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Daniel Finkelstein: Insights that came from a row

Our columnist looks at the relationship between two remarkable men, Daniel Kahneman and Amos Tversky

    Michael Lewis
    Michael Lewis Allen Lane / Amazon

    Please explain to me how it is possible you guys use the same rifles we use, drive the same tanks we drive, fly the same airplanes we fly, and you are doing so well winning all of the battles and we are not. This was the question the US Generals always wanted to ask Reuven Gal, the chief psychologist of the Israeli defence forces. And his answer always started with two words: Daniel Kahneman.

    I always welcome the news that Michael Lewis, author of Moneyball, The Blind Side and Liar’s Poker, is to publish another volume. I can’t recall reading a book of his that I haven’t liked. They rattle along, absorbing you in human drama while articulating striking ideas.

    And I was particularly excited to hear that his latest concerned Amos Tversky and Nobel winner Danny Kahneman, the founders of behavioural economics, academics whose thinking has had a tremendous impact on my way of looking at the world.

    I was right to look forward to Lewis’s The Undoing Project. But what I had not anticipated was how much the tale of these two great men would turn out to be a Jewish one. Behavioural economics, it is revealed, comes out of the story of our people.

    Lewis begins with the story of Kahneman’s youth, of his time as a Jew in France as the Nazis gradually occupied Europe. The strain of hiding and escape eventually killed Kahneman’s father. But as well as leaving the future economist with a deep stain of pessimism and love of peace, they also left him with a great curiosity.

    As a boy, hiding his yellow star of shame and caught after curfew by an SS officer, Kahneman cowered in fear, only to receive a hug and a gift from the officer, who showed a picture of what was obviously his own son. The episode reinforced the teaching of Danny’s mother — that human beings are infinitely complex.

    It was teaching that inspired his life’s work, examining the foibles of the human mind. This found a practical outlet in his life as an Israeli army officer. Asked to allocate officers to different branches of the service dependent on their bent of mind, Kahneman discovered the entire exercise was futile.

    As indeed were many other behavioural theories in the army. The air force, for instance, had concluded that when it congratulated pilots for a good flight, they did worse next time, while when it told them off for a bad flight, they did better.

    Kahneman pointed out that this was just a feature of statistics. People who do exceptionally well one day tend to return to normal the next. The pilots’ behaviour would have changed whether they were congratulated or not.

    As for allocating officers to particular services, Kahneman may not have found that psychological testing didn’t help much with that, but it could help determine who would be a good officer overall. The Israeli army still uses a version of what is known as the Kahneman score to determine overall aptitude. And it helps explain why the army can outperform others while using the same equipment.

    Yet this work would not have become well known outside the army if Kahneman had not teamed up with another Israeli military man, war hero Amos Tversky.

    Tversky, who had thrown himself upon a fellow soldier in a life saving act so brave that Moshe Dayan warned him that he wouldn’t get away with such courage a second time, was not just a military combatant. He was an academic combatant, too, and one used to victory. But when he met Kahneman he found he didn’t automatically win.

    Their partnership was the result of conflict. Kahneman was sure that people were bad instinctive statisticians, that they weren’t good calculators of situations and predictions. Tversky, without thinking much about it, assumed this was wrong. They clashed.

    And according to Lewis they clashed as two Israelis would clash, not two Americans. They sought to destroy each other’s arguments without much thought for hurt feelings. And then when Kahneman had won this first skirmish, they teamed up and did one other Jewish thing. They laughed at how ridiculous life was and people could be. Out of this derived some of the great psychological insights of the last century. That the economists are wrong. We are not fully rational. It’s a Jewish story that I urge you to read.

    Daniel Finkelstein is associate editor of The Times.

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