Daniel Kahneman, the father of behavioural economics, challenged the assumption of human rationality prevailing in modern economic theory. He was jointly awarded the 2002 Nobel Memorial Prize in Economic Sciences. His book Thinking, Fast and Slow published in 2011 summarises his research on cognitive bias, the prospect theory which he jointly developed to challenge the expected utility theory which became the founding theory of behavioural economics.

In his TED talk on The riddle of experience vs memory, he speaks of two selves: the experiencing self which lives in the present and knows the present and the remembering self which keeps score and maintains the story of our life. He speaks of situations when there is a conflict between the experiencing self and the experiencing self. It is the remembering self that makes decisions he says, because we choose between our memories of experiences.

The experiencing self and the remembering self

The experiencing self and the remembering self also have different notions of moments of happiness. It is not about how happily a person lives according to his experiencing self but it is about how satisfied or pleased the person is when he or she thinks about his or her life. About the Gallup poll which asks people what they think about their life, he makes the point that how satisfied someone is with their life doesn’t tell you much about how happily they are living their life and vice versa.

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