Daniel Kahneman changed the lives of many

What was most interesting for me about Kahneman’s work was not the framework of Prospect Theory nor the nuances of loss aversion, but the world of heuristics, the short-cuts that the brain takes while taking a decision.
What was most interesting for me about Kahneman’s work was not the framework of Prospect Theory nor the nuances of loss aversion, but the world of heuristics, the short-cuts that the brain takes while taking a decision.

Summary

  • His trove of ideas inspired a career switch aimed at solving real-world problems of behaviour.

To most, professor Daniel Kahneman (1934-2024) is best known for his path-breaking explorations of how people’s decisions deviate from perfect rationality and the Nobel Prize he won for that work. For me, Professor Kahneman is someone who changed the course of my life.

In the 1990s, I was an advertising professional. While being part of the ad industry, I knew that much of what we were doing to understand and influence human behaviour was not really working. So, I questioned a lot what I was doing in my daily job. Deep within, I had a passion to understand human behaviour better. So anything new about human behaviour caught my attention.

I remember reading an article in Business Standard in 2002. It was about the man who had won that year’s Nobel Prize in Economics and a brief explanation of his theory. Even before finishing the article, I was ecstatic. I knew I had found the theoretical foundation of human behaviour that I was desperately searching for. Until then, I had an inkling that understanding human brain processes could be the key to understanding behaviour. But I had dismissed it as just another random thought of an average intellectual. But Kahneman’s Nobel Prize changed it all.

What was most interesting for me about Kahneman’s work was not the framework of Prospect Theory, nor the nuances of loss aversion. I was delighted to hear about the world of heuristics, the short-cuts that the brain takes while taking a decision. It greatly strengthened my fledgling thought that understanding various processes in the brain will surely give me new insights into human behaviour. From then on, my quest to acquire as much knowledge about the human brain as possible increased by leaps and bounds.

The thought of starting a firm based on this new understanding of human behaviour popped up in my head in 2006. But I had to convince some of my very talented friends to join me in this new venture. This was few years before the UK or US governments had started their behavioural insights teams. Books like Nudge (by Richard Thaler and Cass Sunstein) were not yet published. So the only lifeline I had to convince my friends to join me in this new journey of human behaviour management was Kahneman’s Nobel Prize. And then, in 2007, I co-founded FinalMile Consulting, a firm dedicated to applying the principles of Behavioural Economics to solve real-life human behaviour problems. The confidence to start my entrepreneurial journey, thus, was derived from the inspiration I got from the uniqueness of Kahneman’s ideas.

In the initial years of FinalMile, it was almost impossible to convey even to the most educated what this new theory of human behaviour was. So, in every presentation that I and my colleagues made, one slide was constant. It had a photograph of Kahneman receiving the Nobel Prize. That slide was the most convincing proof we could offer that the theory we were presenting was worth listening to.

We knew that the world of mental short-cuts offered a view of human behaviour that was quite different from that of the rational man theory which held influence until then. We really believed that this new knowledge would help develop more effective solutions for human-behaviour-related problems. But the truth is that we knew very little about the world of heuristics and biases. To support all the discussions and debates we held in our office on the new world of heuristics, books were the only guides we had. That is when books like Choices: Values and Frames, Heuristics and Biases: The Psychology of Intuitive Judgement that Kahneman co-authored became our constant companions. To be honest, these academic books were not nearly as simple to read and understand as his later book, Thinking, Fast and Slow. But we had no other option back then.

Ekalavya, the character from the Mahabharata, had carved out a statue of his guru Dronacharya from the mud the teacher had walked upon. Ekalavya became a great archer, overhearing Dronacharya’s instructions and practising in front of that statue. Similarly, my team and I derived lot of confidence by having Kahneman’s photograph in our presentations. We acquired much knowledge reading various books and articles he had written and listening intently to recordings of every talk he gave. What Dronacharya was for Ekalavya, Professor Kahneman was for us.

I never had an opportunity to meet Professor Kahneman in person. But I know that Professor Richard Thaler and some journalists had informed him of how my team had taken learnings and inspiration from him to develop innovative solutions for several human-behaviour problems around the world. But he remained pessimistic about one’s ability to tackle such problems. His pessimism emanated from his deep understanding of the human brain’s complexities. For example, he knew that getting people to accept short-term costs in their daily lives in order to mitigate higher but uncertain losses in the future is exceptionally hard. So the professor saw no path to success in solving the planet’s climate-change problem.

Had it not been for the presence of certain people in our lives, we would not be what we are today. I have no doubt, if I had not known Daniel Kahneman and his work, I would not be where I am today.

So, in his memory, I would like to offer my pranam to Professor Daniel Kahneman, my behaviour guru.

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