On today’s Plain English: the legacy of Daniel Kahneman, the grandfather of behavioral economics
Lesson summary
Hi there everyone, I’m Jeff and this is Plain English, where we help you upgrade your English with current events and trending topics. If this is your first time listening—and every day is someone’s first time listening—if that’s you today, then you’re in for a treat . This one, and the episode on Monday, are great examples of what we do here at Plain English.
We tell stories about the world. And by listening, you’ll hear things that you might otherwise not have heard in English. You might have heard about them in your first language, but not in your second. So this gets you thinking about new ideas in English—and you’ll definitely pick up some new words and new skills along the way.
Today is all about Daniel Kahneman, a psychologist, one of the most influential thinkers in the field called “behavioral economics.” And if you don’t know what that is, or if you’re not interested in psychology or economics, don’t worry: Daniel Kahneman’s life’s work was about how humans act. That’s something we can all be interested in.
In the second half of the lesson today, I’ll show you when exactly to use the phrasal verb “pass away” and when to simply say someone has died. That’s the second half of today’s lesson.
Remember, the full lesson is available online at PlainEnglish.com/677. That includes transcripts, quizzes, activities, exercises, and the chance to practice what you learn with me. PlainEnglish.com/677.
Let’s dive in.
Daniel Kahneman and behavioral economics
If you studied economics, you’re probably familiar with a fantasy type of person . That person is, half-jokingly , called “homo economicus.” It’s a play on words : “homo sapiens” is the name of our real-life species , so “homo economicus” is a pretend kind of human-like animal.
Homo economicus is always rational . Any time he makes a decision, he gathers the required information , thinks through all possible outcomes , carefully weighs the pros and cons , and then he chooses the option that maximizes his self-interest .
Much of the classical study of economics rests on this model of human behavior . When we make decisions about what to buy, where to work, or how to invest , we humans act consistently and rationally, just like homo economicus would.
This is of course a fantasy. As my economics teachers told me, this is not a realistic model of the world, but it is a useful one. Economists have always known that people aren’t exactly like that. Sure, humans make bad or foolish decisions now and then . But homo economicus is a useful way of looking at the economy and the world since it was thought to be close enough.
But about fifty years ago, a group of academics started to look more closely at homo economicus—and they started to ask whether this really was a “close enough” description of how humans acted. What if humans were hard-wired not to always act in our own best interests? What if our “mistakes,” our foibles , were the rule and not the exception?
That field eventually became known as behavioral economics or behavioral science. And one of the leaders of that field was named Daniel Kahneman. He passed away in March at the age of 90.
You may know Kahneman as the author of a very popular book called “Thinking, Fast and Slow.” He won the Nobel Prize in economics in 2002 and is considered the “grandfather of behavioral economics.”
He has an interesting personal story. Kahneman was born in 1934 in Tel Aviv, which was then part of British-controlled Palestine. He spent his early years in Paris and was just six years old when the Nazis occupied France. He tells the story of being out past curfew as a young boy. He was required to wear a Star of David on his clothing to identify himself as a Jew , but he had turned the sweater inside out .
An SS officer saw him out late and called him over. The officer picked him up and gave him a hug . He showed Daniel a picture of his own young child back home and said he missed his son : that’s why he wanted to give Daniel a hug.
Kahneman said in an interview much later that he learned from this experience: that humans are very, very complicated things.
Kahneman returned to Tel Aviv with his family after World War II and later attended Hebrew University of Jerusalem.
Though he’s most associated with economics, and though he won the Nobel Prize in Economic Sciences, Kahneman never formally took an economics class. He studied psychology and mathematics as an undergraduate . From a young age, he was interested in psychology . As a child, he didn’t much care whether God existed; instead, he was interested in why humans believed in God.
As an Israeli citizen, Kahneman was required to perform several years of military service. He did that after his undergraduate years. Then, he went to the University of California, Berkeley to study for a PhD in psychology. He returned to Israel for what he thought would be a career as a professor of psychology.
But then one of the great intellectual partnerships in modern history formed. He met Amos Tversky, a psychologist at Hebrew University. They collaborated for many years on what would become known as behavioral economics.
Kahneman and Tversky worked intensely together for ten years. They examined assumptions about human behavior, and then tested them against their own lives and experiences. Often, they’d find an economic model that said people do one thing—but they examined themselves, their own lives, their own decision-making , and they discovered that they themselves didn’t behave the way models suggested. So they designed thought experiments to challenge deeply-held assumptions about human behavior.
This is important. Remember homo economicus? Economists relied on that unrealistic portrayal of humans because they didn’t have a clearer understanding of how and why humans acted the way they did. Kahneman and Tversky weren’t the first to point out that homo economicus was unrealistic. But they were the first to design experiments to show just how unrealistic homo economicus was—and in what ways.
Kahneman moved around, working in Israel and Canada, before settling at Princeton University, a few hours outside of New York City. He spent decades living in an apartment in Greenwich Village in New York.
Kahneman collaborated with leading thinkers in psychology and economics for his whole academic life. He worked with co-authors throughout his career —Amos Tversky, Richard Thaler, Cass Sunstein, Olivier Sibony, and others. He published several books, but rose to prominence with “Thinking, Fast and Slow,” which details the brain’s two-mode way of making decisions. Later in his career, he focused on the ways human judgment is flawed —even though we think it’s really good.
His work helped revolutionize , but also complicate, the study of economics. He was considered one of the most influential thinkers in the world, not just in the world of economics. He passed away at the end of March, just weeks after his ninetieth birthday.
Jeff’s take
For his whole career , Kahneman examined how humans behave and make decisions. What he found is not flattering to humans. But this is more than just a curiosity : if we know how our brains are wired to behave, then we can purposely design our lives in a way that makes us happier and better off in the long run .
Next week, we’ll take a look at some of Daniel Kahneman’s biggest findings , and we’ll talk about how we can use those findings to be happier ourselves.
Great stories make learning English fun
