Review: The Undoing Project by Michael Lewis

Mary and Arupa are both going to the airport for business trips. Both are stuck for an hour in unexpected traffic. When Mary arrives at the airport, she is told her plane took off on time an hour ago. When Arupa arrives, she is told the flight was delayed and is just taking off now. Who is more upset?

Michael Lewis is probably most famous for having written Moneyball. While this is a bit of a shame (as The Big Short, The Fifth Risk, and even the out-of-date Next are among his top books), it also generated the most reviews. As he notes in the introduction to this piece, while most of the reviews were positive, one in The Atlantic mentioned that while he described in detail how the Oakland As were able to generate such different data than other teams, what he didn’t explore was how they went about making their actual decisions.

The piece noted that there were two Israeli psychology professors named Daniel Kahneman and Amos Tversky who had devoted their lives to unraveling the secrets of decision making. Lewis did more research into the pair and found a fascinating story. Thus, The Undoing Project was born.

Five seconds to guess: 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = ?

While the book is more a jumping off point from Moneyball than a sequel, it grounds itself in its first chapter, revolving around Daryl Morey. While Morey is currently most well-known for tweeting out support for Hong Kong while GM of the Houston Rockets, he was previously best known for bringing moneyball to the NBA. Based on the way he collected data (and also shut off extraneous data, such as interviews and private workouts), he was able to make great decisions on players that enabled him to put together a very good team (like the As, not championship-level, but close).

Then one day a prospect came in that had no data – a giant from India. He had no game tape, no games against NBA-level talent, just huge size and stories about his skill. Morey had to go back to ineffective sources – interviews and private workouts – in order to make a decision on the player. How should Morey decide? What was the most effective data he possessed to make a decision, and what data was trying to blind him? When Morey passed and the Dallas Mavericks immediately scooped the player up, were they right? Did they have different data, or did they interpret the data a different way in order to make their decision? (Note: The player, Satnam Singh, has not yet cracked the starting lineup, so the jury is out on who was right) It was this kind of decision-making question that Kahneman and Tversky spent their lives tackling.

Which scenario is more likely to occur in the next year?

Scenario A: A flood will kill 10,000 people in the US

Scenario B: A giant earthquake in California will generate a flood that will kill 10,000 people

Kahneman and Tversky’s research mainly revolved around the brain’s use of rules of thumb, or heuristics, when making decisions. Different from established thinking, which posited that brains operated rationally and that any irrational behavior would be overcompensated for, their research showed how brains grasped at ideas such as commonality, and cause/effect, and timing, when making both judgements (“this person seems like a computer scientist”) and decisions (“this person IS a computer scientist”). Their research crashed through established psychological theories and set up new frontiers, with one of them winning the Nobel Prize – for economics.

At a given company, 70% of employees are lawyers and 30% are computer scientists. Gus is a hardworking individual who loves technology, tends to work alone, and finds it difficult to work in a group. What are the odds he’s a computer scientist?

Even more amazing that the research was the team, who were as different as night and day. Danny Kahneman was a child who escaped with his family out of Nazi-occupied Paris and eventually made his way to Israel. He was a very formal and sullen individual who was drawn to psychology from an early age, and though well-trained never considered a top mind. Amos Tversky, on the other hand, was an Israeli-born war hero and one of the celebrated minds of his country who just happened to settle on psychology. After a chance meeting, Danny and Amos, to everyone’s shock, became inseparable, and began publishing acclaimed study after acclaimed study.

Make no mistake about being inseparable – the duo’s preferred method of work was to be side by side all day, bouncing ideas off of each other, and even typing together at the same typewriter. Over time, they were unable to determine who contributed to which parts of their papers, which much later caused a great deal of grief.

One aspect of the book that was somewhat surprising, given the above, is that Lewis never took the low-hanging fruit and compared them to rock stars. That’s what their partnership felt like – Jagger/Richards, Lennon/McCartney, Simon/Garfunkel. I think the most apt comparison would be Simon and Garfunkel, as one member’s contributions (Garfunkel, Tversky) were way overvalued by the general public, making the other (Simon, Kahneman) feel underappreciated.

Just like Lennon and McCartney, the duo eventually broke up due to marriage. Just like a rock duo, the breakup was messy and overlong, and consumed with sadness.

Five seconds to guess: 1 x 2 x 3 x 4 x 5 x 6 x 7 x 8 = ?

Towards the end of the book, Lewis mentions how established psychology considered the brain rational, while Kahneman and Tversky considered it a collection of coping mechanisms. It was a throw-away line, but I feel like it really captured the essence of the book, and wish it had been mentioned at the beginning.

So now Lewis has a book on gathering data and on making decisions on that data. Next stop: Why we evolved to make the incorrect decisions that we do? Anyway, enough for now: eight out of ten hot dogs.