Insights Industry News

August 1, 2020

Lessons from Thinking, Fast & Slow: System 1 and System 2

System 1, System 2, AND System 3? How systemic thinking can improve your insights.

Lessons from Thinking, Fast & Slow: System 1 and System 2
Molly Purcell

by Molly Purcell

Digital Marketing Specialist at GreenBook

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The concept os two thinking systems, System 1 Thinking and System 2 Thinking, was created by the Nobel Prize winner and the intellectual godfather of behavioural economics, Daniel Kahneman in the book Thinking, Fast & Slow. He and his great collaborator Amos Tversky framed human thinking in two forms that they call System 1 and System 2.  According to Kahneman and Tversky, human judgment and decision-making with all of its biases and heuristics could be explained within the two-system view.

What is the difference between System 1 and System 2?

System 1 Thinking

System 2 Thinking

What else is it called? Thinking Fast, Type 1, and Type 1 thinking Thinking Slow, Type 2, and Type 2 thinking
How is it defined? “A perceptual and intuitive system, generating involuntary impressions that do not need to be expressed in words. This system is fast to react, automatic, associative, emotional, effortless and learns through repeated experiences and gradually over time.” – Orlando Wood, System1 Group “The conscious, reasoning self that has beliefs, makes choices and decides what to think about and what to do.” Allocates attention to the effortful mental activities that demand it, including complex computations.
What is an example? Answering the arithmetic equation 2 + 2 = 4, without effort Remembering how to multiply decimals then using a pencil and paper to work out the equation 17.54 x 24.04 = 421.6616
How easy is it to use? We are instead often happy enough to trust a plausible (System 1) gut judgement that comes easily to mind. It is hard work to process information using System 2, however, and our capacity for System 2 thinking is very limited
How much control do we have over it? System 1 is the process that is really in charge as it “effortlessly originates impressions and feelings that are the main sources of the explicit beliefs and deliberate choices of System 2” We identify with System 2
What is it responsible for? It is System 1 thinking that is responsible for many of the everyday decisions, judgements and the purchases we make and explains many of the heuristics (shortcuts or rules of thumb) that are highlighted by Behavioural Economics. We use System 2 to make rational decisions. It is this slower system that retrieves mental data and weighs the pros and cons for us.
How do we measure it?  Facial Coding Survey
What challenges does this type of thinking present? System 1 has systematic errors and much of Kahneman’s research is focused on identifying these. As he himself readily admits, identifying them is one thing but avoiding them is entirely another. Some market researchers question if the model is still relevant. 

Which is better? System 1 or System 2?

First, let’s consider the bigggest challenge with Type 2 thinking. “System 2 is a lazy controller and doesn’t like to expend much effort,” writes Rich Raquet in Thinking Fast and Slow: How Market Researchers Can Implement System 1 and System 2 Thinking. “One of its main functions is to monitor and control thoughts and actions suggested by System 1.” Kahneman and Shane Frederick (professor or marketing at Yale) have also shown that System 1 is indeed lazy and doesn’t always do that job.

In some industries this might not have relevance. But when it comes to market research, there are implications that support a preference for System 1 thinking. When people are asked questions that require thinking, and researchers haven’t engaged System 2, we limit ourselves to surface information and not actionable insights. On the contrary, getting System 2 thinking involved brings for deeper insights and ideas (rather than “superfluous answers with little depth”). “If we can use some other external mechanism to activate System 2 then we are in the game. Smart Incentives is an effective idea generation and gamification approach we have used at TRC for this purpose.”

Raquet continues, “Kahneman says that people are remarkably adept at coming up with answers to all kinds of questions without knowing how or why (surveys researchers beware!).” His explanation for a lot of this is the idea of substitution. That is, people answer an easier but wrong question rather than the difficult one they were asked. So when asked whether they approve of the President’s performance, they simply answer it by assuming that the question is really whether they like the President. They may not even know that they have done that.

“This has implications for market research where respondents are asked all kinds of questions, some of which are quite difficult. If they are simply answering an alternate easier question then it is no wonder that the data don’t make sense! Much of conventional market research assumes that decision-making is done only by System 2 and that too with little input from System 1. Kahneman shows that that is not the case (as demonstrated by a variety of experiments in behavioural economics) and researchers would be well advised to take note and think about how to account for the influence of System 1 in consumer decision-making.”

How researchers can use System 1 and System 2 for insights

Olivier Tilleuil, Founder & CEO of EyeSee pointed out that neuro-marketing techniques could measure System 1 mechanisms via biological aspects of behaviour. Techniques that can measure System 1 thinking include:

  • Eye-tracking: measuring eye positions and movement to determine where the person is looking. An increase in package visibility by 10% can lead to an increase in sales by 2%
  • Facial coding: measuring emotions through naturalistic and spontaneous facial expressions. This method can predict the viral potential of videos 2x better than surveys alone.
  • Brain-imaging techniques: functional magnetic resonance imaging (fMRI), magnetoencephalography (MEG), electroencephalography (EEG), positron emission tomography (PET), etc.
  • Biometric reactions monitoring (heart rate, skin conductance), which depends on the level of emotional excitement
  • Implicit Association Test (IAT): exposing the subconscious associations that respondents are not able, or not willing, to self-report
  • Virtual shopping simulation: used to re-create actual shopping experiences. Correlates with real market shares of 0.8-0.95

While measuring System 1 responses is good practice for a brand, keep in mind that best practices state both System 1 and System 2 insights should be measured together for accurate insights. “If we made every decision based upon what our System 1 or “fast” brain suggested, half of us would be in jail, and the other half would find themselves indulging in too much dessert at the dinner table…Evaluating the speed of attribute associations alone is not enough to understand what drives behaviour. It is imperative that System 1 and System 2 research techniques be layered together holistically.” – Garrett Meccariello, Protobrand

What is the future of systems thinking in market research?

In an interview with GreenBook, Orlando Wood, Chief Innovation Officer of System1 Group spoke about how traditional research tactics are rooted in System 2 thinking, “The way we ask questions, by and large, requires System 2 processing…We assume that people are entirely rational agents with a perfect grasp of how they will behave in a different context when actually the people and environments around them in real-life settings have an enormous bearing on their behaviour and decisions.

So I believe that there is actually an enormous opportunity for researchers to create experiences that mirror more closely real-life environments and to create conditions that promote System 1 thinking. These approaches will get us closer to real-life behaviour, and help us to understand and predict it better.”

Related

Rethinking the Way We Think

System1 Group used behavioural science to prove high impact digital ads really could build brands and drive long-term profitable growth. People make 95% of their decisions each day using the fast, instinctive, emotional Type 1 mode of thinking.

System 1 is in the driving seat, so effective marketing is marketing that appeals to it directly.

In a case study published on the GreenBook Blog, System1 Group found that their client’s high impact ads performed exceptionally well in emotional testing – they outscored standard ads by over 60% for both the level of positive emotion and the intensity people felt it.

Neuroscience is advancing the dual systems paradigm

Breaking down the brain into two distinct ‘systems’ has been extremely helpful for simplifying the complexities of cognition by dividing the brain but it has some limitations. Framing thinking as an either/or process:

  • Does not account for context (e.g., decisions change relative to a context)
  • Does not account for time (e.g., decisions are anchored in time and space)
  • Not mutually exclusive (e.g., habits are automatic, yet can be conscious)
  • Does not fully account for social influences or emotions

A recently published series of articles in the Journal of Consumer Research concluded,“Dual-process conceptualizations (“system 1/system 2”) may be inherently misleading, arguing that it is better to view behaviour as the result of deep interactions among conscious and unconscious processing. There seems to be a consensus for the view that dual-process accounts of behaviour, although popular and generative, may be approaching the end of their lifecycle.” (Poehlman & Williams, 2017)

Neuroscience has repeatedly demonstrated our brain does not passively wait for information, but rather is “always active”, automatically and continuously, predicting the incoming streams of input before they arrive to prepare us for action (Clark, 2013).

Behavioural science is moving beyond a consciousness-centric perspective (deep), and focusing on a broader range of causal drivers that are highly relevant for marketers and insights to understand, predict and change behaviour. This major shift is making behavioural science more applied by providing a broader, holistic picture of customer behaviour that is grounded in context and time- two underappreciated drivers of decision-making.

Insights professionals are looking for System 3 methods

Coined by The Irrational Agency, System 3 refers to the imaginative capability of customers. According to their blog, “Customers imagine their possible futures: the outcomes they would experience after a choice, and how those outcomes will make them feel. The future that makes them feel happiest will be the one they choose. These choices use different parts of the brain than System 1 and 2. They are called System 3 choices.

“Think about how you might buy a car. System 1 would suggest that you see a colour, or shape, or brand of car, immediately fall in love with it and buy without thinking. System 2 implies that you calculate the price, financing options, fuel efficiency, resale value – and pick the model that makes the most financial sense.

“A System 3 decision would look like this: imagine yourself driving that car. Feel, in your mind, the sensations of the seats and how it drives. Imagine how your partner or your friends would view you in it. Consider, too, the impact on your bank account and what else you would be missing out on to pay for it… How do you feel? Is it good?… The car you feel best in – within this mental simulation – is probably the one you’ll choose.”

The original version of this article appeared here.

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behavioral economicsbehavioral scienceconsumer behavior

Disclaimer

The views, opinions, data, and methodologies expressed above are those of the contributor(s) and do not necessarily reflect or represent the official policies, positions, or beliefs of Greenbook.

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