew that earlier, actually. Well, I'm telling you lots of stories. I mean, you've brought me to think about the war.

And so when I was 11, we were living in Mierle-Morgin in the center of France, and we went to Paris, my mother and I. It was around Christmas time, and it was during the German counterattack. I remember the last day, German counterattack, Estonian. And I wrote an essay, and the essay was about religion, and it was about the experience of faith. And very pretentious, you know, that, you know, I was quoting Pascal that faith is God made sensible to the heart. And I said, how right, you know, as an 11-year-old, commenting on Pascal. And then I went on to say that the trappings of cathedrals and churches and the organ were actually all meant

to revive that sense of awe, and that those were artificial means of creating an emotion that resembled the emotion of being faced, really. That's a psychologist. So I was a psychologist at age 11, and I probably knew that. Yeah, it's amazing how early seeds get planted. I mean, it is amazing.

Last night, we were in the home of a very well-known film director. And he showed us Polaroid pictures that he had taken when he was eight of scenes with four soldiers, which are really realistic scenes of war. And this little boy, age eight, taking Polaroid pictures, became a first-rate visual artist and creative of sea. So yes, there are people with vocations. Yeah, I'm always fascinated by that, when that touches down, and how it seems to be the aspiration for so many. And yet it feels like so many also struggle to find that, if ever. I remember sitting down a couple of years back with Milton Glaser, who was this incredible designer and him sharing that he knew what he was going to do when he was

six years old. He didn't know the shape that would take, but he knew it was going to be art. And he becomes this iconic designer who's done everything from the iHeartNY logo to creating New York Magazine and all these different things. And I was talking to him in his similar age as you now. And it's the moment that he realized it when he was five or six years old, had stayed with them. And I often think that that's so rare. But when you do find that and you can just feed that for the rest of your life. It's a bit of a gift. Yeah. One thing I knew about myself even earlier was that I would be a professor because I was a pompous little boy, I think.

And I spoke with, well, I used long words. And so people called me the little professor. And I really believed that that was my future. And I always believed that. Ah, that's funny. The Apple Watch Series 10 is here. It has the biggest display ever. It's also the thinnest Apple Watch ever,

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So you end up at Hebrew U. Right around that time also, as often happens, well, I guess always happened in Israel, spending some time in the IDL, but really more with a psychological focus and running interesting experiments. And then you end up in Berkeley for a chunk of time and then some different locations in the U.S. studying, heading back to Hebrew U. And I guess it was around that time you and Amos Tversky start to come in contact with each other. Were you teaching already at that time? Yeah. I mean, I finished my degree in 61.

Amos was younger by three years, and he joined a few years later. And we started collaborating in 1960. So I think I was already a full professor at that point, but I was 35 and he was 32. And I have lots of stories of that. One of the stories that I've heard, I'm curious if it's true or if it's more legend, is that in the very early days, you invited him to give a guest lecture in one of your classes where he presented his ideas on rationality, and you sort of summarily took him down for those ideas. Yeah, I think that's a true story.

That actually happened. I mean, he was presenting research that was assuming rationality as a given. He wasn't really questioning it,. It wasn't even his research. It was research by one of his professors at Michigan that he was describing because it was interesting. And I didn't believe a word of it. And we had a very

Israeli conversation in front of the students, and then we went on and went on with that conversation. We met Friday. We had lunch at a place where academics and intellectuals at Jerusalem used to meet, a well-known restaurant. And that was really the beginning of the most important friendship and relationship I've had.

Yeah, I mean, from there, it sounds like, you know, you developed this profound friendship and also professional collaboration that goes on for decades, leading to some incredible work around prospect theory, loss aversion, framing, which has been so well documented and shared and built upon by so many others. And, you know, the way that I've heard you describe the relationship was almost like you together were, it's like you would finish your sentences. It was this sort of seamless thought process. And this went on for an incredible amount of time until he, I guess it was in 96, at a young age, I think it was in his

late 50s, I guess, had cancer. He was 69 when she died. But our collaboration didn't last until then, our active collaboration. Our best years, we had, I would say, 12 or 13, 12 very, very good years, where basically our work was the center of our lives and our friendship was at the center of our lives. And that lasted 12 years. And by then, by the end of that period, he was at the center of our lives. And that lasted 12 years. And by then, by the end of that period, he was at Stanford and I was at Canada. And things became more difficult. And we couldn't really work as well as we had wished. So our collaboration petered out much to both, you know, we regretted it very much, I think, to the end of his life.

And I've always regretted it. I know in some words that you offered in reflecting, you wrote, Amos was the freest person I have known. And he was able to be free because he was also one of the most disciplined. No, he wasn't rigid at all, but he didn't do anything that he didn't want to do. That was the sense. And you really couldn't make him do things that he didn't want to do. It was almost a joke.

That is a remark I made at his funeral. And I knew that everybody recognized that you just couldn't make him do anything he didn't really want to do. There was one exception that I saw, recognize that you just could make still anything. He didn't really want to do thick. There was one exception that I saw, and it was quite funny. When we were together at some big-time finance person in New York, and Amos was on his way to Israel,

that man gave him a whole lot of things to take to Israel, to his family. And this really wasn't Amos' style. You know, he traveled light and elegantly and so on. There he was with all sorts of packages, ridiculous packages to take. And that he yielded because of the embarrassment. But it's actually the only story of its kind that I remember about him, when he did something he didn't want to do. That's pretty funny. You, of course, as you describe, you were intensely collaborating for a dozen or so years. And there were a number of other powerful collaborations that you've had,

you know, Richard Thaler, Cass Sunstein, and a number of others, especially sort of really started to blend the world of economics and psychology. It seems like there is an importance of collaboration in the way that you step into all the research that you're doing rather than individual or solo thought. And I'm curious about that mode for you. I think all my work has been collaborative. I've done a few things. It's been collaborative in different ways. That is, with Amos and with Dick Thaler, those were equal collaborations. In many other collaborations,

I was obviously senior and quite dictatorial in some ways, but it was collaborative and enormously enjoyable. And to have done that really was my night. The only thing I did alone, and it was a very lonely experience, was writing Thinking Fast and Slow. I started that. I intended to collaborate with Jason Swyde, one of the journalists for the Wall Street Journal.

And we thought we could do the book together, but it turned out we couldn't because I'm sort of impossible to work with. And I ended up very lonely finishing the book alone. But that's the main experience that I remember is doing something by myself and it wasn't fun. It's interesting, right? It seems like part of your work is about how can I get closer to something that even remotely resembles objective truth. But part of it also is about the experience that you're having along the way. It seems like that matters to you. Oh, enormously.

I mean, it's true for academics, for many academics. Our work is intensely enjoyable. People who enjoy thinking. And some people get rewarded, but other people don't get rewarded. And the lucky ones get rewarded for something that they intensely enjoy doing. And that has been my life.

My life has been extraordinary. And it is really luck. I've thought about that deeply. It's not. There are many people with equal gifts and, you know, same talent, the same perseverance. It was just, I've been lucky along the way in my choice of friends and my choice of problems. And that's made it a good run. It's interesting. I have an interesting role model for this in my own life as well.

My dad studied human learning process. He ran his own lab at CUNY University in New York for, I want to say, 45, 50 years. He had one job and he was somebody who worked intensely, lived in the world of ideas and academia. And to this day, even though I think he's probably retired a decade now, he's still every single day consumed deep into reanalyzing the research. He's still publishing with collaborators that he had who still are actively running labs. And it's interesting to be able to see that. I was able to see it from a very young age, somebody who's just so deeply immersed in that and almost where you can lose yourself in the pursuit of questions for decades and decades and decades. And it's hard, but also intensely joyful.

And the collaborations make it fun. I mean, I recognize that most of my collaborators, those I enjoy the most, have a fairly good sense of humor, and that really helps. It helped them too, because I'm part of work with. You referenced this book, Thinking Fast and Slow, as something that was both lonely, but also this, I guess, came out in 2011, it would have been, right? If I have my timing right. You did a conversation with David Brooks at the CUNY Theater in New York, where I happened to be in the audience during that conversation, which was a lot of fun, sort of like having you guys going at each other with questions and curiosities and challenging. That book, I think for anybody who wasn't familiar with your work beforehand, really

exploded into the mainstream and introduced this notion, as you say, a very simplified notion of the fact that we have almost these two different ways of thinking, almost embodied in our brain, system one, system two, one being more slow and analytical and resource intensive and the other faster and more intuitive. I'm curious, that book has hit so big and to this day, we're having this conversation more than a decade later. It's still, from the outside looking in, appears to be selling at an astonishing level. Do you ever wonder what it was about this idea, the ideas that you introduced in it? Well, the distinction between system one and system two is self-mind.

And, you know, ideas of that kind had been in psychology for a long time, decades, actually. The term System 1 and System 2 had been proposed by Keith Stanovich, psychologist, Toronto. And what I did that worked is I turned them into characters. And the first song in Chic, they are not characters.

And in Sunset, they're not systems, really. But it turns out that our mind is much better at dealing with agents than at dealing with lists or categories. And so the proper psychological way of talking about this, and that's already a simplification. There are two types of thinking, slow thinking and fast thinking. And then you can list their properties, you can list the kinds of mechanisms that are involved in them. When you turn that from categories into agents, it becomes much simpler, much more intuitive. And this is because our mind is specialized for constructing images of agents. They have personalities, they have desires, they have traits, they interact with each other, they generate stories. And so when you want to say

something, turning it into a story and turning categories into systems that interact with each other. That turned out to scandalize quite a few of my friends. It lost me quite a few points with some people, but it really worked sort of didactically better than I thought it would. You know, I didn't think Thinking Fast and Slow was going to do well. No kidding. Oh, absolutely not. I mean, I really didn't like it. I was almost hoping it wouldn't sell because it would be embarrassing. I mean, that was quite neurotic about it. and then write books that in some way try and take really deep thought and complex topics and

a lot of academic research and distill them into something that feels consumable, digestible by lay people and useful, meaningful to them. And almost 201, every person who I've talked to who's done that and then succeeded at a large scale at doing it, has gotten a very high level of pushback from within the academic colleagues, almost saying like, to do this is to bastardize everything that we're about. And I'm always fascinated by that phenomenon. Yeah. I mean, I knew that when I was writing. I actually, I wanted to write so as not to lose the respect of my colleagues and at the same time communicate with the public. And I had the sense that I was failing at both.

I mean, it was really hard to do. But it's true that communicating with the public makes you suspect. So there are a few people who do that and they'll suspect to some extent. And in my case, it wasn't so much that I wasn't allowed to do it. You are allowed to speak to the public after you have spoken to your community and have been accepted by your community. So when the real cardinal sin in academia is, I think, one of the cardinal sins is to write a book prematurely. Write a book before you're well-known and you're disciplined. If you write a book for the public, this rubs people off. I wrote fairly late. I was in my

70s when I wrote Thinking Fast and Slow. So I had the right to do that. I didn't have the right to simplify and to put in living systems inside the brain. That was too much. It's interesting. You talk about the cardinal sin. When you look at the world of social science over the last decade or so, I feel like there has been a real change in the way, in the rigor, in the way that people are looking at what is publishable, at really what is replicable. Even when Thinking Fast and Slow came out, so much about what we held as, well, this is just on, it's true. There's great data around this. There's great research. And now a little more than a decade later, we know so much of it actually isn't anymore. But it's not that people were trying to trick the system. It's just we've evolved in the way that we're examining things, I feel like.

This is a fascinating problem that I spent a lot of time with in the last 10 years. And, you know, I publicly retracted one of the chapters of Thinking Thus and So because it was built on research, the priming research, which I love. And I really believed. And I believed it because it was counterintuitive, but it had been published in good journals. And I even had the terrible phrase that's been brought back to me, that you don't have the right not to believe because it is published. So belief is not optional. And I was

completely wrong. Now, it turns out several things happened, and I was really quite involved in this replication crisis, almost by accident. I became involved because I believed in the priming stuff, and the priming stuff, I thought it was quite central to the story at all. Although the story, I think, hangs together without that particular break, but I thought that it was supportive. I thought it was, and people were failing to replicate. And so I wrote a letter, which I did not intend to become public. I wrote a letter to people in the primary research community, telling them that I used the phrase, a train wreck as you made, that, you know,

there is a replication process, you'd better get your act together and replicate yourselves because other people are not going to succeed replicating you. That was what I believed at the time. And a week later, it was leaked to Nature and published under the, well, the title was Nobel Laureate Tells Social Psychologists to Clean Up the Iraq. And I lost friends that day. I mean, there are many people who haven't spoken to me since. They were so upset.

And the mere fact that I had intended to do it, you know, actually there'd been stories written about this, that I intended to destroy social psychology. And I wrote that letter with that intent in mind. I mean, it's really quite curious what's happened. And what's happened to the topic itself is priming research is really very difficult.

Replicate, I mean, a lot of things just sound so. And people did not change their mind. The people relieved in that stuff that they had done still believe in it, and they still think that they've been treated very unfairly. But what has happened is graduate students will not touch those topics because they are toxic. So no graduate student would bet their career on it. So the topic in some sense has died without people changing their mind.

And that's a very interesting social process that I find fascinating. Yeah, I mean, it seems like it would be something that would be prime to really go deeper and explore and flesh out, like, what is really happening here? What is real and what is not? And yet it's almost because of the power dynamics and the politics around it, people have walked away from it. Well, they walked away because it was hard to replicate. I mean, there were,

and you know, there was a lot of ill feeling. I got a bit angry with people because I believed that they could replicate themselves. For me, the whole thing began when an old student of mine told me about a line of priming research that she didn't believe it, and she wanted to replicate it. And I told her, don't try to replicate it because you will fail. And I would fail if I tried, but I believe that they can replicate.

So I believe that there was sort of theater directorial talent involved in generally making people behave in that way that some social psychologists were good at and others, you know, people like me were not good at. So I believed they could replicate themselves and therefore that it was true. In fact, they couldn't, I think, replicate themselves very cleanly. And they were afraid of doing that. That's when I became estranged from that community. The Apple Watch Series 10 is here. It has the biggest display ever.

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Mayday, mayday. We've been compromised. The pilot's a hitman. I knew you were going to be fun. January 24th. Tell me how to fly this thing. Mark Wahlberg. You know what's the difference between me and you? You're going to die. Don't shoot him. We need him. Y'all need a pilot. Flight risk. As you sort of focused forward, you've done a lot of different types of work as well and the idea of like loss aversion and framing was was an earlier part of your work also um the idea of of bias that we're not aware of has been a part of the work and then you sent you really start just to spend time and this is the topic of your last book,

on this phenomenon that you call noise, which I think is fascinating because of how it affects us, both individually and then societally. When you use the phrase noise, what are you actually talking about? What I'm referring to is measurement. And we think of measurement, of judgment as measuring. That is, in measurement, you look at an object and you assign it a value on some scale. And this is really what we call judgment. You look at an object and you assign it a value on some scale. Except that in judgment, the measuring instrument is not the ruler.

It's the human mind. But basically, the theory of measurement applies to turbulence. And in the theory of measurement, of course, it's a theory of error. And when you classify errors, there are those two major types of error. There is bias and there is loss. And bias is an average deviation. So if your scale is off and systematically, you know, adds five pounds to the weight of people, that's a bias. Noise is a completely different phenomenon. It's variability. And so if you have a cheap

levering, you know, cheap scaling a bathroom, the weight that it would register depends on how you stand on it. So that when you get off and you get back on, you don't get the same measure. That's noise. And so about less than 10 years ago, I became very interested in that. When I discovered that as professionals, in this case in an insurance company underwriters, actually when you presented them with actual cases and you asked them to put a dollar value on it, they did not agree among themselves. And so it appeared as if the insurance company,

which in print should be speaking in one voice, but it speaks through underwriters, and it doesn't speak in one voice because the it speaks through underwriters, and it doesn't speak in one voice because the underwriters don't agree about themselves. And yet, the insurance company did not know that it had that problem. That's what became so interesting to me about Moors, is that here they were, I mean, I can put a number on this. One of the things that I ask executives in the company, and anybody who listens will have a thought on that, you take two underwriters in a well-run company, and they both put, and you take a lot of underwriters, you pick two at random,

by how much do you expect them to differ in percentage? And people think that it's about 10%. That number is actually very common. 10% seems reasonable for people to disagree. The truth is closer to 50%. So there's five times as much disagreement as we expect. That's what makes it interesting. And that there is that huge variability, and people are not aware of it and do not recognize it as a problem in many cases. Yeah. And the human impact of this is potentially vast, both on a systems level, but also on an individual level.

You talk about the notion of unrelated and unpredictable factors and how they influence judgments in ways that we're just not aware of. It's this wonderful example of, and I guess it was based on research that came out in 2003, a paper called Clouds Make Nerds Look Good. How the weather can literally affect the decision about whether somebody

gets into a university or not. Well, yes, because, you know, I'm thinking it's context dependent. So you alter the context. It affects our mood. It affects our mood. It affects the thing that we don't easily think about, good things or bad things.

And it's very difficult to control. I mean, it's impossible to control completely. And what is the most interesting part of the story of Noah's social emergency is something that we call patterns. And it's easiest to describe if you think of judges. So there's a huge amount of laws in sentence that present the same kind of case

to different judges. So to take an example in study with sort of vignettes of crimes, when you take a crime where the average sentence is seven years in prison and look at two judges selected at random, the difference between them is almost four years. So that's the lottery that the defendant faces, which is sort of mind-blowing. And where that comes from is in part from influences like the weather, in part from differences in severity. Some people are more severe, other people are more lean.

But the most interesting part is that judges have different tastes. That is, some of them, they take more seriously certain crimes than others. And some of them think that violence is dreadful. Others think that fraud against all people is dreadful. And so they do not rank the cases, their severity, in the same way. That's what we call pattern. It's systematic. Different individuals, if you will,

have different biases, and it's the variability of biases that people bring to the situation that creates noise. And what's fascinating about it is that people cannot be aware of it. And the reason, the deep reason they cannot be aware of it is that almost, the deep reason you cannot be aware of it

is that almost all of us, we think we see the world the way we do because that's the way it is. So, you know, we believe that the way we see the world is correct. And if we have that belief, psychologists leave us called naive realists, if we believe in naive realists, and I believe that you are, you know, I respect you, I like you, I think you're a reasonable person, I expect you to see the world much as I do. But in fact, you don't. And that's, to me, the dramatic story of noise,

is that people greatly underestimate the extent to which other people see the world differently from the way they do. And I mean within a family, because there are many mechanisms, social mechanisms, that prevent people from realizing how different they are from others. In the first place, we tend to converge immediately. So when people come out of the cinema, they may have very different opinions, but within a couple of minutes, they're converging. The people who are ecstatic about the film, when others are very critical of it,

they become less ecstatic, and others become less critical. And so there is that immediate convergence, and people are not even aware of the amount of initial variability. So that's the topic of knowledge. And as you can see, I find it exciting. I mean, it's really interesting.

It sounds like, tell me if this is right, that bias is generally what might happen in an individual context. One person has a certain orientation. They may or may not be aware of it. And it leads to a decision or an action and an outcome that reflects that bias. But when you take 10 of those people or a hundred or a thousand or 10,000 of those people, each with their own different bias and taking what would be in the exact same circumstance, the exact same set of facts, but landing on very different decisions and very different outcomes that when you look at the incredible

variability, you would think that rationally it should all be within this pretty small range of variability. But in fact, it's much more scattershot and it's almost impossible to try and make it more standardized or uniform. Yeah, that's the essential lesson, I think, of noise. On bias, I would say it's not only individual. For me, the bias is a shared thing. And both the word bias and the word noise are very difficult words because they're used all over the place. They're used for very different things.

So bias against ethnic categories or gender bias is a very different thing from cognitive biases. But biases are shared here. And one of the important differences between bias and noise is that bias is easily perceived as being causal. You can explain things by bias, but noise is not causal. It just happens. People are different from each other. But there is no easy way of explaining it. And when you look at a particular judgment,

it's very difficult to see it as an instance of noise, unless it's a complete outlier. And for outliers, we have that. But if it's within the normal distribution, we cannot tell apart what is noise and what is truth and what is bias. So here's the bigger question for me. Why is it important for us

to be able to actually understand these concepts, especially like noise in particular, if we focus on that? How does this affect us individually and communally? I think that in terms of society, and this is most obvious in the context of justice, noise is unfair. So in some sense, even in the insurance context, if I'm the writer, it's the premium that I'm going to be cited, quoted, depends on the underwriter I happen to, by complete chance, to interact with. There's an unfairness as well as an inefficiency.

And it's clearly costly for everybody when there is no it. Nor is it medicine. It's obviously a bad thing. And so when you look at systems, at social systems that depend on judgment, for example, the granting of patents, the hiring of people, the evaluation of workers, the grading of students, you know, there are many judgments that are made. And when you see how noisy they are, there's something unfair and really,

you would want to correct it. So noise is a bad thing, but we're not aware of it in many cases. Which brings the big question, of course, which is, is noise correctable? And if so, how? What are the big levers that might really help us reduce noise? Basically, disciplined thinking. I mean, when boldly disciplined thinking, it's breaking problems into components, judging those components independently of each other, making your basic judgments, your elementary judgments, as fact-based as possible and as independent of each other as possible. If you do that, and if you use a scale of judgments that people agree on, because judges

differ among themselves. I mean, judges disagree not only in how they see the crimes that they evaluate or the defendants that they evaluate. They do not even agree on the significance of the sentences. So some people view one year in prison as a much more severe punishment than others do. And unless you get some agreement on the use of the scare, as well as on the judgments that are made,

you're going to get noise. That's one of the sources of noise, is different usage of scares. So there are ways of disciplining thinking, and there are also risks. And the risk is that if you discipline thinking too much, it becomes bureaucratic and demoralizing. And so you really want to strike a balance when you try to reform the thinking process in an organization. We want to strike a balance between discipline and freedom. And it seems that the people who work there

and make their own judgments, they need to feel that they express themselves, that they're not robots. So it's a difficult balance, and really there's very little experience in the techniques of noise reduction. The book we wrote, Noise, which we published last year, is clearly the premature

one. And it's premature in that I began thinking about the problem eight years ago. Now, nobody should write a book eight years after they start thinking about a problem. It takes at least 20 years. I just, you know, I was almost 80 when I started, so I didn't have 20 years. So we published a book before we truly have enough facts, especially on the mitigation techniques. So we have reasonable grounds to believe that certain techniques can work, but we haven't collected the experience of how to train people and how to train them. Things are happening in that domain, but we're not there yet. So now I'm curious. The book was out, I guess, about a year ago, generally in the world of

publishing. That means you would have finished writing the manuscript probably the better part of a year before that. So in the intervening two years or so, or year and a half to two years, when you look at what was in the book, is there anything that you feel now is sort of like in need of glaring revision? There were a couple of ideas that we did not develop and now I'm blocking on it. But there are not many. The book is too wrong and it has too much in it. But there were a couple of things that, you know, obviously we didn't treat and we should have done,

but I'm blocking on them. I see the book, you know, regardless of whether you feel like this book is, you know, it's a flag in the sand to me at a bare minimum. I mean, they're fascinating ideas. There is research that tells us, oh, there's this phenomenon happening and it is really affecting outcomes and fairness at scale. So if nothing else, to me, it's like you're seeding the conversation, you're seeding the concept and saying, this matters. We're not really focusing on it.

We have some ideas here. To me, it felt more like an opening of a conversation and saying, this needs to actually be talked about. That was really the intention. You read us as we intended to be read. Wonderful. It feels like a good place for us to come full circle in our conversation as well. So in this container of Good Life Project,

if I offer up the phrase to live a good life, what comes up for you? For me, a good life is a balanced life. It's one where, you know, when you look back or when you don't feel that you have missed the whole panel of experience, that's obviously something that matters. And, you know, for people who are lucky, they have a passion.

And then living their passion and enjoying what they do. That's a good life right then and there. But not everybody has a passion and you can have a very good life without passion. But, you know, those are different lives. Thank you. Before you leave, if you love this episode, say that you'll also love the conversation Hmm. Thank you. follow Good Life Project in your favorite listening app. And if you found this conversation interesting or inspiring or valuable, and chances are you did since you're still listening here,

would you do me a personal favor, a seven second favor and share it maybe on social or by text or by email, even just with one person, just copy the link from the app you're using and tell those, you know, those you love, those you want to help navigate this thing called life a little better so we can all do it better together with more ease and more joy. Tell them to listen. Then even invite them to talk about what you've both discovered because when podcasts become conversations and conversations become action, that's how we all come alive together. Until next time, I'm Jonathan Fields signing off for Good Life Project. The Apple Watch Series 10 is here. It has the biggest display ever.

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