In conversations about the “new” discipline of behavioural economics you’ll often hear: “Fine. But we already knew that… didn’t we?”. The standard defence is “It just seems that way, now we have the proofs”. On reflection I think both the objection and the defence have merit.
I see Kahneman’s fundamental and now familiar distinction between “System 1” / “fast thinking” and “System 2” / “slow thinking” as essentially a modern day, science-led, renewal of the age-old “emotion” vs “reason” debate.
Socrates first spoke about our brains as divided between the rational and the non-rational. Plato wrote that down, but claimed that the division was between desire and emotion, and a reasonable, ‘conscious’, mind .
Aristotle basically agreed, but argued for a three-way split: reason; the passions; and a non-conscious part that controls our essential bodily functions. Bearing in mind that these Greek thinkers couldn’t possibly prove their ideas, subsequent science has ultimately made them look pretty smart.
“Irrational passions would seem to be as much a part of human nature as is reason”
– Aristotle (384 BC – 322 BC)
Fast forward to the father of modern psychology, William James, who in 1890 suggested that our emotional response may have primacy over our rational response, as well as correctly predicting much of the subsequent neuroscience of consciousness and brain function by proposing that emotions are themselves the direct neurological product of in-the-moment physiological experience.
“The emotions aren’t always immediately subject to reason, but they are always immediately subject to action”
“Emotion is only a secondary feeling: a situation first generates a primary feeling which is physiological in nature and then this physiological event triggers a corresponding emotion”
– William James (1890)
In 1947 Herbert Simon presented “bounded rationality”, the idea that when we make a choice our reason is necessarily limited by the available information, the difficulty of the choice, our intelligence, and time. By the late 1970’s Kahneman and Tversky were striking gold with proofs from their numerous behavioural psychology experiments, going on to define a wealth of related non-rational heuristics and emotion-led biases (...and thus “System 1” was born).
Next of course was Star Trek, The Next Generation. In the 1989 episode, “The Defector”, Geordi and Data tell us all about it…
How did we miss all of this? Assuming we didn’t, perhaps it explains why many feel they already know -on some level- about the primacy of emotion in decision making. Perhaps we ignored the massive historical signposting out of convenience – Western economies were until fairly recently making us wealthier, on average. Some say the West is now emerging from a slightly misguided “age of reason” and discoveries from behavioural economics, social psychology et al have been allowed to emerge and shine for two main reasons:
- Economic crisis – failing markets did not self correct as predicted by established economic and banking models and much financial carnage ensued – somehow people were acting out of pattern with the rationality enshrined in those models and so alternative ‘behavioural’ explanations were duly given greater time and credence.
- Neuroscience takes off in parallel – medical investigation confirms that human decision making happens for the most part in the emotional rather than the rational segments of the brain. Hard medical fact was consistently backing-up observation-led behavioural work.
I concede that there is much more to behavioural economics than Kahneman’s two systems, but it is the bedrock.
For those of us in marketing and research careers that tacitly favoured the idea of rational economic man (and that is a lot of us) it has spelled both trouble, and opportunity. With science now promoting the role of emotion over reason in the determination of our behaviours there is a growing acceptance that in many situations we do not act as economic models predict and we either can’t (or won’t) explain why we act differently. Worse – we unwittingly make stuff up when that is less effort (“cognitive ease”) and/or to make explanations appear more coherent with our adopted beliefs and perceived social norms.
So, yes, we have heard about “System 1” and “System 2” somewhere before (not counting all those Conference papers). And, yes, we can only learn about it properly now because of the scientific proofs that have been allowed to emerge. Ancient wisdom and modern science are aligned regarding how we make decisions and how preference works…
…and if Socrates and science are in agreement, there just might be something to it.