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Tel Aviv, Israel
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Tel Aviv, Israel

Daniel Kahneman is an Israeli-American psychologist whose work in the fields of psychology and economics has garnered international acclaim. As a Nobel laureate, his work on cognitive biases, prospect theory, and behavioral economics is illuminating and enlightening. Kahneman began his academic career at his alma mater, Hebrew University of Jerusalem, as an academician. He quickly rose to prominence at a number of other institutions, including the University of California, the University of British Columbia, and Princeton University. Interestingly, despite his training as a research psychologist and his lack of economics experience, he was awarded the Nobel Memorial Prize in economics for his work on Prospect Theory. His contribution to psychology has been enormous, as his work established a new field of research emphasizing integrated economic analysis in conjunction with fundamental insights from cognitive psychology, particularly regarding behavior under uncertainty.

Childhood & Adolescence

Daniel Kahneman was born in Tel Aviv on March 5, 1934, while his mother was visiting relatives. His parents, who were born in Lithuania, settled in Paris, France, where young Kahneman spent the majority of his formative years.

In 1940, Nazi Germany occupied Paris, and the Kahneman family faced difficult times. His father was arrested but later released as a result of his employer’s intervention.

The family was constantly on the run until the end of World War II, and Daniel’s father died of diabetes in 1944.

The family relocated to British Mandatory Palestine in 1948, just prior to the establishment of the state of Israel.

After completing his primary education, he enrolled at the Hebrew University of Jerusalem, where he earned a Bachelor of Science degree in 1954 with a major in psychology and a minor in mathematics.

He was drafted into the Israeli Defense Force after earning his graduate degree, where he worked in the psychology department.

His responsibilities included evaluating candidates for the school’s officer training program and developing tests to determine each candidate’s suitability for the position.

After gaining work experience, he resumed his studies and immigrated to the United States in 1958 to pursue a PhD in Psychology at the University of California, Berkeley. He earned a PhD in 1961.

Career of Daniel

After completing his studies, he returned to his alma mater, Hebrew University of Jerusalem, where he was hired as a psychology lecturer in 1961. He was promoted to senior lecturer within five years.

Apart from pursuing an academic career, he continued his research and published his first article, ‘Pupil Diameter and Load on Memory’, in the prestigious journal ‘Science’. He discussed visual perception and attention in it.

Between 1965 and 1966, he worked as a visiting scientist at the University of Michigan and at the Applied Psychology Research Unit in Cambridge, in addition to his academic position at Hebrew University. In 1966/1967, he worked as a fellow at the Center for Cognitive Studies and as a psychology lecturer at Harvard University.

His relationship with Amos Tversky dates all the way back to his time at the Hebrew University of Jerusalem, when he invited the latter to deliver a guest lecture. They collaborated on their first paper, ‘Belief in the Law of Small Numbers,’ which was published in 1971.

Between 1971 and 1979, the duo published seven additional articles in the field of judgment and decision-making, all of which were published in prestigious journals.

The pair spent the academic year 1977-78 as fellows at Stanford University’s Center for Advanced Study in the Behavioral Sciences. He met Richard Thaler, a visiting professor at the university, at Stanford, and the two had a profound influence on one another.

Kahneman resigned from his academic position at Hebrew University in 1978 to accept a position at the University of British Columbia.

Meanwhile, his exclusive relationship with Tversky deteriorated as he developed relationships with other research analysts, including his wife, Anne Treisman, with whom he co-authored two papers.

They published their magnum opus, ‘Prospect Theory,’ in 1979, which earned them the 2002 Nobel Memorial Prize. Their psychological research included assimilation of economic science insights into the area of judgment and decision-making under uncertainty.

Along with ‘Prospect Theory,’ the duo published ‘Judgement Under Uncertainty: Heuristics and Biases’ in the prestigious journal ‘Science’. The work was equally significant as the one on ‘Prospect Theory,’ as it pioneered the concept of anchoring.

Between 1979 and 1986, Kahneman published a total of 23 works in a variety of fields. During this time period, he wrote a single chapter on hedonics. The work was largely inspired by his previous work on the economic concept of utility.

Thaler published “Toward a Positive Theory of Consumer Choice” in 1980, drawing on prospect theory and Kahneman and Tversky’s body of work. Kahneman has referred to it as “the founding text of behavioral economics.”

In the 1990s, he shifted his focus from behavioural economics to hedonic psychology, a booming field at the time. The field was associated with positive psychology and concerned itself with the study of pleasure and pain.

Following this, he collaborated with other psychologists such as Thaler, Varey, and Snell to produce works on utility and the psychology of utility. In 1992, he collaborated with Varey to develop a method for evaluating moments.

In 1998, he co-developed the concept of focussing illusion with David Schkade. He highlighted the errors that people make when calculating or forecasting future happiness in various scenarios in this work.

He believed that people frequently attributed their overall happiness to a single factor rather than accounting for the plethora of other factors that had the same, if not greater, effect.

He aimed to dispel this particular illusion through his work, thereby assessing the overall effect of various situations on future happiness.

He is currently a senior scholar and emeritus faculty member in the Department of Psychology and Woodrow Wilson School of Public and International Affairs at Princeton University. Additionally, he is a Hebrew University fellow and a Gallup Senior Scientist.

Awards and Accomplishments

He won the prestigious and highly regarded Nobel Memorial Prize in economics in 2002 for his work on ‘Prospect Theory.’ He was co-recipient of this award with Amos Tversky.

In 2003, he shared the University of Louisville’s Grawemeyer Award for Psychology with Tversky. In 2007, he was presented with the American Psychological Association’s Outstanding Lifetime Contributions to Psychology Award.

On November 6, 2009, he was awarded an honorary doctorate by the Economics Department at Erasmus University in Rotterdam, Netherlands. In 2011 and 2012, he was named to Bloomberg’s list of the world’s 50 most powerful people in finance for two consecutive years.

In 2011, he was awarded the Talcott Parsons Prize by the American Academy of Arts and Sciences. The same year, he won the Times Book Award for Current Interest with his book ‘Thinking, Fast and Slow.’

In 2012, he received the National Academy of Sciences Communication Award for his book ‘Thinking, Fast and Slow’. The following year, he was elected to the Real Academia Espa ola as a corresponding academician (Economic and Financial Sciences).

In 2013, US President Barack Obama bestowed upon him the highly regarded and illustrious Presidential Medal of Freedom.

Personal History and Legacies

He married Anne Treisman, who is also a psychology professor at Princeton University. She is a fellow of the Royal Society and a multi-award-winning cognitive psychologist.

Estimated Net Worth

Daniel Kahneman’s net worth or earnings are estimated to be between $1 million and $10 million. He amassed such wealth through his primary career as a Psychologist.