- Person
- Daniel Kahneman
- Lived
- 1934–2024
- Field
- Psychology, behavioural economics
- From
- Israeli-American
The story
Classical economic theory assumes that a rational person's choices should not depend on how the options are described. Daniel Kahneman and Amos Tversky, Israeli psychologists who had worked together since 1969, called this principle invariance. While developing prospect theory in the 1970s they began creating pairs of problems that showed how often people violate it.
After completing prospect theory during the 1977 to 1978 academic year at Stanford, they turned fully to framing, the study of how the way a choice is described changes what people decide. A framing effect appears when two transparently equivalent versions of a problem nevertheless produce predictably different choices. They published their findings in 1981 in Science, in a paper titled The Framing of Decisions and the Psychology of Choice.
Their best-known example asked people to choose between public-health programmes to fight an epidemic threatening 600 lives. Described in terms of lives saved, one programme would save 200 people for certain while the other offered a one-in-three chance of saving all 600. Most people, 72 per cent in the original study, chose the sure thing. When the same options were described in terms of deaths, 400 people dying for certain against a two-in-three chance that all 600 would die, 78 per cent preferred the gamble, even though the outcomes were identical. When people saw both versions and noticed their inconsistency, they were embarrassed, and had no intuition to guide them in resolving it.
Their framing work also included riskless choices, drawing on ideas from a young economist, Richard Thaler, whose friendship with Kahneman began around that time. In one of Kahneman's examples, people who lose a theatre ticket are much less willing to buy another than people who lose the same amount in cash, because the lost ticket feels like paying twice for the same show.
Kahneman insisted that these were not parlour games demonstrating human stupidity. They revealed a basic limitation of the mind: people would wish to avoid framing effects but cannot. The insight that preferences depend on presentation now informs how risks are communicated in medicine, finance and public policy.
Why it matters
Framing research now shapes how doctors explain risks to patients and how public agencies communicate choices so that people can decide well.
About Daniel Kahneman
Child survivor of Nazi-occupied France who, with Amos Tversky, mapped the systematic errors of human judgment, founded behavioural economics and won the 2002 Nobel Prize in economics.
More about Daniel Kahneman
- Daniel Kahneman named the illusion of validityWatching army officer candidates, Daniel Kahneman noticed that assessors stayed confident despite proof their predictions failed. He called it the illusion of validity, his first cognitive illusion.
- Daniel Kahneman built the Israeli army's recruit interviewAt 21, Daniel Kahneman designed a structured interview for all Israeli combat recruits. It roughly tripled the interviews' predictive power and stayed in use for decades.
- Daniel Kahneman found how we remember painDaniel Kahneman showed that memories of painful experiences depend mostly on their worst moment and their end, the peak-end rule, a finding that can make medical procedures easier to bear.
- Prospect theory became the most cited paper in economicsDaniel Kahneman and Amos Tversky's 1979 paper on prospect theory, showing how people really weigh gains and losses, became the most cited paper in economics.
- Daniel Kahneman showed the eye's pupil tracks mental effortWith Jackson Beatty, Daniel Kahneman discovered that people's pupils dilate steadily as they hold more digits in memory, giving scientists a window onto mental effort.
- Daniel Kahneman's eureka moment about praise and blameWhen an Israeli flight instructor insisted that shouting worked better than praise, Daniel Kahneman realised he was seeing regression to the mean, the most satisfying eureka of his career.
- Thinking, Fast and Slow brought Kahneman's ideas to millionsDaniel Kahneman's 2011 book Thinking, Fast and Slow, describing fast intuitive and slow deliberate thinking, became an international bestseller and won major book awards.
- Kahneman and Tversky mapped the mind's shortcutsIn 1974 Daniel Kahneman and Amos Tversky published Judgment under Uncertainty: Heuristics and Biases, showing how mental shortcuts lead to predictable errors.
- Kahneman's theory helped launch behavioural economicsWhen a 1975 draft of prospect theory reached the young economist Richard Thaler, it explained his puzzles, such as the endowment effect, and helped launch behavioural economics.
- Daniel Kahneman championed adversarial collaborationDaniel Kahneman urged scientists who disagree to run joint experiments instead of trading hostile rebuttals, a practice he called adversarial collaboration.
Sources
- Daniel Kahneman: Biographical NobelPrize.org
- Framing effect (psychology) Wikipedia
Another act of tikkun olam. This is part of tikkun olam, the Jewish idea of repairing the world, and every one of us can add to it.