Monday, 28 May 2018

Book Review: The Undoing Project

I've never read a Michael Lewis book before, not even Flash Boys or Moneyball (though I have seen the movie of the latter). To be clear, I haven't been actively avoiding his writing but like Malcolm Gladwell, his books get so much press that I feel like I've read them without actually reading them. The Undoing Project is different. I have read a few short reviews, but not enough to give away the bulk of the content. In it, Lewis tells the story of two psychologists who have had a substantial impact on economics - 2002 Nobel Prize winner Daniel Kahneman, and Amos Tversky, who surely would have shared Kahneman's Nobel if not for his untimely passing in 1996.

I really enjoyed Lewis's writing style, which I would describe as a flowing biographical narrative. It is easy to see why so many of his books have been made into movies, and this one would also lend itself to the screen. There are a lot of quirky stories embedded within it. For instance, take this bit:
Apart from that short note, Amos seldom mentioned his army experiences, in print or conversation, unless it was to tell a funny or curious story - how, for instance, during the Sinai campaign, his battalion captured a train of Egyptian fighting camels. Amos had never ridden a camel, but when the military operation ended, he won the competition to ride the lead camel home. He got seasick after fifteen minutes and spent the next six days walking the caravan across the Sinai.
Similarly, Lewis paints a hilarious picture of Kahneman and Tversky tearing around the Sinai desert in a jeep, surveying Israeli troops during the war. The anecdotes add a lot of value to the story.

However, the book didn't add much, if anything, to my understanding of behavioural economics. If you want a good treatment of that, you would be much better off with Richard Thaler's excellent Misbehaving (which I reviewed earlier this year). However, Lewis does offer a really clear and thorough description of the development of Kahneman and Tversky's collaboration, from how it began, through its peak with the development of Prospect Theory, and onto the decline in their relationship after they both moved from Hebrew University in Israel to North American institutions. I especially liked this bit, on their choice to move on from regret minimisation as a theory:
Amazingly, Danny and Amos did not so much as pause to mourn the loss of a theory they'd spent more than a year working on. The speed with which they simply walked away from their ideas about regret - many of them obviously true and valuable - was incredible. One day they are creating the rules of regret as if those rules might explain much of how people made risky decisions; the next, they have moved on to explore a more promising theory, and don't give regret a second thought.
That new theory was Prospect Theory, which Lewis notes was named as such "purely for marketing purposes", so that it would be distinct (they originally labelled it "value theory"). Interestingly, Lewis avoided the temptation to talk about their lack of regrets when they moved on from regret as a theory (but see, I couldn't resist - that's lazy blog writing, that is).

One thing that comes clearly through in the book is how surprising (as well as how intense) the partnership between Kahneman and Tversky was. Take this bit on their differences:
Danny was a holocaust kid; Amos was a swaggering Sabra - the slang term for a native Israeli. Danny was always sure he was wrong. Amos was always sure he was right. Amos was the life of every party; Danny didn't go to parties. Amos was loose and informal; even when he made a stab at informality, Danny felt as if he had descended from some formal place. With Amos you always just picked up where you left off, no matter how long it had been since you last saw him. With Danny there was always a sense you were starting over, even if you had been with him just yesterday. Amos was tone-deaf but would nevertheless sing Hebrew folk songs with great gusto. Danny was the sort of person who might be in possession of a lovely singing void that he would never discover. Amos was a one-man wrecking ball for illogical arguments; when Danny hear an illogical argument, he asked, What might that be true of? Danny was a pessimist. Amos was not merely an optimist; Amos willed himself to be optimistic, because he had decided pessimism was stupid. When you are a pessimist and the bad thing happens, you live it twice, Amos liked to say. Once when you worry about it, and the second time when it happens.
That last bit made me laugh out loud, because I've had that exact conversation with my wife on more than one occasion, and my view accords with Amos's. The book does jump around a little bit in time, which I found a little disconcerting. However, that betrays my preference for linearity in the storyline. Overall, this was an excellent read, and I'm looking forward to cracking open some other Michael Lewis books in the future (in spite of thinking I already know what they say).

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