Good news, fellow readers: According to recent studies conducted by the U.S. Department of Labor, business people who read at least seven business books per year earn over 2.3 times more money than those who only read one per year. Why? Because of the constant flow of new ideas and strategies, of course! Last month, the topic was thinking differently with Gregory Berns’ “Iconoclast“; this month we tackle “Thinking, Fast and Slow” by Nobel Prize winner Daniel Kahneman. And if you read it, go ahead and mark yourself down for two (of your seven) books for 2012 as it is just chockful of lessons from one of the planet’s great minds in economics. Where Berns challenged our shortcut-taking minds,Kahneman breaks human thinking into System 1 (automatic, quick, no voluntary control) and System 2 (slow, effortful, where complex concentration resides). Think of it this way: If you’ve already said, “I don’t need another brain book on my list,” well, that was your System 1 at work, but if you’re now saying, “Wait, I’m pretty susceptible to snap judgements and maybe it’s not too late to address that,” say hello to System 2!
Kahneman writes, “One of the main functions of System 2 is to monitor and control thoughts and actions ‘suggested’ by System 1.” Ready to test this? The author admonishes that you listen to your intuition on this puzzle: A bat and ball costs $1.10; the bat costs one dollar more that the ball; how much does the ball cost? If you said $.10, congratulations… so do most people (ahem, me too). Check again – it’s actually $.05 (because if the ball cost a dime, the total cost would be $1.20, right?). Reading this book causes the reader to wonder about what conclusions he/she jumps to intuitively. Kahneman calls this phenomenon WYSIATI – what you see is all there is – which is where our wayward overconfidence comes from. And be prepared to reflect when reading the chapter called Anchors, which will speak to how you shop, estimate, and negotiate. You’ll never look at a “Limit 10 per Customer” sign the same way.