Thinking, Fast and Slow, by Daniel Kahneman

Really the title only properly describes the first two-thirds of the book, which delves into the differences between the intuitive, snap judgments our minds make and the slower, rational processes. This brought together many different but related issues, such as how much basic presentation techniques affect persuasiveness, since the brain tends to perceive something easy as true; or how powerful hearing only one side of a case is, even if the facts are relatively neutral; or how people's perception of risk is drastically skewed by what comes easily to mind.

One of the more intriguing aspects was the limitations of expert knowledge. Or, more properly, the limitations of expert prediction. Prediction in general tends to happen by a cognitive slip--we substitute an evaluation of what we know now (e.g. current grades) when asked to predict the future (e.g. how a student will do in college). And experts really don't do any better than that--they go with their gut. But the future is too variable to fit well with predictions, and guts, whether layperson or expert, don't allow for the statistical limitations of their knowledge. Which is why financial gurus will be quite, quite certain about their stock picks, even though, statistically, they are no better at it than monkeys with darts.

Not to say every expert snap judgment is unreliable--but generally, they are better at recognizing and assessing what is (i.e. Is this a forgery?) than what will be (i.e. Will this criminal be a repeat offender?) The quicker and more definitive the feedback, the more likely that the judgments will reflect reality. In general, in making long-range predictions, numbers and averages are more effective than experts, but experts themselves seldom believe that.

There's also an extensive section on how the humans of reality differ from the ideal, profit-maximizing entities of economic theory. Humans value things differently based on whether they currently have them or not, fear loss far more than they desire equivalent gains, and, perhaps most intriguingly, find a loss from an unusual activity far more grievous than one that occurs in routine. (This may explain the harsh reaction to parents who allow grade-school children to be unsupervised, which is no longer a "normal" activity, even though the risks to the children of driving them around are drastically higher, and nobody bats an eye at that.)

I found the final section the most fascinating, however. It looks at humans as two selves: the present, experiencing self, and the self that remembers what has happened. These two are often at odds. For instance, when observing our present experience, we would prefer misery to end quickly and pleasure to go on for a long time. But when it comes to how we actually look back, we ignore duration and only remember the moments: the highs, the lows, and how it all ended. And so our actual experience of life doesn't necessarily match up with our personal assessment of it.

We may be happy day to day but assess our lives as difficult because an unpleasant recent event looms large in our thoughts (or vice versa life may be going on much as normal but a recent achievement raises our satisfaction level). We get used to most things, and so they stop affecting our happiness level--a change in climate or health or wealth. More money does make life more pleasant up to a point, but after that there's no gain in daily happiness--but if money was your goal, it can still increase your overall life satisfaction. (He didn't mention it, but I'm betting it works the same way with more personal goals, like marriage and children.)

Anyway, quite a fascinating book and one that would definitely be beneficial reading for anyone who wants to pay more attention to the choices and judgments they make.