Thinking, Fast and Slow: How Our Brain Makes Decisions

Read out what’s written in the image below.

Did you notice the mistake? Did you notice ‘the’ and ‘a’ are mentioned twice? Don’t feel bad if you didn’t because most people fail to notice the error.

Let’s take another question.

A bat and ball cost 1,100 bucks in total. The bat costs 100 bucks more than the ball. How much does the ball cost?

What’s the immediate answer that comes to your mind? Hold it in your head, and now glance at the image below:

A premonition of what he is going to do next comes to your mind automatically and effortlessly. You can sense it as fast as you can calculate 2 + 2 = 4. This is the result of what scientists call Reflexive Thinking.

Now look at the following mathematical problem: 17 × 37

You know immediately that it’s a multiplication problem. You probably also know that you can solve it, with pen & paper or calculator. However, without spending some time on the problem, you can’t find the right answer.

Try to complete the multiplication (in your head) now.

If you try to carry out the computation in your head, you would realise that it is a bit of a strain. You feel the burden of holding a lot of stuff in your memory. Unlike 2 + 2 = 4, this process consists a lot of mental work. It’s deliberate and effortful. Here you have to engage in something called Reflective Thinking.

Daniel Kahneman, Nobel laureate and the founding father of modern Behavioural Economics, has termed these two modes of thinking as System 1 (fast or reflexive) and System 2 (slow or reflective).

System 1 is the part of the brain that handles the simple things: sensory input, automatic and unimportant decisions, casual social interactions, and other inbound signals that can be processed rapidly and rather easily.

System 1 is rapid and instinctive. It does not involve what we usually associate with ‘thinking’. When you duck unexpectedly because a ball is thrown at you, or get nervous when you look down from the rooftop of a skyscraper, or smile when you see a funny meme on 9GAG, you are using System 1. These activities are associated with the most primitive parts of the brain.

System 2 is the higher-order, logical part of the brain. It’s the part that thinks at the speed of the voice in your head. It brings processing power for decisions and problems that require deeper thought.

System 2 is more deliberate and self-conscious. We use it while learning to drive, when deciding which flight to take to London, and whether to become an engineer or a doctor.

All Indians have a System 1 reaction to a temperature given in Celsius but have to use their System 2 to process a temperature given in Fahrenheit; for Americans, the opposite is true. People speak their native languages using System 1 and tend to struggle to speak a new language using System 2.

Being truly bilingual means that you speak two languages using System 1. A professional chess player’s System 1 allows them to size up complex situations rapidly and to respond with both amazing accuracy and exceptional speed.

System 1 is your gut reaction and the System 2 is your conscious thought.

These two don’t really exist physically inside the brain. They are mere representation of how we think. They have their own personalities, abilities, and limitations.

Speaking of limitations, let’s get back to the bat and ball question. What does the ball cost? If you answered 100 bucks, then it’s your System 1 that tricked you. You need to engage your System 2 here. You need to think deliberately.

The workings of the human brain can be befuddling. Beethoven wrote his incredible ninth symphony while he was deaf, but he often misplaced his house keys. How can we be so ingenious at some tasks and so clueless at others? If you think about all the things the brain is constantly handling — it’s not just impressive, it’s insane. But you’re able to do it because the part of your brain that you’re aware of, System 2, is always outsourcing the bulk of the work to System 1.

The fox knows many things but the hedgehog knows one big thing.

Decades ago, the philosopher Isaiah Berlin wrote an essay that compared the styles of thinking of great authors through the ages. To organise his observations, he drew on a scrap of 2,500-year-old Greek poetry attributed to the warrior-poet Archilochus: “The fox knows many things but the hedgehog knows one big thing.”

Think of System 1 as childlike. Just like 5-year-olds view everything in terms of cause and effect — and has absolute certainty about the things they know — this part of the brain will either believe something with great conviction or not. Nothing in between. It’s like the hedgehog.

Think of System 2 as a beleaguered, overworked but very intelligent manager. System 1 is the army of interns that she’s hired to solve all the simple problems she can delegate — even though they mess some of them up.

System 1 has no time for, ‘This thing has a 30% probability of being true.’ That’s System 2. And the thing about System 2 is that it’s always looking for evidence that something isn’t right or isn’t to be believed. It’s nuanced. It’s a sceptic. It’s like the fox.

Both System 1 and 2 are active when were are awake. System 1 is very active and runs automatically. Like a kid running around the house. While System 2 is normally in a comfortable low-effort mode. Like a father sitting lazily on the couch.

System 1 continuously generates suggestions for System 2: impressions, intuitions, intentions, and feelings. If endorsed by System 2, impressions and intuitions turn into beliefs, and impulses turn into voluntary actions. When all goes smoothly, which is most of the time, System 2 adopts the suggestions of System 1 with little or no modification. You generally believe your impressions and act on your desires.

The arrangement works well most of the time. System 1 is generally very good at what it does. But System 1 an overconfident kid who can get into trouble. In a lot of cases, when this kid should leave things for the father it takes matters into its own hands, and ends up creating systematic errors.

These systematic errors from System 1 are called Cognitive Biases. Such a bias caused you to guess the cost of the ball to be 100 bucks. This was harmless. But cognitive biases can also cause you to make bad decisions in high stakes situations, such as business deals and political negotiations that can cause you a lot of pain and trouble. Some common biases are Anchoring Effect, Confirmation Bias, Survivorship Bias, Availability Heuristic, etc.

Since we know that all these biases can wreak havoc, how do we fight our System 1? Turns out that it’s not that easy. In a lot of cases decision have to be made fast.

Like while driving a car, talking to somebody, or playing football. System 2 is too slow to analyse the situation and take counter measure. Therefore we often have to depend upon our fast but a bit inefficient System 1.

It would be an overkill to engage your System 2 for every small decision. But we should learn to make a compromise. Daniel Kahnemen that we should “learn to recognise situations in which mistakes are likely, and try harder to avoid significant mistakes when the stakes are high.”

So when you’re making an investment or negotiating a deal, engage your System 2. But if you’re brushing your teeth, you can give System 2 some rest and go with System 1. Otherwise it’ll fry your brain.

System 1 can be trained to become less efficient. For example, if you practice enough, you can become fluent in a new language or in driving. The knowledge gets transferred from System 2 to System 1 with practice. One reason why newbie drivers are such risky on the road is that their System 1 has not had much practice, and System 2 is much slower. Similarly, if you study cognitive biases, you can learn to identify and avoid them during decision making.

System 1 v System 2 is a brilliant mental model to explain the machinery of thought. It can help you understand why people make irrational decisions. Why often your gut feelings and intuitions are wrong, especially when you play outside your Circle of Competence. And when it comes to the subject of thinking, Daniel Kahneman’s book Thinking, Fast and Slow is the bible.

Now that you’ve got a fair amount of idea about how our brain takes decisions, what’s your System 1 and System 2 answer to the bat and ball problem? Do they match?