A look at why Albert Einstein was disregarded by many of his colleagues later in life. Thats just a if of the program a few of the programs youll see this weekend. For a complete television schedule, booktv. Org. Booktv, 72 hours of nonfiction books and authors this holiday weekend. Television for serious readers. Now, we kick off the weekend with best selling author Michael Lewis on his latest book on the creation of behavioral economics. The undoing projects. [inaudible conversations] hello, everyone. Hello, everyone. Good evening and welcome to this latest in conversation with event. My name is m be er mervyn king, and my guest is quite simply the most successful Nonfiction Author in the world, Michael Lewis. Of his 13 titles, every single one has been a bestseller. His latest book, the undoing project, is published this week. Please give a warm welcome to Michael Lewis. [applause]. Thank you. Is this on . All right. Splendid. Michael, lets this is pointed out to me . Its subliminal . [laughter] this is the way you try to achieve superiority in the interview context. [laughter] so most of your books have been about slightly odd people, unusual, quirky people who have defied conventional wisdom. This time youve written about two college professors. Why have you written about two College Academics . So the books never start with i want to write a book about this or that. What happened was this, i crawfished into this story over a period of years. A book i wrote called moneyball came out in 2003. That book was ostensibly about baseball, but what it was really about, in my mind, was the way markets can misjudge, misvalue people. And this team, the oakland as, had figured that out, and because they lacked resources, they found new and better ways to value the players than existed. It meant what they were doing, basically, was replacing the intuitive judgment of the socalled experts with analysis of the performance statistics that was just better. It identified, it identified systematic mistakes that the experts made in evaluating the players. Using Business School research. Exact bely. Business school actually, the research they were using, it wasnt as if they had proprietary information. You could have gotten the stuff off the web, but nobody paid attention to it because they trusted their experts. So this book comes out, and an economist and a lawyer together reviewed the book in the new republic. Richard thayler and cass sunstein, and they said they liked my book and so on and so forth, but i seemed not to know that there were these two us israeli psychologists who explained why the experts got it wrong. Danny and amos had done work showing the systematic biases the mind was prone to when it was making intuitive judgments. And id never heard of them. Mervyn was my tutor at the London School of economics, and hes partly responsible for me never having heard [laughter] of danny and iowa as a result. And amos as a result. I was not the most distinguished student. But in any case i didnt want to burden you with too much. Anyway [laughter] we have a long history, and later on if you want to get into it, im happy to get into it. [laughter] but i, so i never heard of these guys. And i thought i filed it away. I went and actually looked them up on the web, saw that Danny Kahneman had won the nobel prize in economics in 2002 and thought thats interesting. I have a drinking buddedty in berkeley. Buddy in berkeley. This is how books come about. [laughter] very well known psychologist. His field is emotion, but he was amos tverskys teaching assistant. I said one night that this is bothering me that i didnt get the story. I told the story about this baseball, and i never got to why the experts were making the mistakes. And he said, well, danny has a house up the hill, i have his email, ill hook you up. This was back, i still must have thought back in 2005 that nobel Prize Winners in economics were unapproachable as opposed to selfpublicizing. So i but kind of tentative, but i called him up, he said come on up and have coffee, and we started a friendship. Wed go for long walks this is a longer answer than you want, but this is the answer was based upon me helping him sort through the crisis of confidence he was experiencing writing his book thinking fast and sold which has sold so many how many millions of copies now which he was sure the moment was published would destroy his reputation. It was wonderful. He had selfdoubt like i had never seen, and he was in the process when i met him of paying people, friends, to go and find people to pay who he would not see so theyd be blind reviewers to write him anonymous reviews persuading him not to publish be his book because it would ruin his reputation. [laughter] i mean, it was crazy. So my job was go up every six, eight weeks and say its great, do it. And in the course of this conversation, i just was interested in him, he started talking about this relationship he had with amos tversky, and it was a love story. It wasnt sexual. But as ive said, the oneline movie summary of this book, its Brokeback Mountain, but they screw each others ideas. [laughter] thats what it felt like. I felt like i was listening to the guys in Brokeback Mountain talking about each other. The emotion old this wing was really emotionalling aspect of this thing was i had taught a writing course at cal. My favorite student was a kid named orrin tversky. I said to taanny, they owned it up to me. Dan, this y was dubious, but they opened the doors to amos files. I started on this in 2008, 2009, and ive been doing it ever since and finally worked up the nerve a couple years ago to write it. At what point did you decide this was going to be a book . Only a few years ago. I mean, i worked and worked and worked on it being very Danny Kahnemanesque going back and forth my problem was, i had a couple big problems. One was i didnt know i could pull it off. I was a stranger to their field. I didnt, had never had as much as an introductory psychology course, and i was going to have to yet my mind get my mind writing around their position in the field. And i had to write about the early israel hi state. I can imagine a Million People telling me exactly how i got it wrong after i published it. So i was reluctant. I made five trips to us rile. I made four trips of more than ten days each before i committed to do the book, thats how, how much kind of legwork i did before i even thought, yeah, i can do the book. But it was three years ago or so i finally said im doing it, and what i concluded was their story was so interesting, enough people thought it was important that someone was going to do it, and it was interesting enough that it justified doing it. And i thought that anybody whos going to do this is not going to have the access to the material that ive had already, open access to the tversky family and its files, danny being forthcoming with me. So someones going to do it, and theyre probably going to do it badly. And i said to danny, who went back and forth about whether i should do this or not, i said, look, someones going to write a book about you maybe after its gone. Its probably after youre gone. Its probably going to be a bad book, and youre not going to like it. Why not me if im going to write the bad book . And he said, thats probably right. He said all of thats probably right. Its probably going to be a bad book, so on and so forth. So thats it came about. It came about very hesitantly. It was unlike any of the other books ive done. Most of the other books ive spotted the subject, and in three or four months im in it. And at least as a maggen zien article magazine article. Thats not the way this worked. So in the end, how did you i mean, danny, presumably, was going to and fro about whether this was a good idea, and your relationship with him evolved. How in the end did you persuade him, just as you said . Just as i said. He would say i knew so danny is the human embodiment of doubt. And his whole life hes had nothing stable. He has an idea, he becomes wedded to it for a few hours, and then he turns on it. He lives his life that way, almost resisting commitment to anything. And i think its partly because he doesnt like to defend things. But he would put it i like to change my mind. This makes it very difficult for people who are collaborating with him yes. And the stories are legendary about the papers about to go to publication, he calls and gotta pull it. And he used to do this with amos, and amos would sit with a drink in his hand saying lets wait for the call. Hed talk him down, and the paper would go in. And i just, i thought im going to have a problem because if i get in the middle of this and he changes his mind, its going to be a lot of wasted effort. So the fallback position was always its not the question isnt a book is going to be written or not going to be written, someones going to write the book. So this is not going to get better. You know im at least fun. So that, i think that was the selling point. He was never happy with the idea. He never was really excited that i was writing a book about him. And when he got it, he was really not excited. [laughter] and read it. I mean, its he, all of the subjects of all of my books have had this jolt when theyve read it. And i tell them all that jolt you feel, youre going to feel even if i got it exactly right. Remember the first time you heard your voice on tape, it didnt sound like you. Youre going to have that feeling a little bit, but at least ask the people who know and love you whether i got it right bar before you get really angry. Before tonight i spoke to one academic who will be nameless who had done joint work with danny, and he said danny is the most difficult person i have ever had to deal with. So what was amos secret to create this extraordinary Creative Partnership . You describe in the book how they would just sit day after day in a room, thered be no one else in the room, people would hear them outside talking and laughing, and then suddenly these great thoughts and ideas would come out. How did amos manage to pull off working with danny . I think it was painful and difficult sometimes because nothing was stable. But i think so amos tversky is one of the most interesting characters ive ever encountered. It was difficult at first how i was going to bring this guy back to life. He died in 96 at age 59. And he, but he sends such vivid signals even from the grave because he never did anything he didnt want to do or never safed a piece of saved a piece of paper he didnt want to save. Anything he saved in his filing cabinet, any friend he had, any party he went to he was there because he wanted to be there, and that included his relationship with danny, as difficult as it was. Because he wants to be in it because he senses quite rightly this is a are, very fertile mind whos general generating ideas. And the grist for their mill was, i think, dannys idgenerating ideagenerating machine. First, there arent many people in the history of danny in whom danny has up conditional faith or trust in their minds. Even danny was awed by amos mind, that everybody said that theres a famous [inaudible] the michigan psychologist designed the oneline intelligence test, and it was about amos. He said the longer it takes you to figure out after youve met amos that hes smarter than you, the stupider you are. [laughter] and everybody who knew amos felt that way. And danny was aware that this was just this very powerful magician, is what he was. And he gave danny a sense of security. I think danny thought, danny was always worried somethings wrong with this. If amos approved of it, it must be right. So amos settled him down that way, and amos was also supremely confident. So he made danny feel confident. And amos, for a stretch anyway up until they basically get to this country, i think treated dannys, all of his ideas kind of uncritically. There was a kind of unconditional love. And danny responded very well to that. So it was a magic in that. I think that danny, you know, that the taming of danny for ten years is one of the miracles of the relationship and the ability to kind of keep him from flipping on them, on the ideas. But anyway, amos spent when i was going through his filing cabinets, there are breakup letters in them, theres this drama in the filing cabinets. And among the signs of the drama were when there were these stack of papers that were clearly actually, some of them were marked preparation of phone call with danny. And it was bullet points of all the things danny was going to be upset about and and amos response. And this clearly happened over and over and over. And so he spent a lot of time, now amos, as i said, did nothing he didnt want to do. He would take his wife to the movies, and if he doesnt like the movie after five minute, hed leave her, go home and watch hill street blues and go back and get her at the end of the movie. Hed say they already took my money, theyre not getting my time x. He told people, you should never stay in a Board Meeting or faculty meeting or even a party if you dont want to be there. And you dont have to think of an excuse. He said if you just get up and walk, its amazing how the mind comes one the words to explain why youre leaving. [laughter] he was just unbelievably efficient. I mean, in a prier the natural way, and yet he was willing to endure this relationship, and i thought that was a powerful statement on the about what he thought of danny. Theres lots of practical advice in the words of amos. Not from danny, but amos, yes. So amos says at one point, he said if you want to do research, its a good idea to be in a permanent state of underemployment. It is better or to waste hours than to end up weeing years. Yes. This is very good advice. And giving yourself time to think. Dont rush around being busy. I cant tell you how many people ive met who arer the write business terribly busy and its absolutely crucial. Yeah. Can we turn for a minute to some of their ideas . Sure. What you describe in the book is a process in which they start working, first of all, on how people behave, how they make judgments. And what these people do is to say, well, you know, economics has become a very deductive discipline. You make certain assumptions at the beginning which no one really understands, but they sound plausible, and then you make lots of deductions about what constitutes rational behavior. And what they do is lots of experiments which say actually people dont behave like that. And it takes a long time to persuade economists that maybe people dont behave in the way economists normally assume. So they study these biases, behavioral biases that you describe in the book, and then they move on to say, well, now weve identified some of the biases. Lets ask a different question which is how do people make decisions. They make judgments and they may get these things wrong, how do they make decisions. And what intrigued me about it was that both in the words a few times of amos but particularly where you describe what it means to us think about real word situations, you bring in the idea of people telling stories. So its not just based on mathematics. Its people telling stories. And there is a quote on page 250 where you actually quote danny on this occasion saying no one ever made a decision because of a number. They need a story. So how far do you think economics and social sciences should move away from the more rigorous mathematical views and the use of numbers towards encouraging us all to tell a story . I was afraid you were going to ask me a question like this. Im back as your student, and im about to get a c of. C. Tell a story. I dont have much should in me. You know, one of the things thats interesting about their work and and the way it found its way into economics is it clearly wasnt intentional in the beginning. They didnt think they were addressing economics. They thought they were addressing decision theory which was a weird branch of psychology which happened to share with economics some assumptions about Human Behavior, that man was a good intuitive statistician, whatever. There was some overlap there. But its only kind of midway through their relationship that amos wakes up in a big way to the implications for economics, and danny is the slowest of all. I mean p even now he claims never did he intend to influence economics, and they gave him a nobel prize for it. [laughter] so i dont think amos would have said that the assumptions that economists make are useless. They serve the purpose of the models, and the mod pells models, theyre tools. These are tools. I think amos would have said maybe its going to get even more interesting to try to adapt the model to actual Human Behavior rather than this theoretical economic man you dreamed up. But he was aware that it created horrible problems more economics and that he was vastly increasing the workload for economists, and he was very sympathetic to economists. He said this is just too much trouble for us. Now, and economics does do a lot. Its very useful. I mean, i was, the course of study i pursueed has been there are a whole lot of ideas that i took onboard, and these were ideas that were all generated by people who were assuming rationality in man. So i dont think, i dont think the lesson from dan think and amos is danny and amos is you chuck out economics and you find a storytelling approach. What they, in that quote, the passage you just quoted what danny was saying i think thats when he goes to the Israeli Foreign minister and shows him yes. And shows him the best probability estimates of what will happen, how arab countries will respond if the israelis do walk away from the peace negotiation. And the estimate is like 10 increase in the probability of war, and the foreign minister says, ah, 10 is nothing. And the number didnt mean anything to him. Thats where they walk away from this field called decision analysis which was stillborn, basically. And it was stillborn, they decided, because people in position of importance, they dont want the power being taken away from them by an algorithm or by probability estimates, and they do want to think in stories. So thats not exactly an answer to your question except that, except that my takeaway from my experience with them is not that economics is in need of serious reform. It isnt that at all. Right. Anyway so b . [laughter] were going to reflect. I tried. I bullshitted my way through like a good princeton student. A good princeton student. [laughter] dannys now at princeton. Hes emeritus. Heses from here, is where he lives. Did winning a nobel prize, do you think, change his views about economics or his own research .