A few years back I used to experience thumping palpitations in my heart whenever I climbed steps. This condition came about suddenly without any advance warning. I consulted a noted physician in my town, and after doing blood and other tests he diagnosed my problem as rheumatic heart disease. He prescribed drugs and warned me that I had to be on life-long medication. I was totally depressed. Friends and relatives suggested that l should consult another doctor for a second opinion. The second doctor was a cardiologist. He ordered an echocardiogram test and found a lump of tissue in my left atrium. I had left atrial myxoma. After the tumor was surgically removed, my problem was gone.
Not long ago I purchased a piece of land in a bustling town. The purchase decision was made without much thought, on the advice of a friend.
Those days real estate prices were shooting up by the day and l was in a tearing hurry to get on to the real estate bandwagon. After the purchase was made, I realised that the land had no proper access and that the seller had a previous agreement with another buyer. With great difficulty and some financial loss I could finally get rid of the land.
Daniel Kahneman, economist and psychologist, a Nobel prize winner, in his book, Thinking Fast and Slow, slots the human thinking process into two categories. System 1 thinking wherein the brain takes snap and intuitive judgments based on limited knowledge. System 2 thinking is a deliberate thinking process in which lot of information is gathered and options are considered. If we analyse the two cases mentioned above, the first case was an outcome of System 2 thinking. Options were searched and the better option was chosen. The second case is an example of System 1 thinking. A snap judgment was made on the basis of a limited amount of information and this led to lot of trouble. System 1 thinking was best suited when human beings were wandering in the African savanna. He had to make a quick judgment whether the figure lurking behind a bush was a lion or a harmless deer. In his daily life he had neither the time nor the security to think through things.
But modern life affords humans the luxury of security, time and abundant information to use System 2 thinking. Unfortunately for many of us, System 1 thinking is the default thinking mode. We use it constantly and make many mistakes.
Rolf Dobelli, the Swiss author, in his book The Art of Thinking Clearly, puts together a hundred biases in human thinking which lead to wrong judgments. The list of biases include the contrast effect, the fear of regret, loss aversion, reciprocity, the anchor effect, the sleeper effect, story bias, the halo effect, the availability bias and so on.
The common theme running through all these biases is snap judgments made intuitively on limited information. Most of our purchases of branded goods are influenced by the halo effect. Our minds are mesmerised by the aura built around them. We purchase them without examining quality parameters.
Knowing full well that System 1 thinking leads us to make mistakes we can’t free ourselves from System 1 thinking. From morning to evening in our daily life we have to make hundreds of judgments. We can’t sit on each event and ponder over options. If we do that, we’ll be stuck. Many of our decisions are snap decisions and most of the time it is ok with these decisions. When it’s a big event such as choosing a life-partner, choosing a career, leaving a job, buying a home, making a large investment or any instance of substantial stake, we have to sit up and play System 2 thinking.
There is no guarantee that when we use System 2 thinking, we’ll get the best outcomes. In spite of the time and effort put into System 2 thinking, sometimes the result may be contrary to expectations. A big black swan may come up to thwart our expectations. In such cases, we have to console ourselves by remembering that the world is its own master and that we cannot control it. Life could throw up surprises. We have to take them in our stride and move on.
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