/

thumbnail text

partner

UBS

Daniel Kahneman is a strange sort of winner of the Nobel Memorial prize for economics. The Israeli-American is not an economist at all but a psychologist by training; he has spent more than 50 years researching the inconsistencies of human behaviour. We are not entirely rational, he argues in his landmark bestseller Thinking, Fast and Slow. Our intuition leads to systematic errors in our reasoning, which makes us poor at understanding statistics and rare events. His theories challenged conventional economic models and formed the foundations of behavioural economics. Here, Kahneman considers our responses to the coronavirus outbreak. 

03-version2.jpg

Is there a precedent for how the pandemic might change our behaviour in the long term?
People who lived through the Great Depression were affected for the rest of their lives. It changed their attitudes to chance, to events, to control and to money. They were financially more cautious and less trusting of the future. They knew the unthinkable could happen. This pandemic is different to the Great Depression but it will not be forgotten quickly.

What is the best way to influence people to behave in the correct manner during the pandemic?
The behaviour of citizens at the moment is largely controlled by governments. So when we receive messages from our leaders, we want them to show respect for the evidence and to model appropriate behaviour. If they talk about physical distancing on the television, they should be practising that. And more generally, masks serve as effective symbols: they are a sign that things are not yet back to normal.

You write about people’s inability to understand statistics but they are the main way for us to comprehend the spread of the virus. Could this pose a risk to us responding appropriately?
People struggle to make big adjustments in their behaviour for small numbers, because small numbers feel like small threats. But with exponential growth, as we see with coronavirus, small numbers can mean a great deal. If something doubles every three days, it grows by a factor of 1,000 in a month. When things begin to reopen, we might see small spikes of cases. I think that people will find it hard to respond to these small spikes with the appropriate level of fear.

You are famously a pessimist. How optimistic are you about our society and economy recovering?
We have a population that is afraid of people and is afraid for its life to some extent. Those you pass on the street can be a threat without even talking to you. This is new. If the virus stays on for a couple of years, this is certainly going to change the way people interact. Many will go back to living as they did before; parks and beaches will be full again. But there is going to be a lingering fear of people. There’s no guarantee that there is a quick fix to the economy either. To reopen businesses and restore supply chains will take years. But I think we can count on recovering eventually. Human ingenuity will overcome.


About the author: Kahneman won the Nobel Memorial prize for economics in 2002 for his work on prospect theory.

Go back: Contents
Next:

Expo

/

sign in to monocle

new to monocle?

Subscriptions start from £120.

Subscribe now

Loading...

/

15

15

Live

00:0001:00

  • The Chiefs