A Deliberate Morning This morning I finished my notes for an upcoming lecture in my graduate-level theory of computation course. There are two points I … Read more
The Chess Master and the Economist A reader recently sent me an interesting interview with Ken Rogoff, a hotshot economics professor at Harvard. As a … Read more
Professorial Exodus Living in Cambridge, Massachusetts, which I did for many years after college, I learned to recognize a curious ritual. Come June, the academic … Read more
In the early winter of 2004, I was a senior at Dartmouth College and in the fortunate position of having two good job offers.
The first was from Microsoft. It paid, by 2004 standards, about as much as you could possibly earn right out of college (around $85,000 in cash and stock per year).
The second offer was to join the computer science PhD program at MIT. It paid considerably less (around $28,000 in stipend) but promised near complete freedom (MIT is quite unstructured and entrepreneurial).
I had no clear preference for which job to take — they both seemed exciting. But in my effort to make a decision, I stumbled on a key tool in the career craftsman toolbox.
The following question came from a sophomore finance major at a well-known state university:
I have read and heard that entry-level investment bankers have to work long hours doing meaningless grunt work assigned by bosses (sometimes portrayed as evil)…How can your career craftsman philosophy be applied to high stakes fields such as finance?
This reader believed in my career philosophy and was perfectly happy to sidestep the flawed idea that he should “follow his passion.” But the option of heading into investment banking — a popular choice for his major at his university — was making him nervous. The requirements for standing out in this field seemed brutal and he wasn’t inspired by the rewards you can obtain for banking stardom (more respect and money in exchange for more work hours and stress).
Daniel Kahneman met Amos Tversky in 1969 when Tversky came to Hebrew University to give a talk.
As Kahneman recalls in his 2011 intellectual biography, Thinking, Fast and Slow, the two researchers hit it off and decided to pursue a joint project: figuring out if some people had more of an intuitive grasp of statistics than others.
They discovered that the answer, universally, was a resounding “no.”
“Our expert colleagues…greatly exaggerated the likelihood that the original result of an experiment would be successfully replicated,” Kahneman recalls of their results. “They also gave poor advice to a fictitious graduate student about the number of observations she needed to collect.”
“Even statisticians are not good intuitive statisticians,” he concluded.
This small observation led to a bigger idea: perhaps humans are hardwired with cognitive shortcuts to help them make sense of an uncertain world, and perhaps these shortcuts, in certain situations, consistently lead to irrational conclusions.
This hypothesis was profound. At the time, social science believed that humans were fundamentally rational, and only emotion, like fear or anger, could lead us to irrational behavior. Kahneman and Tversky were proposing that humans, on the contrary, were wired for illogic.
To support this view, they gathered over twenty different examples of cognitive shortcuts consistently leading to irrational conclusions. They combined the results into a paper titled “Judgment Under Uncertainty: Heuristics and Biases.”
They published the paper in the journal Science where it has since become one of the most important studies in all of social science. (According to Google Scholar, it’s been cited over 13,500 times since its publication.) The paper formed the foundation for the field of behavioral economics, which won Kahneman the Nobel Prize in 2002 (Tversky had died seven years earlier).
Here’s what caught my attention about this story. This paper — Kahneman and Tversky’s first publication on their theory — came out in 1974, a half decade after they first began pursuing the underlying ideas. In other words, it took them a full five years to refine a rough hunch, through systematic exploration and discussion, into an idea too good to be ignored.
They were, in short, diligent.
The reason I’m telling you about Kahneman and Tversky, however, is that I’m convinced that there must be more to the story…
