THURSDAY, AUGUST 09, 2012
Book review: “Thinking, fast and slow” by Daniel Kahneman
Thinking, Fast and Slow
By Daniel Kahneman
Farrar, Straus and Giroux (October 25, 2011)
I am always on the lookout for ways to improve my scientific thinking. That’s why I have an interest in the areas of sociology concerned with decision making in groups and how the individual is influenced by this. And this is also why I have an interest in cognitive biases – intuitive judgments that we make without even noticing; judgments which are just fine most of the time but can be scientifically fallacious. Daniel Kahneman’s book “Thinking, fast and slow” is an excellent introduction to the topic.
Kahneman, winner of the Nobel Price for Economics in 2002, focuses mostly on his own work, but that covers a lot of ground. He starts with distinguishing between two different modes in which we make decisions, a fast and intuitive one, and a slow, more deliberate one. Then he explains how fast intuitions lead us astray in certain circumstances.
The human brain does not make very accurate statistical computations without deliberate effort. But often we don’t make such an effort. Instead, we use shortcuts. We substitute questions, extrapolate from available memories, and try to construct plausible and coherent stories. We tend to underestimate uncertainty, are influenced by the way questions are framed, and our intuition is skewed by irrelevant details.
Kahneman quotes and summarizes a large amount of studies that have been performed, in most cases with sample questions. He offers explanations for the results when available, and also points out where the limits of present understanding are. In the later parts of the book he elaborates on the relevance of these findings about the way humans make decision for economics. While I had previously come across a big part of the studies that he summarizes in the early chapters, the relation to economics had not been very clear to me, and I found this part enlightening. I now understand my problems trying to tell economists that humans do have inconsistent preferences.
The book introduces a lot of terminology, and at the end of each chapter the reader finds a few examples for how to use them in everyday situations. “He likes the project, so he thinks its costs are low and its benefits are high. Nice example of the affect heuristic.” “We are making an additional investment because we not want to admit failure. This is an instance of the sunk-cost fallacy.” Initially, I found these examples somewhat awkward. But awkward or not, they serve very well for the purpose of putting the terminology in context.
The book is well written, reads smoothly, is well organized, and thoroughly referenced. As a bonus, the appendix contains reprints of Kahneman’s two most influential papers that contain somewhat more details than the summary in the text. He narrates along the story of his own research projects and how they came into being which I found a little tiresome after he elaborated on the third dramatic insight that he had about his own cognitive bias. Or maybe I’m just jealous because a Nobel Prize winning insight in theoretical physics isn’t going to come by that way.
I have found this book very useful in my effort to understand myself and the world around me. I have only two complaints. One is that despite all the talk about the relevance of proper statistics, Kahneman does not mention the statistical significance of any of the results that he talks about. Now, this is all research which started two or three decades ago, so I have little doubt that the effects he talks about are indeed meanwhile well established, and, hey, he got a Nobel Prize after all. Yet, if it wasn’t for that I’d have to consider the possibility that some of these effects will vanish as statistical artifacts. Second, he does not at any time actually explain to the reader the basics of probability theory and Bayesian inference, though he uses it repeatedly. This, unfortunately, limits the usefulness of the book dramatically if you don’t already know how to compute probabilities. It is particularly bad when he gives a terribly vague explanation of correlation. Really, the book would have been so much better if it had at least an appendix with some of the relevant definitions and equations.
That having been said, if you know a little about statistics you will probably find, like I did, that you’ve learned to avoid at least some of the cognitive biases that deal with explicit ratios and percentages, and different ways to frame these questions. I’ve also found that when it comes to risks and losses my tolerance apparently does not agree with that of the majority of participants in the studies he quotes. Not sure why that is. Either way, whether or not you are subject to any specific bias that Kahneman writes about, the frequency by which they appear make them relevant to understand the way human society works, and they also offer a way to improve our decision making.
In summary, it’s a well-written and thoroughly useful book that is interesting for everybody with an interest in human decision-making and its shortcomings. I’d give this book four out of five stars.
Below are some passages that I marked that gave me something to think. This will give you a flavor what the book is about.
“A reliable way of making people believe in falsehoods is frequent repetition because familiarity is not easily distinguished from truth.”
“[T]he confidence that people experience is determined by the coherence of the story they manage to construct from available information. It is the consistency of the information that matters for a good story, not its completeness.”
“The world in our heads is not a precise replica of reality; our expectations about the frequency of events are distorted by the prevalence and emotional intensity of the messages to which we are exposed.”
“It is useful to remember […] that neglecting valid stereotypes inevitably results in suboptimal judgments. Resistance to stereotyping is a laudable moral position, but the simplistic idea that the resistance is cost-less is wrong.”
“A general limitation of the human mind is its imperfect ability to reconstruct past states of knowledge, or beliefs that have changed. Once you adopt a new view of the world (or any part of it), you immediately lose much of your ability to recall what you used to believe before your mind changed.”
“I have always believed that scientific research is another domain where a form of optimism is essential to success: I have yet to meet a successful scientist who lacks the ability to exaggerate the importance of what he or she is doing, and I believe that someone who lacks a delusional sense of significance will wilt in the fact of repeated experiences of multiple small failures and rare successes, the fate of most researchers.”
“The brains s of humans and other animals contain a mechanism that is designed to give priority to bad news.”
“Loss aversion is a powerful conservative force that favors minimal changes from the status quo in the lives of both institutions and individuals.”
“When it comes to rare probabilities, our mind is not designed to get things quite right. For the residents of a planet that maybe exposed to events no one has yet experienced, this is not good news.”
“We tend to make decisions as problems arise, even when we are specifically instructed to consider them jointly. We have neither the inclination not the mental resources to enforce consistency on our preferences, and our preferences are not magically set to be coherent, as they are in the rational-agent model.”
“The sunk-cost fallacy keeps people for too long in poor jobs, unhappy marriages, und unpromising research projects. I have often observed young scientists struggling to salvage a doomed project when they would be better advised to drop it and start a new one.”
“Although Humans are not irrational, they often need help to make more accurate judgments and better decisions, and in some cases policies and institutions can provide that help.”
Here is a link to the original article: http://backreaction.blogspot.mx/2012/08/book-review-thinking-fast-and-slow-by.html
While there are no hard-and-fast rules in front-panel package design, here are some guidelines to help you define your brand on today’s cluttered retail shelves.
Branding, marketing, and advertising all converge on the front panel of a retail package. Dedicated package designers would argue a package does all of that and more, and that nothing represents the brand more than the retail package. That’s because the package is the last place the consumer interacts with the brand prior to making a purchase decision. There are certainly no hard-and-fast rules in front-panel package design, and some categories have much more freedom to experiment. But here are some guidelines that will help you define your brand on the front panels of packages on today’s cluttered retail shelves.1. Determine the brand “position.” Know your company and your brand and your core values. Ask the hard questions again and again, and don’t underestimate the savvy of today’s consumers. Is there a unique value proposition? What is the primary product benefit, lifestyle advantage, or convenience gain? For a new brand or brand extension, remember that getting noticed is often the most important goal.
• Who am I? Do I represent something tangible? Do I inspire trust?
• What makes me special? Where do I fit in among competitors?
• Why would they buy me? What’s the most important benefit or advantage?
• How can I connect with consumers emotionally? What cues can I use?
4. Make one element the hero. Is the personality of the brand strong enough to stand on its own? Determine what is the most important single idea to communicate about your product. If you’re going to “own” something, what is that something? Align secondary brand messages under the primary umbrella message. If your brand is the hero, consider “locking in” a tagline with the logo. But make sure you’re committed to that tagline for the long haul. Otherwise, look for inspiration outside the category, which can often lead to breakout design. Use shapes, colors, illustrations, and photographs to reinforce the hero of your brand story. Above all else, make it easy for repeat buyers to find you the next time.
5. Keep it simple. Less is often more—communication-wise. Be succinct, both verbally and visually. Three main visual cues are all that the typical eye will tolerate. Successful package design is often an exercise in constraint. Remove overloaded messages on the front panel. Limit marketing claims and benefit statements. Any more than two or three, and the points will be counterproductive. Too many benefits will dilute the core brand message, and it will actually cause the consumer lose interest in the store aisle. Remember, most packages have secondary panels for more information. That’s where shoppers look when they want to learn more. Use the secondary panels, but don’t skimp on design for those either. If secondary panels are unavailable, consider a hangtag to tell a deeper brand story.
6. Manage stakeholder expectations. Expect some stakeholders to want to put all the information or marketing claims they have on the front panel. Remind them that a package is not an advertisement. Be prepared for the counter-arguments by having a repeatable design development process. Back the process up with checkpoints and transparency and show progress with visual aids. Explain how the process is both expansion and contraction, and have everyone sign off on the process before starting. Quickly develop three to five options so you can establish a common language to talk about the objectives. Be prepared with questions and suggestions should a stakeholder come to you with a printer or converter already in mind before design begins.
7. Communicate value visually. Of course, having a transparent window that shows the product inside is almost never a bad idea. Consumers want visual confirmation of the choices they make. Aside from that, you can say things non-verbally with shapes, design, graphics, and colors. Use the elements that will best communicate attributes and equities, sensations and feelings, emotional associations, and textures. Create an association with a sense of place. Suggest use occasions with graphics that have the elements of that use occasion. Involve a lifestyle. Today’s consumers judge products in relation to how the values of that brand fit into their values and lifestyle. Create a singular “reason to believe” that is capable of closing the sale in isolation.
8. Be mindful of category-specific rules. Each retail category has its own conventions. Some should be followed religiously. Some are important because bucking the convention can set a newcomer brand apart. For food products, however, the product itself should almost always be the hero. Spend the money on production and printing to create a photorealistic representation of the ideal serving suggestion. Conversely, for pharmaceutical products, the brand and product’s physical characteristics can be secondary—sometimes even unnecessary. The parent brand logo may not need to be on the front panel. Instead, emphasize the name of the product and what it does. Across all categories, though, it’s advisable to err on the side of less clutter on the front panel.
9. Don’t forget findability and shopability. Learn how consumers shop the particular category you’re in. Make sure they won’t be confused by the format or the information hierarchy. Remember, cognitively and psychologically, colors communicate ahead of everything else. Next come shapes. Words matter, but mostly as a support role. Words and typography are for reinforcement, not high-level brand communication.
Findability can be either about having a brand-first strategy or about creating a “blocking” element in the store aisle that draws shoppers in. Shopability is about having a consistent system of colors, shapes, materials, or front-panel hierarchy that guide both new and repeat shoppers in finding the specific product and variety he or she desires. If there are multiple lines under a parent brand, consider good/better/best strategies that indicate each value proposition clearly and succinctly. For instance, the relative strengths of different products in a line can be indicated by “strengths,” or relative saturations, of color.
10. Plan for future brand extensions. A brand that is flexible enough to extend to other categories also has a core brand identity that it owns. After that, a successful brand platform is one that can grow by adding product varieties or lines, or extending outside its original category. Test the versatility of a front panel’s design by applying it to new products and to new categories. Look at a wide swath of imaginary products and extensions, not just the flagship variety. Make sure they all work together, united as a brand but easily understood as separate offerings.
Even plan for future redesigns of your core product line. Don’t inhibit the future growth of your brand by creating a platform that is not both extendable and flexible.
8.1.13 / THE PSUEDO-SCIENCE OF ADVERTS
Anyone who says that the mid-1950s Creative Revolution (The Big Idea epoch) was merely a semantic change in the way advertising was practiced, should look below. Try to find the creative in this primer of persuasion.
The advertising industry, which Edward Bernays suggested was the propaganda ministry of the nation, sought whatever scientific means it could to guarantee success. Capitalism runs on commerce, so psychology, as Aldous Huxley has written, was employed early in the 20th century and adopted for better or worse in the postwar era.
Freud was the Mad Men’s best friend.
What everyone wants and advertising must exploit.
More fundamental wants and desires.
Advertising is a science?
What’s that in his hands, rope and bat? Hmmmmm.
Aspiration, inspiration, perspiration.
Women: Consumer and allurer. . .
Beats me . . . !!!
Truth. You want the truth?! You can’t handle the truth!!!
Let’s review. Got it? Got it!