
In memory of Daniel Kahneman (March 5, 1934- March 27, 2024). An appreciation by Omar Mahmoud.
“Human Beings are to independent thinking as cats are to swimming. They can do it, but they prefer not to.”
— Daniel Kahneman
Daniel Kahneman, winner of the 2002 Nobel Memorial Prize in Economic Sciences, with Vernon L. Smith, revolutionized our understanding of decision making through his life’s work with his intellectual partner Amos Tversky. Their ideas were popularized in Kahneman’s masterpiece “Thinking, fast and slow.” He is considered by many to be the father of behavioral economics.
Kahneman’s overarching idea is that we have two systems for information processing and decision making; System 1 (fast, intuitive, impulsive, automatic) and System 2 (slow, reflective, rational, and deliberate). System 1 is effortless while System 2 is effortful, and lazy. That’s why we use System 1 most of the time to make decisions, and use System 2 to justify decisions already made by System 1, occasionally modifying them, and very rarely changing them.
While human beings are rational, their rationality is limited by the vast amount of information available to them, the uncertainty of the decision-making context, and the limited time and mental capacity available to us. Our rationality is a “bounded rationality.” Contrary to traditional economic theory which assumes a homos-economicus who calculates decision making utility based on an assessment of benefits and costs, think of buying a product or service or making a donation, Kahneman proposed that we make fast decisions based on short-cuts (heuristics) and cognitive biases.
The practical implications of Kahneman’s work are immense. If you use System 2 in your communication while your audience is interpreting it using System 1, you have a disconnect.
That’s why Kahneman’s work was celebrated and applied by many policy makers, economists, investors, and marketers.
Importantly, Kahneman’s work had significant implications for the non-profit sector in communication, advocacy and fundraising.
Below are our selection of 10 key ideas Kahneman gifted to the world that have proved useful in fundraising and other pro social applications.
Availability
We are influenced not by the most important information, but by the information that comes more easily to mind, usually as a result of media coverage.
Fundraisers can do well to link their messages to topics on people’s mind (e.g. a climate change event, a story of a refugee, a striking case of human rights violation).
Anchoring
Since we evaluate things not in the absolute but compared to other things, the first number we see (e.g. $ amount) influences our perception of subsequent numbers.
Fundraisers should start with numbers that influence donors’ perception in a desirable way, including the order of the money amounts they ask for (e.g. descending vs. ascending order).
End-Peak Rule
Our perception of an experience (e.g. a vacation, surgery) is not a result of the average experience or its duration, but of its peak and end moments.
Fundraisers should try to offer their donors a special moment of positive experience, and end their donating experience, especially if they had experienced some earlier inconvenience.
Framing
We are influenced not only by the facts, but also by how those facts are presented, or framed to us. A surgery with a 90% chance of success is factually the same as a surgery with a 10% chance of failure, but it feels different.
Fundraisers should consider, and test, alternative ways of presenting their information; donate $ 350 a year, donate $ 1 a day, donate the equivalent of a cup of coffee daily.
Loss Aversion
We hate losing more than we enjoy winning. The pain of losing $100 is stronger than the pleasure of gaining $100.
Fundraisers should highlight the loss that is going to be suffered and the risk of not reacting (risk aversion) whether it is a result of a natural disaster, famine, climate change, etc.
Mental Accounting
According to traditional economic theory, money is fungible; a dollar is a dollar regardless of its form or method of payment (e.g. cash, credit card, digital). Behavioral economics says we treat the same amounts of money differently depending on the mental account we put them in.
Fundraisers should keep in mind people’s mental account including their method of payment. For example, paying by credit card is less painful than paying in cash. Donating three months from now is preferable to donating now (present bias).
Mere Exposure Effect
We like what we know. The more familiar it is, the more we like it.
Fundraisers should pay attention to building their brand with emphasis on spontaneous brand awareness (recognition) and familiarity (fluency).
Normalization
When we don’t know what to do, we imitate others.
Fundraisers can make reference to the positive behavior of others who might influence potential donors positively, highlighting that such behavior is a norm or a new normal (X thousand people have donated).
Priming
Earlier information influences our perception of subsequent information.
Fundraisers can make their donors more receptive to their messages by providing them with a context (e.g. location, images, stories) that are indirectly relevant to the ask. Identity Priming reminds donors of their values that are relevant to the cause for which they are asking for donations (e.g. You are a person who believes in equality, You believe that we must leave our planet in a healthy state for future generations).
Substitution
When faced with a difficult cognitive question to answer, we change it into an easier question to answer, usually an emotional one. For example, if we are asked which political candidate has a better political program, we might change the question to which candidate do we like more (emotional).
Fundraisers should realize that donors will substitute the rational question we are asking them (System 2) with a simpler emotional question they can more easily answer (System 1). Fundraisers should adjust their communication accordingly.
The effectiveness of these various heuristics is multiplied when we combine some of them seamlessly in the same ask.
Many of these behavioral economics methods have been used by nonprofit organizations to help raise money and take action to help reduce suffering and create a better world in small and big ways. Thank you Danny.

For more on applying behavioral economics to fundraising see Change for Good: Using Behavioral Economics for a Better World by Bernard Ross and Omar Mahmoud and Change for Better: Behavioral science lessons from the world’s top practitioners by Bernard Ross, Madeleine Croucher, Meredith Niles and Omar Mahmoud. Both are available on Amazon.