Nobel laureate talks emotions and economics

On the quiet Thursday of fall break, Daniel Kahneman — the professor of public affairs and psychology who won the 2002 Nobel Prize in economics — delivered the 11th annual Einstein Lecture to a filled Dodds Auditorium. Titled "Toward a Science of Well-Being" Kahneman's presentation was the first Einstein lecture in a field other than the natural sciences.

The Einstein, a unique lecture series featuring Nobel laureates, was the brainchild of former Princeton Regional Chamber of Commerce Chairman Jack O'Leary. The event was sponsored by the Princeton Regional Chamber of Commerce with support from Bovis Lend Lease, Inc., Janssen Pharma-ceutica, the Sarnoff Corporation and the Wilson School. President and CEO of the Chamber of Commerce Kristin Appelget said she believed this year's "tremendous response is due to how current Kahneman's research is and its interest to many people."

Kahneman received the Nobel for integrating psychology and economics to form insights into human judgment in decision making.

"Kahneman has challenged basic economic assumptions of how people make decisions, especially under uncertainty," said Christina Paxson, Director of the Center for Health and Wellbeing in the Wilson School, in her introduction, Kahneman discussed the developing field of wellbeing and posed a series of questions.

"Does money buy happiness?" he asked. " If we are all richer, are we all happier? Are old people really miserable?"

The standard economic model, Kahneman said, is that individuals are rational, self-interested and calculating. But he suggested that other psychological motives determine one's behavior and that these additional motives are essential in understanding economic phenomena.

Kahneman explored philosophical questions related to wellbeing and offered two sets of emotions of wellbeing. The first was happiness, enjoyment, and warmth; the other was alertness, determination and pride.

Kahneman also analyzed the differences between measuring experience as it occurs in real-time, known as experience sampling, and reflecting on experiences after the fact.

Citing a case study that measured the pain of a patient undergoing a colonoscopy, Kahneman argued, "When we reflect on an experience, the end event has much more effect on the experience." Accordingly, an individual's level of pain toward the end of the procedure had a greater effect on his overall experience and level of satisfaction, he said.

The other experimental results Kahneman mentioned were theories that people tend to get happier with age, religious individuals seem to be more satisfied with life, people enjoy being with friends more than with family, and greater satisfaction with life exists in historically Protestant societies than in former Communist societies.

In addition, Kahneman postulated that a general increase in one's standard of living has little or no effect on one's happiness—in other words, the rich are happier than the poor, but only slightly.

"We know a great deal more than we did 10 or 15 years ago, but nothing compared to what we will know 10 or 15 years from now," he said.

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Michael Hierl, chairman of the Chamber, said, "[Kahneman] is not only a Nobel laureate luminary, but also a warm and wonderful teacher. He is the perfect individual to inaugurate the broadening of the Einstein Lecture."

Hierl said he hopes future lectures will reflect the diversity of Nobel Prize recipients and possibly MacArthur and Pulitzer Prize winners, while retaining its science component.

"The more we expand the series, the more we will be able to engage the community," Hierl said.