Daniel Kahneman, who won Nobel in economics, dies at 90
Daniel Kahneman, who never took an economics course but who pioneered a psychologically based branch of that field that led to a Nobel in economic science in 2002, died Wednesday. He was 90.
His death was confirmed by his partner, Barbara Tversky. She declined to say where he died.
Kahneman, who was long associated with Princeton University and lived in New York City’s Manhattan borough, employed his training as a psychologist to advance what came to be called behavioral economics. The work, done largely in the 1970s, led to a rethinking of issues as far-flung as medical malpractice, international political negotiations and the evaluation of baseball talent, all of which he analyzed, mostly in collaboration with Amos Tversky, a Stanford University cognitive psychologist who did groundbreaking work on human judgment and decision-making. (Barbara Tversky, also a professor of psychology at Stanford, had been married to Amos Tversky, who died in 1996. She and Kahneman became partners several years ago.)
As opposed to traditional economics, which assumes that humans generally act in fully rational ways and that any exceptions tend to disappear as the stakes are raised, the behavioral school is based on exposing hard-wired mental biases that can warp judgment, often with counterintuitive results.
“His central message could not be more important,” Harvard University psychologist and author Steven Pinker told The Guardian in 2014, “namely, that human reason left to its own devices is apt to engage in a number of fallacies and systematic errors, so if we want to make better decisions in our personal lives and as a society, we ought to be aware of these biases and seek workarounds. That’s a powerful and important discovery.”
Kahneman delighted in pointing out and explaining what he called universal brain “kinks.” The most important of these, the behaviorists hold, is loss-aversion: Why, for example, does the loss of $100 hurt about twice as much as the gaining of $100 brings pleasure?
Among its myriad implications, loss-aversion theory suggests that it is foolish to check one’s stock portfolio frequently, since the predominance of pain experienced in the stock market will most likely lead to excessive and possibly self-defeating caution.
Loss-aversion also explains why golfers have been found to putt better when going for par on a given hole than for a stroke-gaining birdie. They try harder on a par putt because they dearly want to avoid a bogey, or a loss of a stroke.
Mild-mannered and self-effacing, Kahneman not only welcomed debate on his ideas, he also enlisted the help of adversaries as well as colleagues to perfect them. When asked who should be considered the “father” of behavioral economics, Kahneman pointed to University of Chicago economist Richard H. Thaler, a younger scholar (by 11 years) whom he described in his Nobel autobiography as his second most important professional friend, after Amos Tversky.
“I’m the grandfather of behavioral economics,” Kahneman allowed in a 2016 interview for this obituary, in a restaurant near his home in lower Manhattan.
This new school of thought did not get its first major public airing until 1985, in a conference at the University of Chicago Graduate School of Business, a bastion of traditional economics.
Kahneman’s public reputation rested heavily on his 2011 book “Thinking, Fast and Slow,” which appeared on bestseller lists in science and business. One commentator, essayist, mathematical statistician and former option trader Nassim Nicholas Taleb, author of the influential book on improbability “The Black Swan,” placed “Thinking” in the same league as Adam Smith’s “The Wealth of Nations” and Sigmund Freud’s “The Interpretation of Dreams.”
Author Jim Holt, writing in The New York Times Book Review, called “Thinking” “an astonishingly rich book: lucid, profound, full of intellectual surprises and self-help value.”
Shane Frederick, a professor at the Yale School of Management and a Kahneman protégé, said by email in 2016 that Kahneman had “helped transform economics into a true behavioral science rather than a mere mathematical exercise.”