Michael Lewis writes good books. They tend to be concise, highly readable, immensely lucid and concerned with fascinating matters of human confusion and how to find one’s way through it. He also tends to be highly interested in thinkers who operate outside the range or authority of popular prejudice and conventional intellectual wisdom.
His first, Liar’s Poker (1989), was about his strange experience in a Wall Street bank’s bond trading department. Since then, he has written a string of bestsellers. Perhaps the most famous of them have been Moneyball (2003) and The Big Short (2010), both turned into films.
His latest book, The Undoing Project: A Friendship that Changed the World, is less thrilling — not being about sport or the corruptions and stupidities of Wall Street and the US government — but it is a wonderful story and Lewis is a first-rate raconteur.
The story is that of the extraordinary intellectual friendship between Amos Tversky and Daniel Kahneman, which took cognitive psychology to new levels and ended up generating the new discipline of behavioural economics, with profound implications for public policy and the whole conversation about choice and human rationality.
As with the heroes of Moneyball and Short, the heroes of this story were highly intelligent, somewhat eccentric outsiders addicted to asking curly questions and digging relentlessly for the answers.
Lewis uses as the epigraph to his book a quip by Voltaire: ‘‘Doubt is not a pleasant condition, but certainty is an absurd one.’’ One might add that a fog of confusion is the most common human experience and that bringing about tolerable clarity — to say nothing of certainty — is an exacting task.
Yet our economists argued for a long time that human beings were ‘‘utility-maximising rationalists’’ and that this was why market economies worked — and worked better than command economies. There is a lot to this, but …
Behavioural economics, which relies on the insights of Kahneman and Tversky, is based on a substantial correction of that assumption. And, as Richard Thaler (one of the founders of that discipline and another of Lewis’s outsiders) and Cass Sunstein (a brilliant former professor of jurisprudence and political science at Chicago University) point out in Nudge: Improving Decisions About Health, Wealth and Happiness (2009), if we want our citizens to make rational The Undoing Project: A Friendship That Changed the World By Michael Lewis Allen Lane, 369pp, $45 (HB)
Amos Tversky, left, and Daniel Kahneman in Stanford, California, in the late 1970s