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125. The Undoing Project

Rating:  ☆☆☆

Recommended by:   

Author:   Michael Lewis

Genre:  Non-Fiction, Psychology, Biography, Economics, History, Public Policy

362 pages, published December 6, 2016

Reading Format:  Audio Book

 

Summary

The Undoing Project highlights the research performed by Israeli psychologists Daniel Kahneman and Amos Tversky which focused on undoing our assumptions about the decision-making process. Their papers showed the ways in which the human mind systematically erred when forced to make judgments about uncertain situations. Their work created the field of behavioral economics, revolutionized Big Data studies, advanced evidence-based medicine, and led to a new approach to government regulation. Kahneman and Tversky are more responsible than anybody for the powerful trend to mistrust human intuition and defer to algorithms.

 

Quotes

“When you are a pessimist and the bad thing happens, you live it twice.”

 

“The nice thing about things that are urgent,” he liked to say, “is that if you wait long enough they aren’t urgent anymore.”

 

“Maybe the mind’s best trick of all was to lead its owner to a feeling of certainty about inherently uncertain things.”

 

“Here was another way Israel was different from the United States: Its wars were short, and someone always won.”

 

“It’s hard to know how people select a course in life,” Amos said. “The big choices we make are practically random. The small choices probably tell us more about who we are. Which field we go into may depend on which high school teacher we happen to meet. Who we marry may depend on who happens to be around at the right time of life. On the other hand, the small decisions are very systematic. That I became a psychologist is probably not very revealing. What kind of psychologist I am may reflect deep traits.”

 

“It is amazing how dull history books are, given how much of what’s in them must be invented.”

 

“It is sometimes easier to make the world a better place than to prove you have made the world a better place.”

 

“Life is a book. The fact that it was a short book doesn’t mean it wasn’t a good book. It was a very good book.”

 

“The way it feels to me,’ he said, ‘is that there were certain ideas that I was put on this earth to think.  And now I can think them.”

 

“Wall Street trading desks at the end of each year offer a flavor of the problem. If a Wall Street trader expects to be paid a bonus of one million dollars and he’s given only half a million, he feels himself to be, and behaves as if he is, in the domain of losses. His reference point is an expectation of what he would receive. That expectation isn’t a stable number; it can be changed in all sorts of ways. A trader who expects to be given a million-dollar bonus, and who further expects everyone else on his trading desk to be given million-dollar bonuses, will not maintain the same reference point if he learns that everyone else just received two million dollars. If he is then paid a million dollars, he is back in the domain of losses. Danny would later use the same point to explain the behavior of apes in experiments researchers had conducted on bonobos. “If both my neighbor in the next cage and I get a cucumber for doing a great job, that’s great. But if he gets a banana and I get a cucumber, I will throw the cucumber at the experimenter’s face.” The moment one ape got a banana, it became the ape next door’s reference point. The reference point was a state of mind. Even in straight gambles you could shift a person’s reference point and make a loss seem like a gain, and vice versa. In so doing, you could manipulate the choices people made, simply by the way they were described.”

 

“No one ever made a decision because of a number. They need a story.”

 

“There was what people called “present bias”—the tendency, when making a decision, to undervalue the future in relation to the present. There was “hindsight bias”—which he thought of as the tendency for people to look at some outcome and assume it was predictable all along.”

 

“Confirmation bias,” he’d heard this called. The human mind was just bad at seeing things it did not expect to see, and a bit too eager to see what it expected to see. “Confirmation bias is the most insidious because you don’t even realize it is happening,” he said. A scout would settle on an opinion about a player and then arrange the evidence to support that opinion.”

 

““He suggested a new definition of the nerd: a person who knows his own mind well enough to mistrust it.”

My Take

I am a fan of Michael Lewis, having read Liar’s Poker, Moneyball, Coach, The Big Short, and The Blind Side as well as many of his blog entries on Slate.  I really enjoyed his writing and was therefore looking forward to The Undoing Project which focused on Danny Kahneman and Amos Tversky, Israeli behavioral psychologists who studied how and why we make certain decisions.  While the book was interesting at times, there was a lot of meandering that was less than compelling.  It was definitely not a page turner.  I don’t regret reading it, but am reluctant to give it a big recommendation.

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82. Happy Money: The Science of Smarter Spending

Rating:  ☆☆☆1/2

Recommended by:  

Author:   Elizabeth Dunn and Michael Norton

Genre:  Non-Fiction, Finance, Happiness, Self-Improvement

224 pages, published May 14, 2013

Reading Format:  Book

 

Summary

Professors Dunn and Norton delve into behavioral science research to explain how money can buy happiness—if you follow the five core principles of smart spending:

 

  1.  Buy Experiences:  Most Americans describe owning a home as an essential component of the American dream. But recent happiness research suggests that home ownership is far from dreamy.  Material things (from beautiful homes to fancy pens) turn out to provide less happiness than experiential purchases (like trips, concerts, and special meals).  Whether you’re spending $1 or $200,000, buying experiences rather than material goods can inoculate you against buyer’s remorse.

 

  1.  Make It a Treat:  Many residents of London have never visited Big Ben.  What stops them? When something wonderful is always available, people are less inclined to appreciate it. Limiting our access to the things we like best may help to “re-virginize” us, renewing our capacity for pleasure.  Rather than advocating wholesale self-denial (say, giving up coffee completely), we’ll demonstrate the value of turning our favorite things back into treats (making that afternoon latte a special indulgence rather than a daily necessity.

 

  1.  Buy Time:  By permitting us to outsource our most dreaded tasks, from scrubbing toilets to cleaning gutters, money can transform the way we spend our time, freeing us to pursue our passions.  Yet wealthier individuals do not spend their time in happier ways on a daily basis; thus they fail to use their money to buy themselves happier time.  When people focus on their time rather than their money, they act like scientists of happiness, choosing activities that promote their well-being.  For companies, this principle entails thinking about compensation in a broader way, rewarding employees not only with money but with time.

 

  1.  Pay Now, Consume Later:  In the age of the iPad, products are available instantly and our wallets are lined with plastic instead of paper.  Digital technology and credit cards have encouraged us to adopt a “consume not and pay later” shopping mind-set.  By putting this powerful principle into reverse—by paying up front and delaying consumption—you can buy more happiness, even as you spend less money.  Because delaying consumption allows spenders to reap the pleasure of anticipation without the buzzkill of reality, vacations provide the most happiness before they occur.

 

  1.  Invest in Others:  New research demonstrates that spending money on others provides a bigger happiness boost than spending money on yourself.  And this principle holds in an extraordinary range of circumstances, from a Canadian college student purchasing a scarf for her mother to a Ugandan woman buying lifesaving malaria medication for a friend. The benefits of giving emerge among children before the age of two, and are detectable even in samples of saliva.  Investing in others can make individuals feel healthier and wealthier—and can even help people win at dodge ball.

 

Quotes

“Looking back on their past decisions about whether to purchase experiences, 83 percent of people sided with Mark Twain, reporting that their biggest single regret was one of inaction, of passing up the chance to buy an experience when the opportunity came along.”

 

“The Big Ben Problem suggests that introducing a limited time window may encourage people to seize opportunities for treats. Imagine you’ve just gotten a gift certificate for a piece of delicious cake and a beverage at a high-end French pastry shop. Would you rather see the gift certificate stamped with an expiration date two months from today, or just three weeks from now? Faced with this choice, most people were happier with the two-month option, and 68 percent reported that they would use it before this expiration date.25 But when they received a gift certificate for a tasty pastry at a local shop, only 6 percent of people redeemed it when they were given a two-month expiration date, compared to 31 percent of people who were given the shorter three-week window. People given two months to redeem the certificate kept thinking they could do it later, creating another instance of the Big Ben Problem—and leading them to miss out on a delicious treat.  Several years ago, Best Buy reported gaining $43 million from gift certificates that went unredeemed, propelling some consumer advocates and policy makers to push for extended expiration dates. But this strategy will likely backfire. We may have more success at maximizing our happiness when treats are only available for a limited time.”

My Take

There a lot of practical advice in Happy Money that, if followed, is likely to make you happier.  In my life, I have long practiced “pay now, consume later,” especially with travel (which also involves spending on an experience, rather than a product).  For me, at least half the fun of a trip is the planning that goes into it.  I also really enjoy looking back on trips that I have taken in the past and have never regretted any money that I have spent on travel.  I am also a big fan of “make it a treat” and can personally attest to the happiness boost that results.  As a devoted student of happiness, I can unequivocally recommend Happy Money as a way to increase your happiness.

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74. Abundance: The Future Is Better Than You Think

Rating:  ☆☆☆1/2

Recommended by:  Christopher Funk

Author:   Peter Diamandis

Genre:  Non Fiction, Science, Economics

400 pages, published February 21, 2012

Reading Format:  Audio Book

 

Summary

In Abundance, tech entrepreneur turned philanthropist Peter Diamandis makes the case that the world is a lot better off than you think it is and that we are getting close to the time we will be able to meet and exceed the basic needs of every human being on earth.  Diamandis backs up this bold claim with extensive research and shows how four forces (exponential technologies, the DIY innovator, the Technophilanthropist, and the Rising Billion) are all helping to solve humanity’s biggest problems.  Abundance profiles many innovators doing amazing work including Larry Page, Steven Hawking, Dean Kamen, Daniel Kahneman, Elon Musk, Bill Joy, Stewart Brand, Jeff Skoll, Ray Kurzweil, Ratan Tata, and Craig Venter.   After discussing human needs by category—water, food, energy, healthcare, education, and freedom, Diamandis sets forth concrete targets for change and lays out a strategic roadmap for governments, industry and entrepreneurs to achieve these goals.

 

Quotes

“Quite simply, good news doesn’t catch our attention. Bad news sells because the amygdala is always looking for something to fear.”

 

“It’s incredible,” he says, “this moaning pessimism, this knee-jerk, things-are-going-downhill reaction from people living amid luxury and security that their ancestors would have died for. The tendency to see the emptiness of every glass is pervasive. It’s almost as if people cling to bad news like a comfort blanket.”

 

“Today Americans living below the poverty line are not just light-years ahead of most Africans; they’re light-years ahead of the wealthiest Americans from just a century ago. Today 99 percent of Americans living below the poverty line have electricity, water, flushing toilets, and a refrigerator; 95 percent have a television; 88 percent have a telephone; 71 percent have a car; and 70 percent even have air-conditioning. This may not seem like much, but one hundred years ago men like Henry Ford and Cornelius Vanderbilt were among the richest on the planet, but they enjoyed few of these luxuries.”

 

“I’ve got a hunk of gold and you have a watch. If we trade, then I have a watch and you have a hunk of gold. But if you have an idea and I have an idea, and we exchange them, then we both have two ideas. It’s nonzero.”

 

“Poverty was reduced more in the past fifty years than in the previous five hundred.”

“Teaching kids how to nourish their creativity and curiosity, while still providing a sound foundation in critical thinking, literacy and math, is the best way to prepare them for a future of increasingly rapid technological change.”

 

“The true measure of something’s worth is the hours it takes to acquire it.”

 

“Technology is a resource-liberating mechanism. It can make the once scarce the now abundant.”

 

“if everyone on Earth wants to live like a North American, then we’re going to need five planets’ worth of resources.”

 

“The negativity bias—the tendency to give more weight to negative information and experiences than positive ones—sure isn’t helping matters. Then there’s anchoring: the predilection for relying too heavily on one piece of information when making decisions. “When people believe the world’s falling apart,” says Kahneman, “it’s often an anchoring problem. At the end of the nineteenth century, London was becoming uninhabitable because of the accumulation of horse manure. People were absolutely panicked. Because of anchoring, they couldn’t imagine any other possible solutions. No one had any idea the car was coming and soon they’d be worrying about dirty skies, not dirty streets.”

 

“Today most poverty-stricken Americans have a television, telephone, electricity, running water, and indoor plumbing. Most Africans do not. If you transferred the goods and services enjoyed by those who live in California’s version of poverty to the average Somalian living on less than a $1.25 a day, that Somalian is suddenly fabulously rich.”

 

“Decentralized means learning cannot easily be curtailed by autocratic governments and is considerably more immune to socioeconomic upheaval.”

 

“A week’s worth of the New York Times contains more information than the average seventeenth-century citizen encountered in a lifetime.”

 

“If we were to forgo our television addiction for just one year, the world would have over a trillion hours of cognitive surplus to commit to share projects.”

 

“From the very beginning of time until the year 2003,” says Google Executive Chairman Eric Schmidt, “humankind created five exabytes of digital information. An exabyte is one billion gigabytes—or a 1 with eighteen zeroes after it. Right now, in the year 2010, the human race is generating five exabytes of information every two days. By the year 2013, the number will be five exabytes produced every ten minutes … It’s no wonder we’re exhausted.”

 

“Abundance is not about providing everyone on this planet with a life of luxury—rather it’s about providing all with a life of possibility.”

 

“Nanotechnology has the potential to enhance human performance, to bring sustainable development for materials, water, energy, and food, to protect against unknown bacteria and viruses, and even to diminish the reasons for breaking the peace [by creating universal abundance].”

 

“Today mammography requires an expensive, large, stationary machine that takes a crude, two-dimensional picture. But imagine a ‘bra’ that has tiny X-ray pixel emitters on the top and X-ray sensors on the bottom. It’s self-contained, self-powered, has a 3G or Wi-Fi-enabled network, and can be shipped to a patient in a FedEx box. The patient puts on the bra, pushes a button, and the doctor comes online and starts talking: ‘Hi. All set to take your mammogram? Hold still.’ The X-ray pixels fire, the detectors assemble and transmit the image, and the doctor reads it on the spot. The patient ships back the package, and she’s done. With little time and little money.”

 

My Take

Abundance is my kind of book.  I have always been a “glass half full” person and it is encouraging to read an optimistic take on the future of the world.  So many people think that we live in terrible times and that things are getting worse.  Peter Diamandis repeatedly demonstrates that folly of that mindset and that things have never been better.  Not only is the world-wide poverty rate declining dramatically and rapidly, but there are a plethora of technological innovations coming our way that will make life better and more meaningful.  Abundance made me realize how good we have it now and excited for all of the future developments that are coming our way soon.

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