Morningstar Magazine - August/September 2018 - 57

Interviewing Kahneman was a professional and
personal pleasure. His work underpins our
behavioral science efforts at Morningstar. As a
behavioral economist who focuses on the
psychology of financial decisions, I would not have
been able to pursue my career path had not
Kahneman and his contemporaries paved the way.
Our conversation has been edited for length
and clarity.
Sarah Newcomb: When you look back at what you've

accomplished, what do you feel most proud of?

Daniel Kahneman: Thinking, Fast and Slow 3 came
out when I was 77 years old. I was very proud of
having been able to pull something off at that age.
Newcomb: You've talked about the Lifetime Achievement Award for the American Psychological Association
being something that's close to your heart.

Kahneman: Of the awards I've gotten, I think
that's the one. It was from my colleagues,
and it was for the whole of my work, and I was
very honored by that.
Newcomb: For those of us already feeling a bit
dwarfed by your accomplishments: He has a Nobel, and
it's not what he's most proud of!

I would argue that the greatest contribution
psychology has made to the financial industry has been
to make the subjective measurable. Economists
treat people as rational to make the models work. It's a
simplification; nobody really believes that. It's just
that measuring all the human differences seemed like
an intractable problem. But then psychologists
like you came along. It wasn't the first time. Back in the
1730s, Bernoulli did it. In the early 1900s, Herbert
Simon did it. But it never really caught on. And then

you and your colleagues come along, and the ideas
just exploded. What was it about the work or the time
that made people ready?

Kahneman: I think it's because we adopted
a method of presenting our data where we put
questions inside the text and turned the
readers into their own subjects. We asked very
simple questions that they answered wrongly.
That's the trick. We chose the questions because
we were inclined to answer them wrongly;
they illustrated intuitive mistakes and intuitive
errors. Our readers participated in their
own experiment and discovered that it's not about
subjects and psychological experiments.
It's something that they themselves are prone to.
People could recognize themselves in our work.
Newcomb: Did you have any pushback from

economists in academia?

3 2011. New York: Farrar, Straus and Giroux.

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57


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