The Undoing Project

I have just read an excellent book by Michael Lewis called “The Undoing Project”

the undoing project

The author had previously written a number of books about the follies of American life like the madness of Wall Street gambling which saw the great crash of 2008 and a fascinating book (later made into a film) called “Moneyball” about the success of a low level baseball team in beating the odds and winning the national league with players that were largely overlooked by the bigger teams (reminds me very much of Leicester City winning the Premier League in football).

The origins of how a man who had previously written books on big money finance and sport came to write a book about two Israeli psychologists is that he read a review of his “Moneyball” book by two academics Cass Sunstein and Richard Thaler.

The opening paragraph reads:

“Michael Lewis’s new book is a sensation. It treats a topic that would seem to interest only sports fans: how Billy Beane, the charismatic general manager of the Oakland Athletics, turned his baseball team around using, of all things, statistics. What next–an inspirational tale about superior database management? But there are some broader lessons in Lewis’s book that make it worth the attention also of people who do not know the difference between a slider and a screwball. Those lessons have to do, above all, with the limits of human rationality and the efficiency of labor markets. If Lewis is right about the blunders and the confusions of those who run baseball teams, then his tale has a lot to tell us about blunders and confusions in many other domains.”

I have outlined the key term in this paragraph, “The limits of human rationality”.

This is seen in the following paragraph from the review:

“Why do professional baseball executives, many of whom have spent their lives in the game, make so many colossal mistakes? They are paid well, and they are specialists. They have every incentive to evaluate talent correctly. So why do they blunder? In an intriguing passage, Lewis offers three clues. First, those who played the game seem to overgeneralize from personal experience: “People always thought their own experience was typical when it wasn’t.” Second, the professionals were unduly affected by how a player had performed most recently, even though recent performance is not always a good guide. Third, people were biased by what they saw or thought they saw, with their own eyes. This is a real problem because the human mind plays tricks, and because there is “a lot you couldn’t see when you watched a baseball game.”

The authors then go on to explain that these mistakes are caused by the mind playing tricks or the mental equivalent of an optical illusion that was investigated and made famous by two young Israeli psychologists Amos Tversky and Daniel Kahneman.

Lewis was fascinated by this and decided to investigate a subject that he admits he knew little about. He was fortunate in that he lived in Berkeley California and had a personal friend Dacher Keltner who worked at UC Berkeley with Kahneman who happened to live only a few blocks away from Lewis! Keltner made an introduction for Lewis and his investigation into the incredibly important work and remarkable friendship of two brilliant minds in war-torn Israel over a period from the 1960’s to the 80’s began. It took five years to complete but was well worth the effort.

This is a book that explains how these brilliant minds used their talents in mathematical psychology (Tversky) and mental processes (Kahneman) to fashion a whole range of theories based on the idea that the mind has biases and works in patterns that are formed by what they call “heuristics” which are essentially set ideas. This allows us to not engage our deep, rational abilities and make quick decisions.

In his seminal book “Thinking Fast and Slow” Kahneman shows how evolution favoured quick decision-making to slow pondering of all possibilities (it meant that we avoided being some animal’s prey!). The Prefrontal Cortex, where we are able to rationalise and think deeply, uses up a lot of our energy, thus we are inherently shallow thinkers and indeed we have developed quick approaches to guide our actions, which has led to biases and mistakes of judgement. In short, we are very often irrational in our thinking and this plays out in so many aspects of our lives.

This is a key finding of cognitive psychology. It has influenced so many areas of our lives that are so well covered in the book by Lewis. A really good example is the work of Donald Redelmeier. a good example would be his paper written with Tversky “On the Belief That Arthritis Pain Is Related to the Weather”. Redelmeier was also one of the first people to point out the dangers of driving whilst engaged in a mobile phone conversation (which seems obvious to us now but wasn’t just a few years ago when drivers were killing themselves and others!).

Irrational thinking has shown itself in so many aspects of our life recently. Lewis was interviewed recently about his book by the Financial Times. The article is well worth reading in that he explains how Donald Trump fools himself all the time and is able to fool so many others and how dangerous this is for us all.

Apart from the importance of the psychology (which is huge), the book is about a great friendship in a place (Israel) that is in an almost constant state of war and imminent destruction. I found the personal stories and the history of the small embattled nation fascinating.

This is one of the best books I have read in a very long time and is well worth a read if you get the chance.




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