Today humanity faces multiple problems that are simultaneously difficult and interesting, but that’s not new; our species has always faced challenges. The only difference today is that everything looked easy when our parents were facing the tough choices. But now that the shoe is on our foot, so to speak, we’ve come face to face with complexity and it can be daunting. What we have to deal with complexity that our parents didn’t have is the work of Daniel Kahneman and his late partner Amos Tversky.
Daniel Kahnemen won a Nobel Prize in Economics in 2002 for his work with Tversky on how we behave when facing difficult choices. What’s interesting about Kahneman is that he’s a psychologist and researcher, definitely not an economist, but today he’s known as one of the fathers of a new branch of economics, behavioral economics.
Let’s look at two of the thorniest problems we all face today through Kahneman’s prism, climate change and cybercrime. Considering either of these issues is not anyone’s idea of fun and considering both in one article is asking a lot. But they’re such serious issues that it behooves us all to spend a few moments with them. First let’s understand Kahneman’s way of problem solving.
In 2011 Daniel Kahneman published, Thinking, Fast and Slowwhich summarized some of the work he and Tversky had done over several decades on such topics as cognitive biases, loss aversion, prospect theory and other areas. Kahneman core idea is that we humans have two modes of thinking which he labeled System 1 and System 2and they’re both appropriate but in very different situations. Neither is right for all problems.
System 1 thinking is often what we mean by gut instinct. It’s almost automatic, often emotional, and unconscious. Think of driving a familiar route, say to work or your spouse’s parents. Do you always remember everything about such a trip?
System 1 is automatic because it had to be during evolution. Ancestors who saw a lion on the savannah and automatically took off in the other direction had much higher survival rates than those who might have thought, gee what a beautiful kitty.
System 2 is not exactly opposite but there is an element of slowness or deliberateness to it, hence the title of the book. You can solve 2 + 2 in System 1 but 36 x 24 might require System 2 as well as paper and pencil or some computing device. System 2 is algebra to System 1’s arithmetic. System 1 is reading an ad on TV without even intending to. System 2 is reading a good book.
Kahneman showed how both systems work using the classic Bat and Ball Problem.
If a baseball and a bat cost $1.10 together and the bat costs $1.00 more than the ball, how much does the ball cost.
You should try to solve this. Go ahead, I’ll wait….
Did you get it? Did you conclude that the ball costs ten cents? That’s nice, but it’s also wrong. If the ball costs a dime, there would be a dollar left in the equation but that’s only ninety cents more than the ball and the problem said the bat is one dollar more than the ball. But if you do a little algebra you can prove that the ball costs a nickel and the bat $1.05 which satisfies both conditions: the bat is a dollar more than the ball and everything totals $1.10.
If you said the bat cost a buck you did your calculation automatically using System 1 and why not? Doing all that algebra to get the precisely correct answer seems like a lot of work for almost no reward. If you got the right answer you are very good at doing algebra in your head, Mr. Einstein, and you used System 2 with or without paper.
Let’s look at why this is important in our two big problem areas, climate change and cybercrime.
These problems don’t have official solutions yet so can certainly disagree with this analysis and no one can really say you are wrong, but let’s play this game anyhow.
Much of the current thinking about climate change centers around finding a simple solution. Often the solutions begin with words like “Just do…” that’s System 1 thinking for sure. Some of the candidates for a climate solution include lowering emissions or passing massive legislation like the Green New Deal. Before we evaluate any solution though let’s first try to frame the problem.
Framing is a crucial step in problem solving that System 1 ignores (sorry). A well framed problem is one that’s on its way to a solution. A problem without a frame or a not so good one will leave you frustrated and exhausted without much to show for your work. So our first question on the way to solving climate change is evaluating if curbing emissions or launching a Green New Deal are the right frames.
Curbing emissions seems like a no-brainer, how could it be otherwise? But remember the bat and ball. Also, what exactly do we mean by curbing?
Some facts for framing the issue
Climate change is caused by the buildup of carbon dioxide in the atmosphere and oceans. Other greenhouse gasses like methane play a role too but by far CO2is the big concern. There’s already enough out there–on the order of 7 trillion tons increasing by 40 to 50 billion tons per year–to cause global average temperature increases and some really freaky weather including droughts in some parts of the world and heavy rains and hurricanes elsewhere. Droughts are causing whole populations to be displaced. In 2017 the UN estimated there were 68.5 million people(about the population of France) who were refugees, a number that could increase as dry lands become deserts incapable of supporting agriculture.
We also know that carbon dioxide stays in the air for a very long timeunless absorbed by things like green plants or chemical reactions with water and rocks. So given this basic information, it seems that simply lowering emissions won’t do much. Adding emissions at a slower rate (what curbing really means) won’t change the basic direction of climate change, only the timing. Therefore, although reducing emissions would be important to any climate solution, it is already too little and too late to use this as a single targeted approach.
Reducing carbon emissions then, is not the appropriate way of framing the problem. It gets us a bat for $1 instead of $1.05 and this time, the difference is material.
Let’s add some complexity and employ System 2. We also know that earth has about 50 years’ worth of petroleum left in the ground and about 100 years of coal. We’re running out of fossil fuels. So now the emphasis is two-fold–we need to quit emitting carbon into the air (not just restrain emissions) and we need to find a new energy source because we’re running out of fossil fuels. The US department of Energy estimates about a 50-year supply calculated at 1.688 trillion barrels of oil.
So, with that critical new information it becomes apparent that reducing emissions is important but not the key to finding a solution and that climate change is a more complex problem. What’s good about this is that we now have a better handle on the reasons for getting away from burning fossil fuels. With that we can begin iterating toward real solutions. It also suggests that we’ll likely need additional approaches for actively removing carbon from the atmosphere. Such solutions already exist.
We also have a greater incentive. Changing climate happens too slowly to bother the minds of System 1 thinkers. But any System 1 thinker can easily relate to an empty gas tank. Also, anyone using System 2 will understand that changing the energy paradigm, which is what’s needed, will take most of the 50 years we have left. Time to put some giddy-up on this.
Like climate change, cybercrime is not a single entity but a cluster of unpleasantness. Some of the issues include:
· Abuse of social media and its databases by corporations and nation states.
· Various forms of hacking, ransomware, viruses, denial of service and much more. Millions of customer records have been stolen in just the last few years and we don’t know what will become of it.
· Finally, there’s also aggression to inflict harm by nation states including industrial espionage, election disruption, and potentially disruption of civilian infrastructures like electric grids.
Unfortunately, we’re still not looking at the whole constellation of issues using our System 2 minds. We’ve been quick to enumerate partial solutions like breaking up Facebook. Although that might be justified, it’s a System 1 response, it’s not enough to straighten out the cyber mess. What’s needed is a comprehensive solution that brings together all of the disparate threads of the cyber problem and turns it into an orderly market. I wrote a long piece on how to do this hereon Medium, if you’re interested.
Briefly a comprehensive solution would involve developing a simple system of regulating users just like the systems now in place to regulate private practitioners from plumbers to doctors and lawyers.
A solution also requires changing Facebook’s business model from advertising to more of a franchise approach. This would apply to other vendors using the advertising model in and out of the social media space. It would create space for partners to add value and provide an opportunity to bring a modicum of order to users. All this is much easier to do with a form of regulation and certification in place like the one described above.
But we also need some universal law or set of laws modeled on the European Union’s GDPR which regulates the security of private data and sets stiff fines for abusers.
Finally, we need an addendum to the World Trade Agreement in which the member countries pledge not to engage in cybercrime and that sets forth penalties for miscreants.
This cluster of solutions is much more than we can arrive at using System 1 thinking and it’s not only a great example of how to puzzle through problems in a modern world, it’s also a good example of how to frame a problem in the first place.
It’s not often that we need to consciously think about solutions for our future needs but when we do, just knowing about Kahneman’s System 1 and System 2 can make us all better decision-makers. Very often we definitely need to think fast but we also need to think clearly. Identifying the nature of a problem, i.e. its framing, before we begin searching for a solution can mean the difference between never finding an answer and all the frustration, and time waste that entails, and finding the simple and elegant solution we imagine is always out there.