DEFINITION of Daniel Kahneman
Daniel Kahneman is a professor emeritus of psychology and public affairs at Princeton University, and was awarded the 2002 Nobel Prize in Economics, along with Vernon Smith, for his research on prospect theory, which deals with human judgment and decision-making.
BREAKING DOWN Daniel Kahneman
Born in Tel Aviv in 1934, Daniel Kahneman spent his early childhood in France, where he and his family had to escape repeatedly from the Nazis until they moved to Palestine before it became the state of Israel. As they spent the war years running from the Nazis from place to place, Kahneman speculated that people were endlessly interesting in what they chose to do, and set his sights on the psychology that makes people tick.
Kahneman took his undergraduate studies at the Hebrew University in Jerusalem, and then joined the psychology department of the Israeli Defense Forces in 1954. In 1958, he left Israel to attend UC Berkeley as a PhD candidate and was awarded the degree in 1961.
By 1966, Kahneman was a senior lecturer at Hebrew University, but he also spent time at other institutions around the globe. He was a visiting scientist at the University of Michigan, a fellow at Cambridge, and a fellow at the Center for Cognitive Studies at Harvard University.
During this period and while in Jerusalem, Kahneman invited fellow psychologist Amos Tversky to guest lecture for his class. The two struck up a friendship that would extend into the world of ideas and they soon found that they had much to collaborate on, particularly in the areas of human judgment and decision-making. Though the term behavioral economics may already have existed prior to their collaboration, Kahneman and Tversky would certainly do a lot to popularize the term and the branch, and ironically while engaging the discipline of psychology rather than economics. Throughout the 1970s, the pair worked and published together frequently.
Influence of psychology on Kahneman's ideas
Historically, economics has assumed that people act in their self-interest and make rational decisions. Kahneman's research combines psychology with economics to explore how people's behavior may depart from these assumptions, in a branch of the discipline now known as behavioral economics.
In 1978, Kahneman left Hebrew University to take a permanent position at the University of British Columbia. Around that period, Kahneman published papers around the concept of Prospect Theory and Tversky collaborated on some of these ideas, an idea for which Kahneman would later be awarded for in the form of a Nobel Prize in economics. In 1982, their collaboration resulted in a book titled Under Uncertainty: Heuristics and Biases on Cambridge University Press.
In the 1990s, Kahneman switched his focus to hedonic psychology, which Kahneman summarizes as the study of what makes people and what makes experiences either pleasant or unpleasant. It would appear that much of what we think about an event from the past has little to do with rational thinking and is more about what we remember that event that matters in determining what we think about it. This resulted in a book called Well-being: The Foundations of Hedonic Psychology.
Over the course of his career, Kahneman published extensively in psychology and other academic journals, and in 2011, he published Thinking Fast and Slow, which quickly became a best seller after Foreign Policy magazine listed him among the top global thinkers. In 2013, he was awarded a Presidential Medal of Freedom by Barack Obama.