The Quirkiness of Human
Although he never took an economics course, Princeton psychologist
Daniel Kahneman received the Nobel Prize in economic sciences in
2002. The award recognized Kahneman’s life-long work in integrating
psychological research and economic science. His work showed economists
how people don’t always make reasoned choices, over-turning
long held views and opening up a new field of research.
Kahneman has studied the importance of context in decision-making
and the shortcuts people take ever since the 1970’s, when
he began publishing his groundbreaking work with the late Amos Tversky.
His findings on the psychological motives that determine decisions
have implications for economists, especially in areas such as individual
savings behavior or participation in the stock market.
Kahneman and Tversky's landmark paper on decision-making under circumstances
where there is uncertainty was published in Econometrica
in 1979. Prior to this publication, economists assumed humans made
rational decisions. Economics was also a non-experimental science
that relied on real-world observations. Today, largely because of
Kahneman’s work, experimental economics is burgeoning.
Kahneman notes that his research has had a wide impact because his
paper was published in an economics rather than a psychology journal.
“It legitimized a certain approach to thinking about decision-making,
which eventually, through the work of other economists, became influential
in economics itself,” he says.
In an article based on his Nobel Prize lecture, published in American
Psychologist (September, 2003), Kahneman reviews studies on
intuitive judgment and decision- making in the context of two related
concepts. These are accessibility (the ease with which thoughts
come to mind) and the distinction between effortless intuition and
His paper shows how the psychology of judgment and the psychology
of choice share basic principles, once again drawing together lines
of research that are usually studied separately.