Cutting Through the Noise
Daniel Kahneman on applying behavioral psychology to financial advice.
The 30th annual Morningstar Investment Conference in June was a fitting platform for a conversation with Daniel Kahneman, one of the founding fathers of behavioral economics and a recipient of the Nobel Memorial Prize in Economic Sciences in 2002. In partnership with Amos Tversky and others, Kahneman’s research on judgment and decision-making established that heuristics and biases can lead to errors—a refutation of the perfectly rational investor. In “Prospect Theory: An Analysis of Decision Under Risk,” Kahneman and Tversky provided more realistic models of economic behavior and gave us the vocabulary of frames and anchors common in behavioral finance today.
Interviewing Kahneman was a professional and personal pleasure. His work underpins our behavioral science efforts at Morningstar. As a behavioral economist who focuses on the psychology of financial decisions, I would not have been able to pursue my career path had not Kahneman and his contemporaries paved the way. Our conversation has been edited for length and clarity.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.