Daniel Kahneman

Daniel Kahneman (Tel Aviv, 1934 – Switzerland, 2024) was an Israeli-American psychologist whose work on human judgment and decision-making reshaped economics. He shared the 2002 Nobel Memorial Prize in Economic Sciences, although he was trained as a psychologist. His research showed that people do not behave as rationally as mainstream economic theory assumed, which is why he is often called one of the founders of behavioral economics.

He was born in Tel Aviv, then in the British Mandate of Palestine, while his mother was visiting relatives. He grew up in Paris, where his Lithuanian Jewish parents had settled in the early 1920s. The Nazi occupation of France in 1940 shaped his youth: his father was arrested in one of the first large round-ups of French Jews and was freed after six weeks thanks to his employer's intervention. The family survived the war, though his father died of diabetes in 1944. In 1948 they moved to Palestine, just before the creation of the State of Israel.

He studied psychology and mathematics at the Hebrew University of Jerusalem and, after military service, worked in the psychology department of the Israel Defense Forces, where he helped design selection tests for officer candidates. In 1958 he went to the University of California, Berkeley, to complete a doctorate in psychology. Back in Jerusalem, he invited Amos Tversky to lecture at one of his seminars in 1968 or 1969, which began a collaboration that lasted decades. They published their first joint paper in 1971 and, in 1974, the article "Judgment under Uncertainty: Heuristics and Biases" in Science, which introduced the notion of anchoring. In 1979 they presented prospect theory, which describes how people weigh gains and losses asymmetrically and depart from basic principles of probability. Its best-known consequence is loss aversion: losing 100 dollars hurts more than winning the same amount pleases.

Kahneman held professorships at the University of British Columbia and at Berkeley, and later became professor emeritus at Princeton University. From the 1990s his research turned toward hedonic psychology, the study of subjective experience and well-being. He distinguished experienced utility from remembered utility and described the peak–end rule, according to which we judge an experience mainly by its most intense moment and by how it ends. With David Schkade he also developed the focusing illusion, in which we overweight a single factor in our overall happiness.

His influence is considerable. Concepts such as heuristics, cognitive bias and loss aversion are now used in economics, medicine, law and public policy. His book Thinking, Fast and Slow (2011), which summarizes much of his work, became a bestseller and brought his ideas to a wide readership.