I was honored to have my book, Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die reviewed by Vijay Mehrotra — check it out.
A tale of two books on decision-making
By Vijay Mehrotra
Daniel Kahneman is a psychologist who was awarded the 2002 Nobel Prize for his influence on the burgeoning field of behavioral economics. I recently read his bestselling 2011 book “Thinking Fast and Slow” . The book begins with a set of chapters collectively entitled “Two Systems.” This is where the book’s title comes from: System 1 [the “Thinking Fast” from the book’s title] “operates automatically and quickly, with little or no effort and no sense of voluntary control,” while System 2 [“Thinking Slow”] is engaged in “the effortful mental activities that demand it, including complex computations …” .
Kahneman then proceeds to illustrate how these Systems interact. He presents several examples in which System 1’s assessment processes are simplistic and biased. System 2, while capable of making much better decisions, is shown to be “lazy” as a result of the volume and variety of demands that leave it in a busy and depleted state. The tendency toward lazy System 2 processes, it turns out, is also why so many people turn out to be quite unskilled at probabilistic reasoning and associated decision-making; it is simply much, much easier for System 1’s automatic (and often incorrect) heuristics to be deployed than for System 2 to break away from its many other demands.
My System 2 was exhausted by the time I finished “Thinking,” so I simply started reading the next book that was sitting on my nightstand, which was Eric Siegel’s “Predictive Analytics: The Power to Predict Who Will Click, Buy, Lie, or Die” . Siegel is a former computer science professor, an experienced analyst and more recently the founder of the Predictive Analytics World conference series. As its title suggests, he has written a book that focuses on data-driven predictions, which he collectively labels as “predictive analytics” (PA).
The centerpiece, or rather centerfold, of the book is a list of more than 100 success stories that involve PA, grouped into categories ranging from “Financial Risk and Insurance” to “Family and Personal Life.” In turn, each chapter tells its own tale through these PA success stories. For example, in the chapter that explores the ethical and privacy implications of using data for prediction (“With Power Comes Responsibility”), Siegel illustrates the key ideas through the story of HP’s model for predicting the likelihood of employees leaving the company and Target’s algorithm and processes for predicting which customers were likely to be pregnant, while in the last chapter (“Persuasion by the Numbers”) he shines a bright light on U.S. Bank, Telenor (a Norwegian telecommunications company) and the Obama 2012 campaign.