The Freakonomics Radio Book Club EXTRA: Remembering Daniel Kahneman
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Apr 9, 2024 
Nobel laureate and psychologist Daniel Kahneman discusses his book 'Noise' with Steve Levitt. They explore decision-making, the impact of noise, and the origins of behavioral economics. The conversation delves into Kahneman's collaboration with Amos Tversky and the intersection of psychology and economics, highlighting challenges and successes in applying behavioral economics for behavior change.
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Levitt and Kahneman's First Encounter
- Steve Levitt recounts meeting Daniel Kahneman while dining in NYC after the release of SuperFreakonomics.
- Kahneman critiqued Levitt's book, saying it would "change the course of mankind, and not for the better."
Defining Noise
- Noise, the focus of Kahneman's book, is defined as unreliability in judgments and decisions within a system.
- It's distinct from bias, representing the variability of errors rather than the average error.
Insurance Company Noise Audit
- Kahneman's work with an insurance company revealed significant noise in underwriters' premium assessments.
- When presented with the same case, underwriters' premiums varied by 50%, five times the expected 10% variation.