/ 04
It Never Hurts to Stop & Think
by Roy Katznelson,
Director of Publications
Trick Question for you... if a baseball bat and a ball cost $1.10 together and the bat costs $1 more than the ball, how much does the ball cost?
The answer is not what you may initially think when reading this question. I can assure you that as soon as you finished reading the problem, the immediate answer that came to mind was that the ball costs 10 cents. This is wrong, but it is not your fault, it is the result of cognitive biases that we all exhibit.
In the book Thinking Fast and Slow, the Nobel prize winning psychologist Daniel Khaneman describes the many biases and irrationalities that the average person undergoes when making a decision. He describes two systems of thinking that our brain uses to process information.
- System 1 is intuitive and always on autopilot, constantly taking in and processing the world around you without you even knowing. An example of this is reading words in front of you, even if you consciously try not to. This is the system responsible for telling us that 10 cents sounds good enough to be the answer even though we did not check our work.
- System 2 is what you use when you are solving a complex math problem. This is the system that needs to be used to calculate that the ball would be 5 cents and the bat would be $1.05, the correct answer. These two systems work together 24/7 to ensure that you are making the best economical decisions throughout your life.