Daniel Kahneman

• 1. Introduction

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  Daniel Kahneman was born on the 5th of March, 1934, in Tel Aviv, while it was still the British Mandate of Palestine. He would go on to win the Nobel Memorial Prize in Economic Sciences in 2002 despite never having taken a single economics course in his life. That paradox sits at the center of everything Kahneman did. He was a psychologist who dismantled the assumption that people are rational, and in doing so helped create an entirely new field of science. What made an Israeli child who survived Nazi-occupied Paris into the man economists called their grandfather? And how do you overturn a century of economic theory with a coin flip and a few carefully designed experiments?

• 2. A Child in Occupied Paris

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  Paris fell to Nazi Germany in 1940, when Kahneman was six years old. His father Efrayim was picked up in the first major round-up of French Jews, held for six weeks before being released through the intervention of his employer, a man named Eugene Schueller. The family spent the remainder of the war moving and hiding. Efrayim did not survive the war intact. He died of diabetes in 1944, before liberation came.

  Kahneman later described a night from late 1941 or early 1942 that he said helped explain why he became a psychologist. He had stayed out past the 6 p.m. curfew imposed on Jews. Walking home, he turned his brown sweater inside out to hide the Star of David sewn onto it. A German soldier in a black SS uniform spotted him and waved him over. Kahneman was terrified the soldier would find the star. Instead, the soldier picked him up, hugged him, and spoke to him with emotion in German. He opened his wallet, showed Kahneman a photograph of a boy, and gave him money. Kahneman went home, he wrote, "more certain than ever that my mother was right: people were endlessly complicated and interesting."

  In 1948, just before the creation of the state of Israel, the family moved to Mandatory Palestine. Kahneman was fourteen years old. His paternal uncle was Rabbi Yosef Shlomo Kahaneman, the head of the Ponevezh Yeshiva, giving the family deep roots in Lithuanian Jewish intellectual life.

• 3. Becoming a Scientist

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  Yeshayahu Leibowitz, a towering Israeli intellectual, was both Kahneman's chemistry teacher at Beit-Hakerem High School and his physiology professor at the Hebrew University of Jerusalem. Kahneman described Leibowitz as influential in his intellectual development. By his own account, Kahneman was average in mathematics but thrived in psychology. He was drawn to the field in his teens after realizing he was more interested in why people believe in God than in whether God exists, and more interested in indignation than in ethics.

  Kahneman received his Bachelor of Science degree from the Hebrew University of Jerusalem in 1954, majoring in psychology with a minor in mathematics. That same year he began military service as a second lieutenant in the Israel Defense Forces. He spent a year in infantry before moving to the IDF's psychology department. There he developed a structured interview for evaluating combat recruits that remained in use for several decades.

  In 1958 he traveled to the United States to pursue a doctoral degree in psychology at the University of California, Berkeley. His 1961 dissertation, supervised by Susan Ervin, examined how adjectives relate to each other in a semantic framework. Kahneman later described it as letting him pursue two of his favorite activities: analyzing complex correlational structures and writing FORTRAN programs.

  He returned to the Hebrew University as a lecturer in 1961 and became a senior lecturer in 1966. His early research focused on visual perception and attention. Stints at Michigan, Harvard, Cambridge, and the Center for Cognitive Studies in the mid-to-late 1960s broadened his frame. His attention research eventually became a book, Attention and Effort, built around studies of how the pupils of the eye dilate during effortful mental tasks.

• 4. The Tversky Partnership

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  Amos Tversky gave a guest lecture at one of Kahneman's seminars at the Hebrew University in 1969. The two men became collaborators almost immediately. Their first co-authored paper, "Belief in the Law of Small Numbers," appeared in 1971. To decide whose name would appear first on that initial paper, they flipped a coin, then alternated on subsequent work.

  Between 1971 and 1979 they published seven journal articles together. One of them, "Judgment Under Uncertainty: Heuristics and Biases," introduced the concept of anchoring, the tendency for initial numbers or reference points to pull all subsequent estimates toward them. That paper was written over an entire year the two men spent together in an office at the Van Leer Institute in Jerusalem.

  Prospect theory took even longer. They spent more than three years revising an early version completed in 1975. The final paper appeared in 1979 in Econometrica, the leading economics journal of the time. It would become the most cited paper in the history of economics. Its power came from showing, through careful psychological experiments, that people do not weigh gains and losses the same way. The pain of losing a sum of money is felt more acutely than the pleasure of gaining the same amount. Losses, in other words, loom larger than gains.

  During those years in Jerusalem, colleagues described the two men as inseparable and as soul mates. The collaboration began to taper off in the early 1980s after both men left Israel for positions at different universities. A tension developed: Tversky, Kahneman said, received most of the external credit for work they had produced together. Kahneman described their eventual estrangement bluntly, saying, "I eventually divorced him." Still, they continued to publish together until the end of Tversky's life. During the final six months before Tversky's death in 1996 at the age of fifty-nine, the two worked together on the introduction to an edited collection of papers related to their research.

• 5. Building Behavioral Economics

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  Richard Thaler was a visiting professor at Stanford's branch of the National Bureau of Economic Research during the academic year 1977-1978, the same year Kahneman and Tversky were both at Stanford. Kahneman was a fellow at the Center for Advanced Study in the Behavioral Sciences; Tversky had a visiting appointment in the psychology department. The three became friends.

  Thaler published a paper in 1980 called "Toward a Positive Theory of Consumer Choice." Kahneman later called it "the founding text of behavioral economics." The Russell Sage Foundation then granted Thaler funds to spend the 1984-1985 academic year with Kahneman at the University of British Columbia. Together with Kahneman's friend Jack Knetsch, the group produced two papers on fairness and on the endowment effect, the tendency for people to assign more value to things simply because they own them.

  Kahneman eventually stated, without irony, that everything he knew of economics he and Tversky had learned from Thaler and Knetsch. The Nobel committee awarded him the 2002 prize specifically for integrating psychological insights into economic science, citing his work on human judgment and decision-making under uncertainty. The Harvard psychologist Daniel Gilbert described Kahneman's central finding as the discovery that human reason, left to its own devices, reliably produces fallacies and systematic errors, and that awareness of those biases can lead to better decisions.

  Kahneman stated in the introduction to Thinking, Fast and Slow that the collaboration with Tversky on judgment and decision-making was the reason he received the Nobel Prize, and that Tversky would have shared it had he not died in 1996.

• 6. Memory, Experience, and Happiness

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  One of the most counterintuitive experiments associated with Kahneman involves colonoscopies. Kahneman identified a bias he called the peak-end rule: people's overall impression of a past experience is shaped mainly by how it felt at its most intense moment and how it felt at its end, not by the total duration of pleasure or discomfort. When colonoscopy exams were extended by three additional minutes in which the instrument was held still rather than moved, patients remembered the procedure less negatively, even though the extended version involved more total discomfort. They were also more likely to return for follow-up procedures.

  This work led Kahneman to distinguish between two versions of the self. The experiencing self registers pleasure and pain as they occur. The remembering self constructs a retrospective story of those experiences, and that story is systematically inaccurate. The remembering self relies on peaks and endings. It ignores duration entirely.

  Kahneman extended this thinking to happiness research. Around the year 2000 he assembled a team including Alan Krueger, David Schkade, Norbert Schwarz, and Arthur Stone. Their goal was to create a measure of experienced happiness that economists could use. The team developed the Day Reconstruction Method, in which participants described their day as a sequence of episodes and rated each one across multiple emotional dimensions. Kahneman also contributed to the design of the well-being module in the Gallup World Poll.

  The effort produced a partial result. Measures of day-to-day affect did get incorporated into standard well-being surveys. But Kahneman concluded that experienced happiness was not what people actually pursue. Life satisfaction, he said, is tied to social yardsticks: achieving goals, meeting expectations. Those are the measures the remembering self keeps. The experiencing self registers what is actually happening. The two rarely agree.

• 7. The Focusing Illusion

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  A 1998 paper Kahneman wrote with David Schkade asked a pointed question: does living in California make people happy? Students in the Midwest and students in California reported nearly identical levels of life satisfaction when surveyed. But when Midwestern students were asked to predict how happy their Californian peers were, they assumed California residents must be significantly happier. The only thing distinguishing information they had was the geographic fact of where those peers lived.

  Kahneman used this result to frame what he called the focusing illusion. When a person considers the impact of any single factor on their overall happiness, they tend to overestimate how much that factor matters. The reason is structural: thinking about one thing means not thinking about the many other factors that actually shape daily life. Attention narrows the field.

  Kahneman described the illusion in Thinking, Fast and Slow with a line he considered his most famous dictum: "Nothing in life is as important as you think it is when you are thinking about it." The phrase compresses decades of research on affective forecasting, the tendency for people to misjudge what will make them feel good or bad in the future, into a single warning. Thinking, Fast and Slow was published in 2011, became a bestseller, and won the Los Angeles Times Book Award for Current Interest and the National Academy of Sciences Communication Award for the best book published that year.

• 8. A Life and Its End

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  Kahneman described himself as a very hard worker, a worrier, and "not a jolly person," though he added that he was quite capable of great enjoyment and believed he had lived a great life. His close friend Richard Thaler, a self-described optimist who called Kahneman an "avid pessimist," said Kahneman believed worrying was rational because it meant he would not be disappointed by outcomes.

  His first wife was Irah Kahn, whom he married while both were students. They had two children before divorcing. Their daughter Lenore, who works in pharmaceuticals, helped her father prepare his Nobel lecture. His son Michael has schizophrenia. Kahneman was quoted as saying Michael "would have been a very brilliant economist."

  From 1978 until her death in 2018, he was married to the cognitive psychologist Anne Treisman, a Fellow of the Royal Society. Treisman suffered from dementia in her final years. After her death, Kahneman lived from 2020 onward in New York City with Barbara Tversky, also a cognitive psychologist and the widow of Amos Tversky.

  Kahneman died on the 27th of March, 2024, three weeks after his 90th birthday. His experience of his wife's dementia shaped the choice he made at the end of his own life. He received assistance in dying from the Swiss organization Pegasos and died in the municipality of Nunningen, Switzerland. The details of how and where he died were not publicly revealed until March 2025. The behavioral economist Ulrike Malmendier, a member of the German official council of economic experts, said Kahneman and Tversky were "the founders of our field." Eldar Shafir, a colleague at Princeton, said that "many areas in the social sciences simply have not been the same since he arrived on the scene."