What Nobel Winner Daniel Kahneman Said About Decisions, Marriage, and Success

Daniel Kahneman, who died on March 27, won a Nobel Prize in economics even though he was a psychologist. In 2011, on the publication of his influential bestseller Thinking, Fast and Slow, he sat down with TIME to explain his theories, but also to talk more widely about how to make decisions, including who to marry, who to vote for, and when to trust intuition. Here’s an extended cut of that interview.

In the book you frame the way we think into two different systems. There’s the fast system, System One, and System Two, the slow thinking. Can you explain the difference?

If I say, "What is 2+2?" the answer comes to your mind, you don’t have to decide to do it, it just happens. But if I say, "What’s the product of 17 times 24?" probably nothing comes to your mind. Slow thinking has the feeling of something you do. It’s deliberate, it gives you a sense of agency, and you’re the author of the things you do. That’s not at all the way it happens when System One operates, when you brake a car suddenly or have an emotion.

Are there public figures who you think are typical of slow thinking, or fast thinking, or is it within all of us? All of us have the ability both for fast thinking and for slow thinking. We couldn’t survive with only one. There are people who are more obviously in touch with their emotions and who follow their gut more. You can compare the current President [Barack Obama] and his predecessor [George W. Bush]. [Obama] is certainly much more reflective and much more deliberate. And the previous one quite explicitly trusted his intuition, trusted his gut, and very much followed what System One was telling him to do.

What are the most common decision-making mistakes involving these systems? In the first place, many of the decisions we make are influenced by emotions of various kinds. We are biased to like some people and to dislike other people; we are biased by words. You’re not going to have the same attitude to a cold cut of meat if it is described as 10% fat or 90% fat-free. People actually are willing to pay more for the latter.

We all think we’re very considerate and judicious and reflective, but does System One, fast thinking, have effects on us that we just don’t even realize? System One—you can think of it as events in your mind that happened very quickly and that operate as suggestions. And then you have System Two, the slower thinking, endorsing many of these suggestions, or sort of relying on them and following up on them. They are the basis, they are the anchor, which is modified by further thinking. But the effects are still there.

You don’t seem, in the book, to be a huge fan of intuition. Is it idiotic to go with your gut? It really depends on the situation. All of us rely on intuition all the time. And most of us are very good at what we do—we couldn’t live without System One. In some situations, people have considerable confidence in intuitions that are worthless. If you are making a judgment on an impression that is based on very little information, you might want to stop yourself if the judgment is important. If you are negotiating and somebody has put a number on the table, you should be very wary, because that number looks more reasonable the moment it comes to the table.

Can we train ourselves to notice when we’re being misled by our System One, or when we’re leaning on System One when we shouldn’t be? Well, I’m not a good case study because I’ve been studying this for 45 years and my intuitions really have not improved. I don’t believe in self-help. I believe occasionally you can recognize a situation in which you’re making a mistake. My goal in the book was actually to educate gossip, because I think we are much, much better at correcting the mistakes of other people than at detecting our own. And if there was better gossip in the world, if people were gossiping more intelligently, I think decisions would actually be better. Because we do anticipate the gossip of other people. And if we anticipated intelligent gossip, it might help us.

What do you mean by intelligent gossip? Intelligent gossip is gossip about judgments and decisions that is informed by the psychology of judgment and decision-making. In order to understand a situation, you need a vocabulary and you need a set of concepts. You can’t be a physician without having names for diseases, and you need names for the various psychological effects and for the different biases, so that you can pinpoint and say, "Oh, this is a case of that." And once you have the richer language, you have much richer associations, many more ideas, and more ability to discriminate between situations. That would be intelligent gossip.

You write about the fire captain who can tell that the floor’s going to collapse, and he thinks it’s his gut, but in fact you argue plausibly that it’s a lot of experience. What experts should we listen to and whom should we ignore? It’s mostly what they’re talking about and whether expertise is possible in their domain. There are domains in which expertise is not possible. Stock picking is a very good example. Long-term political strategic forecasting. It’s been shown that experts are just not better than the average reader of the New York Times at making long-term predictions, and that’s not very good. That’s about like a dice-throwing chimp, for moderately difficult questions. So, if people are claiming expertise in a situation that is basically unpredictable, don’t believe them.

So we should all fire our stockbrokers? No, you should not. There is a lot that your stockbroker knows that is going to be very useful. They know about risk in general, so they know what investments are generally more risky than others. They know about taxes. They have a lot to tell you. When they’re telling you invest in this rather than in that, they’re likely to be not much better than chance.

Digital media gives us answers quickly and means that we have to work a lot less hard at System Two, because we don’t have to recall so many facts. If I don’t remember who the President of Bulgaria is, I can just ask my phone. Is that changing the way we think? It probably is changing the way we think. It probably is changing the way that we learn about the world, but I don’t really know enough to have an intelligent answer to that question.

What are the biggest mistakes that people make in thinking about themselves? In the first place, they think that other people have biases but that they don’t. We’re generally very overconfident in our opinions and our impressions and judgments. Many people—not all, but the people who make the most difference to the lives of other people—are optimistic and they have an illusion of control. And we exaggerate how knowable the world is. For example, we think that there were people who knew that there was going to be a recession. I think they didn’t know it. They thought it, and then it happened, but there were other equally knowledgeable, equally intelligent people who knew the same thing and didn’t think there was going to be a recession. So we use the word know in peculiar ways, and that strengthens the illusion that we understand the world, when we really don’t.

What can we do? All we can say is, "Gosh I don’t know anything." Does that make us stop and think, or does it just sap all the confidence out of us to do anything? Clearly you need a balance, because there is such a thing as paralysis-by-analysis and you don’t want to fall into that trap. Being more reflective when things matter is good, but on most decisions we’d better follow our intuition and not worry about it. When we’re trying to predict what it will be like in the future in particular, psychologists have demonstrated that your intuition is a pretty good guide, and if you like something now, you’ll likely like it later. If you like somebody now, you’re likely to like them later.

We’ve talked a lot about the impact of these theories on economics, but what about areas outside economics? Should we be thinking about this in terms of who we marry? Well, I should think so, yes. Knowing something about the future, not expecting that your feelings will remain exactly the same as they are now – that, I think, will be quite a useful thought to have when people marry.

You have some interesting recommendations in your book on how to interview a candidate for a job. Do you have any about how you interview a candidate for your life? I haven’t prepared a list of criteria for that, but I would say, this is a person you love now, but you are going to have to like them later. And that’s quite important.

Do you think that most success is luck? No, there’s a considerable amount of skill in success, but there is more luck than we’re generally inclined to believe. There is a whole business literature that claims to tell you that if you follow the advice of these experts, then you are going to be successful. When there are big successes, there is a lot of luck.

So somebody like Steve Jobs was incredibly lucky? Steve Jobs was very lucky in many ways. You know, he was lucky to be paired with a technological genius when he started. He was lucky a lot along the way. And then he did have a knack. And he had, really I think that is true, he had his taste. He trusted his taste, and his taste turned out to be a taste that people shared eventually, or could be made to share, and that is a genuine talent. He was lucky to be able to exercise that talent.

Does your theory have room for something like faith? How does faith play into the way we make decisions? Is it a net positive or negative, or neither? People have values that guide their choices and guide their judgments, and the values come from a variety of places, and it is not that people who do not believe in God do not have values that guide them. This being said, the sense of confidence that people have in their faith, and the idea that many people of faith have that other religions and other faiths are ridiculous on the face of it, that is strange, from a psychological point of view. And that fits reasonably well with the idea that faith is associated with overconfidence.

How big a role should fear of regret play in decision-making? Actually, there is some disagreement about that among psychologists. I happen to believe that regret is quite important. In some ways it’s absurd to regret spilt milk, you should focus on actual consequences, and that’s what economists tell you. But in fact, regret is a psychological fact of life, and if you anticipate that you’ll regret something, you probably shouldn’t do it. But to some extent you can inoculate yourself against regret. There are things that people can do so that, whatever the outcome, their regret will not be too severe. For example, just the act of anticipating it. You know you’re making a decision and you know chance is involved, and later, if the outcome isn’t good, you at least will know that you thought about it carefully. That actually does mitigate regret.

You write that the halo effect [an overall positive impression of a person or thing that is based on a single characteristic] plays a big role in who we vote for. Is there a way of mitigating against that? Well, it turns out that it’s not only the halo effect, it’s the face – it’s whether people like the face. There is a marvelous study done at Princeton where you show students pictures of politicians for one-tenth of a second and you ask who looks more competent, and that predicts 70% of the congressional elections. And it’s even more predictive for people who know very little about politics, and who just follow their gut. So being more reflective about how you use your vote is clearly better, I think.