Is Daniel Kahneman the most important social scientist of his generation?

Daniel Kahneman is the flavor of the econ season as he has just released his new book – Thinking, Fast and Slow, A dear friend suggests it is a must read as it covers almost anything and everything on how human mind thinks and acts..

There are two superb profiles of the man who introduced behavioral economics to the world (alongwith Amos Tversky).

First is a profile by Michael Lewis nicely titled as King of Human Error (TGS titles it as  Great Man Kahneman). And second is this by Evan R. Goldstein is managing editor of The Chronicle Review. I learnt via this article that the name prospect theory is meaningless. Kahneman and Tversky wanted something distinctive and easy to remember. It surely has sruck in minds.

Chronicle also points to this astonishing graph which shows reach of Prospect theory. Its broad idea that people are sisk averse when they make profits and risk seekers when losing has found applications in many fields – medicine, law, political science etc. So far, there have been 8000 references in different journals and chapters across many disciplines. That is truly massive.

 Their Science and Econometrica papers are among the two most cited in all of social science. According to the Thomson Reuters Web of Science, Kahneman has appeared or been cited in scholarly journals more than 28,312 times since 1979. In 2002 he won the Nobel in economic science for “having integrated insights from psychological research into economic science.”

Kahneman’s career tells the story of how an idea can germinate, find far-flung disciples, and eventually reshape entire disciplines. Among scholars who do citation analysis, he is an anomaly. “When you look at how many areas of social science he’s put his fingers in, it’s just ridiculous,” says Jevin West, a postdoctoral researcher at the University of Washington, who has helped develop an algorithm for tracing the spread of ideas among disciplines. “Very rarely do you see someone with that amount of influence.”

Political scientists use prospect theory to model foreign-policy decision making. Some international-relations scholars argue that cognitive biases favor hawkish policies, making wars more likely to begin and more difficult to end. (Kahneman shares that view.) At Columbia University, an interdisciplinary group of economists, psychologists, and anthropologists is building on Kahneman’s ideas about risk perception to better understand apathy about climate change. Kahneman’s services are also, not surprisingly, in demand on Wall Street. Guggenheim Partners, a New York-based global financial-services firm that manages more than $125-billion in assets, has recently advertised a Kahneman-designed “proprietary approach” to help “high-net-worth investors understand their specific attitudes toward risk.”

It may be in the policy world where Kahneman’s ideas have gained the most recent attention and may have the most impact. In the late 1990s, a movement in behavioral law and economics emerged to challenge the assumption in conventional law and economics that judges, jurors, criminals, and consumers are rational. That school of thought, which emerged in the 70s and is most closely associated with Richard Posner, is seen as a bulwark of free-market libertarianism. If people make good choices, the thinking goes, government need only get out of their way. Critics were at a disadvantage, says Thaler. They had misgivings and arguments, but no competing theory of economic behavior. “Then Kahneman and Tversky came along,” he says. “People who felt like they were being bullied now had something to hit back with.”

The article also points how Richard Thaler who tool over the baton (though Kahneman is still active) got linked to the Israeli duo. Which itself is a fascinating story. And then how Kahneman overcame WW-II fears to become a top mind in the area of social science..

Superb profiles both of them. Must read…

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One Response to “Is Daniel Kahneman the most important social scientist of his generation?”

  1. Marc Weiss Says:

    Thanks for this post — extremely interesting.

    You mention an interdisciplinary group at Columbia that’s using Kahneman’s ideas to understand apathy about climate change. Can you please provide a link to more information on that group?

    Thanks!

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