The news arrived this week of the death of Daniel Kahneman at age 90. Kahneman was a noted psychologist obviously and his work with Amos Tversky had a foundational influence on the development of behavioural economics and a range of related fields. His work on prospect theory and judgement and biases were already heavily embedded in several areas when he was jointly awarded the Nobel prize in 2002. Several popular talks and his book Thinking Fast and Slow made him known to a much wider public audience in the later phase of his life.
I met him on a couple of occasions. I was a fellow at the Centre for Health and Well-being at Princeton in 2011. He was technically there but was absorbed in the activity around a book at the time which was launched as Thinking Fast and Slow. About that stage of my life, I was moving from a phase of seeing some scholars as being abstract characters in a great intellectual historical drama to meeting some of them. With Kahneman, I couldn't ever shake the feeling in the few times I was in the same room that I was in the presence of something larger than life. This is definitely not due to him as his reputation coming from the many who knew him fondly as "Danny" is of a charming, intellectually open and humble individual. My one substantive interaction with him was as part of a workshop on day reconstruction where I treated him to a rant that wasn't fully formed about how survey methods to validate Day Reconstruction Methods could become a lab to study all sorts of fundamental questions. Cringe!
Students and colleagues in our Department at LSE will be aware of several interactions between our programme and Kahneman both as a scholar and a person. Paul Dolan has written here of the impact Kahneman had on his life and work. A lot of our Foundations in Behavioural Science course is based around his work, including core lectures on prospect theory and on judgement, biases and heuristics. His talk at the LSE in 2012 is available here and takes place at the time where our current graduate programme in behavioural science was being planned out by Paul and others. It would be hard to have studied on any of our behavioural science programmes here without having spent meaningful time with Kahneman's work and along with Cass Sunstein he is most frequently mentioned in cover letters as an inspiration for coming here.
Like many people, I owe a lot of the trajectory of my life and work to reading the work of Kahneman and Tversky. Reading their 1974 paper "Judgement Under Uncertainty: Heuristics and Biases" completely changed my life. The paper is obviously a citation classic. There are many literatures that can be traced to the paper. And also a genuine question as to how to characterise the real contribution of the paper and their related work. They certainly were not the first to examine heuristics and biases as Kahneman had no problem noting. Others have questioned whether it paints too bleak a picture of human reasoning or whether the pen-and-paper format and student samples lead to very localised descriptions of human behaviour. I am not going to review all the replication exercises and philosophical debates here. From my side, I studied psychology and economics in Trinity College and encountered his work when I was 19. I had always seen economics and psychology as fundamentally intertwined but two years of studying it at college had created a huge pressure in my mind as to how the fields had become disconnected. Studying psychology, I had been exposed to everything from Freud to modern neuroscience experimental techniques and sitting in my economics lectures, I followed along with optimisation problems and axiomatic treatments of human choice. 25 years later I am contaminated by decades of listening to opinions but I still have at least some memory of how mind-blowing it was to read the 1974 paper. It genuinely felt like finding a forgotten treasure and everything I was studying in both fields suddenly came together for the first time. Having studied and lectured on the history of behavioural science for a long time now, I am convinced something similar happened in the discipline as a whole.
There are similar discussions that could be had about the evolution of prospect theory which accumulated several modifications to expected utility theory (including loss aversion - graph below from Nobel website) into a key behavioural decision framework. Kahneman and Tversky's work is definitely redolent of the peasant in the field problem. There are most likely people of all sorts of modest repute who had similar instincts to them regarding human behaviour. And there are certainly works that predate them that contain the building blocks of prospect theory. But there is nothing that combines the mathematical treatment, the psychological intuition, and the awareness of the implications of what they were doing.
Inherent in Kahneman and Tversky and later Richard Thaler is always a keen awareness of the massive edifice they are setting themselves against. Prospect Theory is published in
Econometrica the journal that set to define economics as a science, it is given a name that places it in a long-run historical perspective, it is even written in a style that is both compelling and contains enough vagueries (WTF is a prospect??) to keep people discussing it forever. I
blogged earlier about recent work examining the state of the art of modern prospect theory. Loss aversion may or may not be a thing. It may or may not be related to the endowment effect. But they have set the terms of discussion of decision-making in core areas of human thought for decades and probably centuries to come. I was fortunate to get a chance to establish behavioural economics courses in Trinity College and University College Dublin in the late 2000s (
details here). I have given something in the region of 30 iterations of a course that has prospect theory and heuristics and biases as core lectures and still have not even remote feelings of fatigue with the material.
Kahneman is also a key descendant of utilitarian thinking on well-being (not necessarily an ethical utilitarian which is an argument for another day). A key question in Benthamite thought is how to measure well-being and Kahneman was one of a handful of people to advance that agenda in the last few decades. His 2004 paper "A survey method for characterising human experience" was another thunderbolt. The paper was co-written with Alan Krueger, Norbert Schwartz, David Schkade, and Arthur Stone, a veritable dream team assembled across psychology, economics, and survey measurement. I wrote in another post how this paper shaped a lot of the rest of my own career. It is another classic Kahneman paper, written in a beautifully clear fashion with boundless implications following from unassuming sentences. One major task for the rest of my life will be to craft a more eloquent version of the rant I exposed him to that sees this method as a key arena for studying human subjectivity in consequential settings.
The main impression I am left with from Kahneman is that he wrote for the ages and that he will be discussed for centuries to come. We are fortunate to have had him in the world. Condolences to readers who knew him personally and will mourn his passing. I hope students who are encountering his papers for the first time will experience the same intellectual stimulation as thousands before.
