Bits of Books - Books by Title
The Undoing Project: A Friendship That Changed Our Minds
(first 30 odd pages are about baseball team, Houston Rockets, using data)
A lot of what people say when they predict things, is phony, just pretending to know things. For most of the interesting questions the only honest answer is "It's impossible to know for sure."
Interview for a job helping baseball team pick right players, owner asked "What religion are you?" and guy mumbled about his parents' church, owner just interjected "Just tell me you don't believe any of that shit'"
Knowledge is literally prediction. Knowledge is anything that increases your ability to predict the outcome.
Baseball scouts tended to form an instant opinion of a player, and then organize all his thoughts around that.(Confirmation Bias) Problem magnifies when evaluating players that reminded them of their younger selves. You saw someone who reminded you of you, and then you looked for reasons to like him. Or similarly, if someone a bit unusual was successful in the NBA, then guys who resembled him had better chance of being selected.
When trying to assess people need to take away your gut first impression.
Interesting things happen to people who can weave them into interesting stories. (Amos observation)
All the economic models up to 80's premised on people being smart and rational, but all the people they meet are idiots.
Amos got a lot of mail. He'd open anything that looked interesting then put rest on a pile for that day. Each day new mail arrived and he'd push the old mail down the table. When the pile reached the end it would be tipped off into garbage bag.
Philosophy a waste of time. There's nothing you can add to what the smart guys of yesteryear produced. The only problems left are the ones with no solution.
When Amos starting out studying psych in late 50's, clinical psychology was like C17 medicine (In C17 if went to doctor you usually wound up worse. C19 it was basically a breakeven - sometimes make you better, sometimes make you worse).
Went to Michigan as postgrad. They required all PhD candidates to show proficiency in two languages, but they didn't accept Hebrew as one. Tested on translating 3 pages of a book - student picked the book, examiner picked the pages. Amos went to the library and found a French math textbook that had nothing but equations in it.
(Amos) Stinginess is contagious and so is generosity, and since behaving generously made you happier than behaving stingily, you should only spend your time with generous people.
Danny working with Israeli Air Force - instructors believed in praising good performance and yelling at bad ones, and justified that by claiming that bad ones always improved afterwards. But DK showed that they were just regressing to the mean, and would achieve the same results without any chastisement.
Reforms always create winners and losers, and the losers fight harder than the winners. Rather than try to bully or argue into agreement (poor success rate), better off identifying the reasons for resistance and addressing those.
Problem that even in 50s clinical psychologists could not outperform a basic algorithm in diagnosing or predicting the behaviour of patients.
Similar problem with radiologists. Researchers asked drs what looked for when interpreting an xray of stomach ulcers, and used that to build a simple model which considered each of the variables drs suggested. To check the model they gave the radiologists 96 xrays to evaluate on a scale from definitely malignant to definitely benign. But there were only 48 different xrays - each was presented twice, in a shuffled order. The drs diagnoses were all over the map - they didn't agree with one another, and they didn't even agree with themselves - every dr gave different diagnosis for same slides.
The doctors had a clear idea of how much each factor should weigh in interpreting an xray, but they didn't stick to it, and as a result, the simple algorithm beat them all.
The world isn't a stage, it's a casino, and we're really bad at assessing the odds. We compare whatever it is we're judging, to a model in our mind. How closely do those clouds resemble my idea of an approaching storm?
When we're trying to decide what to do, we construct scenarios in our head. The stories, based on what we've seen previously, replace probability judgments. What people rem about their past, warps their judgments of possible futures.
People predict by making up stories.
People predict little and explain everything.
People believe any explanation as long as they can make it fit the facts they know.
People avoid new knowledge.
Man is a deterministic device thrown into a probabilistic Universe.
Most advances in science come not from eureka! moments but from "hmm that's funny" moments.
Occupational hazard of historians - take whatever facts they have gathered, ignoring the many facts they did not or could not observe, and make them fit neatly into a confident-sounding story. The only question that remained, once a historian had explained how and why some event had occurred, was why the people in his narrative had not seen what the historian could now see.
Bit like the investment models which explain how past highs and lows occurred, but fail to predict future ones.
Across America, more people die from preventable accidents in hospitals than die in car crashes. Bad things happen when patients moved from one place to another, when doctors or nurses forget to wash their hands (elevator buttons usually more germs than toilet seats). But the biggest danger is clinical misjudgment. Doctors tend to see, and treat, the most obvious problem, without checking to see if anything else causing.
Biggest danger was false certainty. Drs refusing to acknowledge that there was a great deal of uncertainty in medicine.
Mistakes need to be communicated, not denied, and not demonized. Just recognition that human error is part of human nature.
Influence of slogans - "Live free or die" used to resist compulsory crash helmet law for motorcyclists.
Widely held belief that arthritis pain related to weather. Thousands of years - even Hippocrates thought that. But when someone actually researched it, there was no meaningful correlation. Instead, there was selective memory - rem when pain at same time weather changed, but not times when weather changed and didn't have pain. "A single day of severe pain and extreme weather might sustain a lifetime of belief in a relation between them."
People don't think about money in absolute terms, they think of changes. Today Jack and Jill each have a million dollars. Yesterday Jack had half a million and Jill had two million. Everyone understands that Jack is way happier than Jill.
People don't choose between things - they choose between descriptions of things - the way the story is framed.
Pilots susceptible to sensory illusions - a pilot without instrument ratings who flies into a cloud has an average life expectancy of 178 seconds. ref Tom LeCompte
Which is more likely: 'Linda is a bank teller' or 'Linda is a bank teller who is active in the feminist movement'? When these two mixed up with 2 or more other statements about Linda, 100% of students/doctors/psych lecturers said second one more likely. Even when only those two presented, 85% opted for second one. And when the fallacy pointed out to them baffled as to why so easily taken in.
Or: Fido barks and chases cars. Which is Fido more likely to be - a cocker spaniel or an entity in the universe?
Choice architecture: The decisions people make are driven by the way they are presented. People construct their preferences, and they usually follow the path of least resistance.
Michael Lewis is a seriously good writer. He ends the book with a story about the Nobel Prize and how DK carefully prepared a lecture which was basically an audition for it. And then explains that everyone knows roughly when the phone will ring with the fateful call. And all over the world there are people waiting, hoping. But DK's phone didn't ring, so he coped with disappointment by imagining what he would have done had he won, bit then putting it behind him. And then the final sentence of the book: "Then the phone rang."
In 2003, we reviewed Moneyball, Michael Lewis's book about Billy Beane and the Oakland A's. The book, we noted, had become a sensation, despite focussing on what would seem to be the least exciting aspect of professional sports: upper management. Beane was a failed Major League Baseball player who went into the personnel side of the business and, by applying superior 'metrics,' had remarkable success with a financial underdog. We loved the book - and pointed out that, unbeknownst to the author, it was really about behavioral economics, the combination of economics and psychology in which we shared a common interest, and which we had explored together with respect to public policy and law.
Why isn't the market for baseball players 'efficient'? What is the source of the biases that Beane was able to exploit? Some of the answers to these questions, we suggested, might be found by applying the insights of the Israeli psychologists Daniel Kahneman and Amos Tversky, on whose work behavioral economics greatly relies. Lewis read the review, began to take an interest in the whole topic of human rationality, and, improbably, decided to write a book about Kahneman and Tversky. He kindly even gave us credit for setting him down this path.
Though we were pleased that Lewis was taking an interest in our field, we admit to being skeptical when we heard about his book plan. Granted, Lewis has shown many times before - not only with Moneyball but also with The Big Short, his book about the real-estate market, and Flash Boys, which is about high-speed trading - that he can write a riveting book about an arcane subject. And we did not doubt the appeal of the book's main characters: one of us had written several papers with Kahneman, and the other had known Kahneman and Tversky since 1977 and had collaborated with both men. (Tversky died in 1996, at the age of fifty-nine. Kahneman, now eighty-two, is blessedly still very much with us.) Both of us had been deeply influenced by their joint work on the psychology of judgment and decision-making. Still, how was Lewis going to turn a story about their lives into the kind of page-turner that he's known for? Kahneman and Tversky were brilliant, but they did most of their work together more than thirty years ago, and they worked primarily by talking to each other, switching between English and Hebrew. Where's the book?
Our skepticism was misplaced. The book, titled 'The Undoing Project: A Friendship That Changed Our Minds,' captivated both of us, even though we thought we knew most of the story - and even though the book is just what Lewis had said it would be, a book about Amos and Danny, two men who changed how people think about how people think. Lewis accomplishes this in his usual way, by telling fascinating stories about intriguing people, and leaving readers to make their own judgments about what lessons should be learned. He provides a basic primer on the research of Kahneman and Tversky, but almost in passing; what is of interest here is the collaboration between two scientists. Having written several articles and one book together, we have firsthand experience in both the joys and struggles of getting two minds to speak with one voice, and the conflicts that can arise when one author is a fast writer and the other likes to linger over each word. And while one gleans a good deal about teamwork from the book, Lewis doesn't spell the lessons out. Instead, the reader learns through observation, getting as close as anyone could to being in those closed rooms where the two men worked.
In 1968, Tversky and Kahneman were both rising stars in the psychology department at the Hebrew University of Jerusalem. They had little else in common. Tversky was born in Israel and had been a military hero. He had a bit of a quiet swagger (along with, incongruously, a slight lisp). He was an optimist, not only because it suited his personality but also because, as he put it, "when you are a pessimist and the bad thing happens, you live it twice. Once when you worry about it, and the second time when it happens." A night owl, he would often schedule meetings with his graduate students at midnight, over tea, with no one around to bother them.
Tversky was a font of memorable one-liners, and he found much of life funny. He could also be sharp with critics. After a nasty academic battle with some evolutionary psychologists, he proclaimed, "Listen to evolutionary psychologists long enough, and you'll stop believing in evolution." When asked about artificial intelligence, Tversky replied, "We study natural stupidity." (He did not really think that people were stupid, but the line was too good to pass up.) He also tossed off such wisdom as "The secret to doing good research is always to be a little underemployed. You waste years by not being able to waste hours." Managers who spend most of their lives in meetings should post that thought on their office walls.
Early in his career, Tversky was a 'mathematical psychologist,' which meant that he used formal models to characterize human behavior. He didn't care for metaphors: "They replace genuine uncertainty about the world with semantic ambiguity. A metaphor is a cover-up." He was organized and highly disciplined. His office was spotless; there was nothing on his desk except a pad, a mechanical pencil, and an eraser. (Even Tversky made mistakes.)
If there were a pad and pencil in Daniel Kahneman's office, on the other hand, Kahneman would struggle to find them. Born in Tel Aviv when his mother was visiting family, he spent his childhood in Paris, speaking French as his first language. His father was a chemist in a cosmetics company. In 1940, the German occupation put the family at risk. Hiding in the South of France, they managed to survive (with the exception of his father, who died in 1944, from untreated diabetes). After the war, the rest of the family immigrated to Palestine.
A constant worrier, Kahneman is an early riser who often wakes up alarmed about something. He is prone to pessimism - claiming that, by expecting the worst, he is never disappointed. This pessimism extends to the expectations he has for his own research, which he likes to question: "I get a sense of movement and discovery whenever I find a flaw in my thinking." In our own collaborations with Kahneman, we saw this close up, as he would proclaim, at what seemed to be the final stages of some joint work, that he had just discovered a fatal problem with our whole approach and that we would have to give up or start all over again. He was usually wrong about that - but sometimes he was right, and the constant worry made the work much better.
Tversky liked to say, "People are not so complicated. Relationships between people are complicated." But then he would pause and add, "Except for Danny." So, yes, they were different, but those who saw them together, spending endless hours just talking, knew that something special happened when they applied their two very different minds to a problem. Lewis both captures and sharpens the contrast between them, showing us why their collaboration was impossibly incongruous and yet perfectly complementary.
The names Kahneman and Tversky are now well known among social scientists, but even experts in the field will not know the story of how their collaboration began. At the beginning of their careers, they worked in different branches of psychology: Kahneman studied vision, while Tversky studied decision-making. Like much of psychology, these topics can be studied only indirectly; one can't directly monitor what people see or think (yet). In those days, mathematical psychologists like Tversky conceived of thinking in much the same way as economists: choices were thought to be made more or less 'correctly,' as people incorporate new information and make good choices for themselves. By contrast, those studying vision made much use of common mistakes such as visual illusions. (What does the fact that we see what seems to be water on a desert highway tell us about the vision system?) As Kahneman put it, "How do you understand memory? You don't study memory. You study forgetting."
In the spring of 1969, Kahneman invited Tversky to speak at his seminar. Tversky chose to outline some cutting-edge experiments about how people learn from new information. The experiments seemed to demonstrate that ordinary people were close to being rational; they thought like "intuitive statisticians." Though the presentation was impressive, Kahneman thought that the experiments were, as Lewis writes, "just incredibly stupid," and that they demonstrated no such thing. Insisting that judgments are more like sensory perceptions (and similarly prone to error), he went after Tversky hard, as people do in the best academic environments. Tversky almost never lost an argument, but he lost this one.
Very much in character, Tversky reacted to this loss by coming back for more. His friend Avishai Margalit, the distinguished Israeli philosopher, calls the session "Kahneman and Tversky's Big Bang." He recalls meeting an agitated Tversky, who "started by dragging me into a room. He said, "You won't believe what happened to me.' He tells me that he had given this talk and Danny had said, 'Brilliant talk, but I don't believe a word of it.'"
Before long, Kahneman and Tversky were in constant conversation. They worked intensely in a small seminar room or a coffee shop, or while taking a long walk. The sessions were private; no one else was invited to join. As they began to produce work together, each sentence would be written, rewritten, and rewritten again, with Kahneman manning the typewriter. (Tversky never did master the art of the keyboard.) On a good day, they would write a paragraph or two. Everything was produced jointly; they did not really know where one's thought ended and the other's began. Graduate students "now wondered how two so radically different personalities could find common ground, much less become soul mates," Lewis writes. One reason was that "Danny was always sure he was wrong. Amos was always sure he was right."
That actually did help. While Tversky was "the most terrifying mind most people had ever encountered," he was uncharacteristically receptive to Kahneman's ideas. Kahneman, for his part, found Tversky's arrogance surprisingly liberating: "It was extremely rewarding to feel like Amos, smarter than almost everyone." And they laughed together - a lot. As Kahneman said, "Amos was always very funny, and in his presence I became funny as well, so we spent hours of solid work in continuous amusement."
What followed was a period of extraordinary creativity - the best and most original work that either of them had done, or would do, at any stage in his career. In the period between 1971 and 1979, they published the work that would eventually win Kahneman the Nobel Prize in Economics. (The prize would certainly have been shared with Tversky had he still been alive. Nobel Prizes are not awarded posthumously.) There were two distinct themes: judgment and decision-making. Judgment is about estimating (or guessing) magnitudes and probabilities. How likely is it that a billionaire businessman from New York with no experience in government gets elected President? Decision-making is about how we choose, especially when there is uncertainty (meaning almost all the time). What should we do now?
Kahneman and Tversky showed that, in both of these domains, human beings hardly behave as if they were trained or intuitive statisticians. Rather, their judgments and decisions deviate in identifiable ways from idealized economic models. Most of the importance of Kahneman and Tversky's work lies in the claim that departures from perfect rationality can be anticipated and specified. In other words, errors are not only common but also predictable.
For instance: ask people what they think is the ratio of gun homicides to gun suicides in the United States. Most of them will guess that gun homicides are much more common, but the truth is that gun suicides happen about twice as often. The explanation that Kahneman and Tversky offered for this type of judgment error is based on the concept of 'availability.' That is, the easier it is for us to recall instances in which something has happened, the more likely we will assume it is. This rule of thumb works pretty well most of the time, but it can lead to big mistakes when frequency and ease of recall diverge. Since gun homicides get more media coverage than gun suicides, people wrongly think they are more likely. The availability heuristic, as Kahneman and Tversky called it, leads people to both excessive fear and unjustified complacency - and it can lead governments astray as well.
The influence of their work has been immense - not only in psychology and economics, where it has become part of the normal conversation, but in every other field of social science, as well as medicine, law, and, increasingly, business and public policy. And this legacy is based on what by current standards would be considered a very small number of papers - eight, to be precise. (They went on to write more papers together in the years that followed, but the foundation was laid with those few from the nineteen-seventies.)
The low rate of output was one of their strengths, and is a direct result of their joint personality traits. Kahneman's constant worry about how they might be wrong combined perfectly with Tversky's mantra: "Let's get it right." And it takes a long time to write a paper when both authors have to agree on every word, one by one.
The Kahneman and Tversky partnership was extraordinary in terms of its scientific impact - they are the Lennon and McCartney of social science - and even now, when joint work is increasingly common in academia, enduring teams like theirs are extremely rare. In Lewis's account, the relationship between Kahneman and Tversky was as intense as a marriage. As anyone who has been married knows, marriages can be fraught, and they sometimes dissolve entirely, rarely amicably. Tversky and Kahneman never got divorced, but they did start dating other people, and their relationship became strained.
After the two decided to leave Israel, in 1978, Tversky quickly received offers from Harvard and Stanford (where he ended up). Kahneman, who was looking for jobs jointly with his equally distinguished wife, Anne Treisman, was hired at the University of British Columbia, in Vancouver - a fine university, but lower in status than those that pursued his friend. At a relatively young age, Tversky received honorary degrees from Yale and the University of Chicago.
Although their work had been a true collaboration of equals, Tversky had unofficially been declared the star of the team, which didn't sit well with Kahneman. Tensions were aggravated in 1984, when Tversky was given a MacArthur 'genius' grant, and Kahneman wasn't. Kahneman was not actually eligible for the award, which is given only to American citizens or residents, but not many people realized this - and, what's more, when Kahneman moved to Berkeley, two years later, thus becoming eligible, the MacArthur Foundation still did not give him a fellowship. The incident illustrates another one of Kahneman and Tversky's most famous concepts: loss aversion. When the MacArthur grants are awarded every year, only the most egomaniacal of us read the list and say, "Damn, I lost." Unless, that is, your best friend wins the prize for work you did entirely together.
The two did not stop being friends, or stop talking nearly every day, or stop working on occasional projects. But once they were separated by distance, and began working with students and other co-authors, their relationship lost its ease. The way Kahneman saw it, "Amos changed. When I gave him an idea he would look for what was good in it. For what was right with it. . . . He stopped doing that." He noted, "Something happens when you are with a woman you love. You know something happened. You know it's not good. But you go on." Tellingly, he added, "I wanted something from him, not from the world." After one particularly difficult interaction, Kahneman decided, and told Tversky, that they were no longer even friends. "I sort of divorced him." This is the kind of outburst that Kahneman typically takes back within a few days, as he did at least a dozen times when he declared that he was abandoning for good his book project, which would eventually become the mega-best-seller Thinking, Fast and Slow.
In the case of his breakup with Tversky, fate intervened to hasten the inevitable reversal. Only three days later, Tversky called to say that he had just been diagnosed with a malignant melanoma and that he had, at most, six months to live. As Kahneman recalled, "He was saying, 'We're friends, whatever you think we are.' "
In the remaining six months, Kahneman and Tversky worked on the introduction to an edited collection of papers related to their work, an introduction Kahneman had to finish after Tversky died. Kahneman had (of course) worried about completing this introduction alone, and Tversky had (of course) assured him that he should just trust the mental model that, by now, he surely had of Tversky's mind. But no one has that model, alas. That is why collaborations are so special: one partner cannot simply replace the mind of the other, even after twenty-five years.
Tversky once said, "It is sometimes easier to make the world a better place than to prove you have made the world a better place." But it is not hard to prove that Amos and Danny did so - you only have to read those papers that they published in the seventies. Or, for that matter, Lewis's book.
The term 'the economic man,' or homo economicus, is attributed to John Stuart Mill. It represents one way economists have studied people for decades - as rational, self-interested actors whose behaviors and actions can be modeled. But then came the psychologists.
Daniel Kahneman and Amos Tversky are often referred to as the fathers of behavioral economics, for demonstrating that the human brain relies on mental shortcuts and biases in decision-making, which often leads people to irrational ends. Kahneman won the Nobel Prize in economics in 2002, for "for having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty." In 2011, he wrote a best-selling book, Thinking Fast and Slow, about his research with Tversky.
The pair might seem an unlikely subject for writer Michael Lewis, who wrote the bestsellers Moneyball, The Big Short, and Flashboys. In his new book, The Undoing Project, Lewis tells the the lives of Kahneman and Tversky, the friendship that ungirded their ground-breaking research, and ultimately how that friendship unraveled due to physical distance (when the two took jobs at different institutions) and tension over recognition of the work they did together.
I talked to Lewis about why he wrote about two academics, the impact of their research, and the 2016 election through the lens of Kahneman and Tversky. A lightly edited transcript of our conversation is below.
Bourree Lam: Why you decided to pursue this book project about Kahneman and Tversky and their research? In the preface, you mention Richard Thaler and Cass Sunstein's review of Moneyball, which pointed out that what you described in that book was essentially behavioral economics. But The Undoing Project also seems to me a labor of love.
Michael Lewis: The reason I got so interested in the first place was just that spending time with Danny Kahneman was so interesting. I wanted to go back for more, without ever thinking that this was going to be a book. [The project] immersed me in him, and becoming immersed in him meant becoming very familiar with his relationship with Amos.
Then I thought: I had this privileged access; I had this combination of a relationship with Danny and a prior relationship with Amos's son, who was my student at [the University of California]. I didn't know he was Amos's elder son at the time, I just knew him as Oren Tversky, but I was very fond of him and we were friends. The Tversky family was willing to open up to me.
The more I learned about it, I thought: These guys were for the ages. If you could have been a fly on the wall with Freud, or Darwin, or Einstein... I thought these guys were a big deal, and nobody had told their story. I didn't have any doubts about the importance of the subject. What compelled me to do it - though I didn't feel like it was naturally my subject - was a feeling that if I didn't, no one else would because no one else would have the access
Lam: How much time did you spend with Danny? And when did you decide it was time to start writing?
Lewis: (Laughs) You know, you stop counting. We first met in the end of 2007. We made a trip to Israel together. I went and helped teach his class at Princeton. We'd go for long walks in the hills of Berkeley when he was here three months of the year. I don't know how much time when you add it all up together, but enough time so that there wasn't anything I didn't hear three times.
I've had this with subjects often, where they think I'm stupid because I'm asking the same question in a different way for the eighth time, just trying to see if there's anything else there - a memory, an insight - and I could tell I was getting that way with him towards January of [last] year. There wasn't much left to talk about that we hadn't talked about 18 different ways.
In the course of thinking about the book, I laid it out over a period of a couple years, it becomes clear what you need, what material is necessary. Once all the gaps are filled in, I don't feel like there's much work left to do on the reportorial side. I just sense that I have the story in my head and I'm ready to write.
Lam: The three pillars of the book are biographical stories about Kahneman and Tversky, the way their personal stories informed their relationship - which led to their Nobel winning work. How did you see the balance and interconnectedness of those three elements, and what fascinated you about them?
Lewis: It's funny, I didn't think of the structure that way. I was telling the story of this relationship, but I knew I wanted to do something tricky with the structure. I wanted to cut out quickly into the world and show the ideas at play in the world. The book opens with 30 pages in a basketball front office, and my struggle was: How do I weave their relationship and the creation of the ideas together with the consequences of their ideas in the world?
I was constantly struggling with, how do I jam the reader's nose into the fact that this is not just two academics in a room spinning airy-fairy ideas that have nothing to do with anything in the world? How do I jam the reader's nose into the consequences, like life and death in the world, or decisions about human beings in the labor markets? That, for me, was the thing I just agonized over.
Lam: What was it like to write about academics, and specifically these two?
Lewis: I can't think of another intellectual project that touches as much of human existence as their work in such an interesting way. I think they're very unusually important and relevant. If they were just academics, I never would have even begun this project. What drew me to them was the life of their ideas outside of academia, and that they themselves were constantly thrust into practical affairs by Israel. The fact that they had spent time on the battlefield, and were constantly kind of on call by the Israeli government and the Israeli military... Their unusual interaction with the world outside of academia made the story possible. If it were just two guys in a room, I never would have written it. They're constantly being stimulated by stuff outside of the academy.
Much of their work is mocking the academy. Amos explicitly and Danny implicitly end up having very little time for their own field. They create their own subfield within the field, and then they go about poking holes in economics. A lot of their interactions with their fellow academics are... it's not hostile but it's certainly ironic and irreverent. I also thought that possibly a lot of academics would benefit from every six years going to shoot at people and get shot at.
Lewis: Yes. I think that it sort of puts everything in perspective. These guys were never going to have time for petty academic battles, and they had a gift for avoiding getting sucked into them. They've got the perspective of what people who are fighting actual battles go through. They're not interested in the little things; they're interested in the big things. I think they get that perspective because it's forced upon them, because this all might end at any moment. There's an urgency to their academic life, their intellectual life, that I think grows out of their experience in Israel.
Lam: Can you say more about what you found interesting about the way their ideas reach beyond academia? A lot of readers know you as a storyteller of narratives about money or finance. How does this book fit into the repertoire of your work?
Lewis: Some of my work, at least, is clearly exploring the weird things that markets do. They screw up the value of baseball players; they screw up the value of mortgage-backed securities. Even the political book I wrote, I found myself drawn to a candidate the process had no time for because his type wasn't valued. So the distortion of value that goes on in markets or in people's minds directly connects up to [Kahneman and Tversky's] work.
Moneyball comes right out of their work. Why do professional athletes get so badly misvalued? Part of the answer is there are distortions and kinks in the minds of the people doing the evaluations, and these guys were exploring that. I wasn't interested in them just because I thought they helped explain some of their work, I was interested in them in particular because of the intensity of their feelings for each other.
But there's no question that in their work are ideas that I wasn't even aware had come from them. I've been obsessed since I left Wall Street with the problems of financial advice. I just don't understand why people take it. These guys have a lot to say about that, and they also have a lot to say about why people shouldn't take it.
Their work on randomness - how people see random sequences as not random and see patterns where none exist - you see this everywhere. You see this in people getting a reputation for being really great with money, you see it in people getting a reputation for being really great at picking hits in the movie business, or picking baseball players in the draft. Many of the things around us have a random component; a lot of luck involved. The human mind doesn't see the luck, it sees the pattern and this is one of their first great insights.
Lam: Another one of their great insights is how predictable and systematic mistakes and thinking errors can be.
Lewis: That's the very big idea that collides with economics. If the mistakes aren't systematic, then economics can ignore them. They're showing that we're hardwired for certain types of mistakes, so people are mostly going to make these mistakes. Then you have the beginning of a story where whole markets can go wrong, and this is what Richard Thaler picks up on. He thinks of them as having one idea: systematic error. That would be filtering it through the lens of an economist who's dissatisfied with the rational-actor model in economics.
I think they have dozens of ideas. So, back to your first question, about what got me into this. When I would go out for walks with Danny, this stuff just tumbles out of him. I thought, this is just gold. This guy is, and, even dead, Amos was full of all of these nuggets of wisdom that if you add them all up together, they're more important than the formal work.
Lam: Your work has been about market failures in different realms, so I have to ask, are you going to write about this last election?
Lewis: [Laughs] I have to ask, should I? Do you think anybody's going to want to read anymore about this?
Everybody wants to know what happened. Everybody wants their dream explained, because everybody feels like they woke up and are still in this dream. I have no plans to write about this, I certainly don't have plans to write about the election. That's not to say I won't. Now, if someone called me from inside one of the campaigns and told me, "You know, there's a part of the story no one's ever told. Here's all of the information," I mean, I'd be hard-pressed to resist it. But I'm not actively pursuing it. I'm more interested in what happens next.
Lam: I do feel like people are trying to gain some insight from The Undoing Project regarding the 2016 election though.
Lewis: Well, it's a market for a politician, but people have this sense that the market did something really screwy, and they're not unjustified. There's a very clear sense right now that a lot of the people who voted for Trump may not have been voting in their best interests. It really seems like an irrational act to put this man in office, especially to people who didn't vote for him. And so people want to understand what was going on in the minds of these people.
I did find myself listening with a kind of Kahneman and Tversky ear to what was going on around me after the election. But the first thing I noticed was how people undid it. You could predict, given their discussions, how the imagination works and how the undoing was going to get harder and harder. As Danny points out, when a tragedy just happens, it's easy to undo it. You start from the event, and the first thing that you can undo moving backwards in time and change the result, you change: So the FBI director's email, or the ground ball that goes through the first baseman's legs in the bottom of the ninth inning, or the field-goal kicker missing at the end of the game. This is all the same stuff.
But then what happens is, the consequences of Trump pile up. To undo the election, your mind has to undo all this other stuff that happens as a result of Trump being elected, and you just stop doing it. It will seem quaint in six months to be talking about the FBI director and what he did with the emails; people won't feel that it changed everything. There'll be a sense that this was always going to happen, that we were always going to have Trump as President, that whatever happens will feel more determined or more inevitable or fated than it actually was.
I was listening to that, this brief moment after the election where people appreciated that this wasn't a deterministic event and lots of things could have happened to prevent Trump from being president, but their minds fixated on just a couple of those things. I don't think Trump knows any of this. I think he's just making it all up as he goes along, but he's really well-suited to being both a victim and a beneficiary of the [human thinking] mistakes that Danny and Amos point out. He's pure intuitive judgment, and he's appealing to other people's pure intuitive judgment. There's no real strong rational argument he's making about why he should be president.
Lam: But that's why many people remain confused that he won.
Lewis: That's right. He's saying, vote for me, trust your gut. If you look at what Danny and Amos studied, it's just that. Somewhere in the back of people's minds, when they're trying to connect my book up to the election, that's what's in their minds. But I didn't write it because of the election. I've been doing this for eight years. I didn't see any of this coming. I didn't connect any of it to the election or anything like that, so this is just an accident.
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