The Undoing Project: A Friendship that Changed the World(81)

Framing was just another phenomenon: There was never going to be a theory of framing. But Amos and Danny would eventually spend all kinds of time and energy dreaming up examples of the phenomenon, to illustrate how it might distort real-world decisions. The most famous was the Asian Disease Problem.

The Asian Disease Problem was actually two problems, which they gave, separately, to two different groups of subjects innocent of the power of framing. The first group got this problem:

Problem 1. Imagine that the U.S. is preparing for the outbreak of an unusual Asian disease, which is expected to kill 600 people. Two alternative programs to combat the disease have been proposed. Assume that the exact scientific estimate of the consequence of the programs is as follows:

If Program A is adopted, 200 people will be saved.

If Program B is adopted, there is a 1/3 probability that 600 people will be saved, and a 2/3 probability that no people will be saved.

Which of the two programs would you favor?

An overwhelming majority chose Program A, and saved 200 lives with certainty.

The second group got the same setup but with a choice between two other programs:

If Program C is adopted, 400 people will die.

If Program D is adopted, there is a 1/3 probability that nobody will die and a 2/3 probability that 600 people will die.

When the choice was framed this way, an overwhelmingly majority chose Program D. The two problems were identical, but, in the first case, when the choice was framed as a gain, the subjects elected to save 200 people for sure (which meant that 400 people would die for sure, though the subjects weren’t thinking of it that way). In the second case, with the choice framed as a loss, they did the reverse, and ran the risk that they’d kill everyone.

People did not choose between things. They chose between descriptions of things. Economists, and anyone else who wanted to believe that human beings were rational, could rationalize, or try to rationalize, loss aversion. But how did you rationalize this? Economists assumed that you could simply measure what people wanted from what they chose. But what if what you want changes with the context in which the options are offered to you? “It was a funny point to make because the point within psychology would have been banal,” the psychologist Richard Nisbett later said. “Of course we are affected by how the decision is presented!”

After the meeting between the American economists and the Israeli psychologists on the Jerusalem kibbutz, the economists returned to the United States and Amos sent a letter to Paul Slovic. “Everything considered we got a very favorable response,” he wrote. “Somehow, the economists felt that we are right and at the same time they wished we weren’t because the replacement of utility theory by the model we outlined would cause them no end of problems.”



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There was at least one economist who didn’t feel that way, but he wasn’t, at least when he came upon Danny and Amos’s theory, anyone’s idea of a future Nobel Prize winner. His name was Richard Thaler. In 1975, Thaler was a thirty-year-old assistant professor in the School of Management at the University of Rochester with vague prospects. It was a wonder he was even there. He had two deeply pronounced traits that rendered him unsuited not just to economics but to academic life. The first was that he was easily bored, and highly imaginative in his attempts to escape boredom. As a child he routinely changed the rules of the games he was expected to play. The first hour and a half of Monopoly, when players march around the board randomly landing on properties and buying them, he found tedious. After playing a few times, he announced, “This is a stupid game.” He said that he would only play if all the properties were shuffled and dealt to the players at the start of the game. Same with Scrabble. Finding it boring when he got dealt five “E”s and no high-value consonants, he changed the rules so that the letters were organized into three buckets: vowels, common consonants, and rare, high-value consonants. Each player got the same number of each; after seven rounds, each player was given a high-value consonant. All the changes Thaler made to the games he played as a kid reduced the waiting-around time, and the role of luck, and increased the challenge and, usually, the players’ competitiveness.

This was odd, as Thaler’s other pronounced trait was a sense of ineptitude. When he was ten or eleven years old, and a B student, his father, a detail-oriented insurance executive, had grown so frustrated with his sloppy schoolwork that he handed his son The Adventures of Tom Sawyer and told him to copy a few pages exactly as Mark Twain had written them. Thaler tried, seriously. “I did it over and over, kicking and screaming.” Each time, his father found errors—missing words, missing commas. The quotation marks in an exchange between Tom and Aunt Polly confounded him. Looking back on it, he could see that his problem was more than a lack of effort: He was probably mildly dyslexic. But people just assumed he was either careless or lazy, or both.

And so he began to think of himself this way, too. Economics just then wasn’t perhaps the ideal place for people who were easily bored and had trouble with details. Thaler had gone from college straight to graduate school mainly because his father’s life had persuaded him that business careers were mind-crushingly boring, and that he had no ability to work for someone else. He couldn’t think of what else to do but go to graduate school, and he picked economics because “it seemed kind of practical.” Only then did he discover that the field placed a terrifying premium on both precision and mathematical ability—to the point where it seemed that the only people who were allowed to make jokes in their journal articles were the guys who were best at math. By the time Thaler arrived at the University of Rochester’s Graduate School of Management, he sat at some distance from his own field, and from his fellow graduate students. “I was more interesting than them, and not as good at math,” he said. “What was I good at? It was at finding things that were interesting.”