(RepublicanDaily.org) – Behavioral economics pioneer Daniel Kahneman has passed away at the age of 90 years old.
Kahneman won a Nobel prize for economics for his work, which showed that humans have ingrained neurological biases, which in turn influence the way we make decisions. Kahneman’s research caused waves across the economic world, as it was a radical departure from long-held beliefs that were espoused by famous historical thinkers such as Adam Smith.
Before Kahneman’s research came out, humans were deemed as “rational actor” – individuals who always acted with self-interest in mind and used logic and reason to make decisions such as what car to buy or what job or career to take. The Israeli-American economist, along with long-time collaborator Amos Tversky, showed that human decision-making is comprised by a myriad of factors that include subconscious mental quicks that are irrational and even harmful at times.
He won the Nobel Memorial Prize in Economic Sciences in 2002. However, Tversky died in 1996, and lost his chance at a Nobel Prize, since the award is never given posthumously.
Kahneman’s work was published in his book called “Thinking, Fast and Slow,” which came out in 2011. Here, Kahneman expressed a negative view of people’s approach to solving problems in general. He wrote that many people find “cognitive effort at least mildly unpleasant” even to the point of avoiding it (thinking) “as much as possible.” Kahneman also said that many people put too much stock in their own intellectual and decision-making prowess.
Kahneman and Tversky’s research eventually became the base from which the field of behavioral economics was established, where psychological factors are considered the way humans make economic or financial decisions. Their work has had far-reaching applications, anywhere from governments’ policy making, giving doctors extra tools to make more accurate diagnoses, and to changing the way baseball scouts assess would-be players.
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