Here’s a simple arithmetic question: A bat and ball cost a dollar and ten cents. The bat costs a dollar more than the ball. How much does the ball cost?
The vast majority of people respond quickly and confidently, insisting the ball costs ten cents. This answer is both obvious and wrong. (The correct answer is five cents for the ball and a dollar and five cents for the bat.)
For more than five decades, Daniel Kahneman, a Nobel Laureate and professor of psychology at Princeton, has been asking questions like this and analyzing our answers. His disarmingly simple experiments have profoundly changed the way we think about thinking. While philosophers, economists, and social scientists had assumed for centuries that human beings are rational agents—reason was our Promethean gift—Kahneman and his scientific partner, the late Amos Tversky, demonstrated that we’re not nearly as rational as we like to believe.
When people face an uncertain situation, they don’t carefully evaluate the information or look up relevant statistics. Instead, their decisions depend on a long list of mental shortcuts, which often lead them to make foolish decisions. These shortcuts aren’t a faster way of doing the math; they’re a way of skipping the math altogether. Asked about the bat and the ball, we forget our arithmetic lessons and instead default to the answer that requires the least mental effort.