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In this last part of the book, Kahneman turns from puzzles about rational choice to puzzles about value judgments where choice is incidental. How do we rate an experience just enjoyed or endured? More poignantly, how do we rate the value of an entire life’s worth of experiences? The assessment turns out to depend heavily on perspective.

The “experiencing self,” as Kahneman calls it, goes through highs and lows that can be summed up over time to obtain an “area under the curve” rating, like a mathematical integral—total happiness over time.

The “remembering self,” by contrast, looks back and registers two things: the peak intensity of pleasure or pain and the intensity at the end. It largely ignores duration. By this peak-end rule, for example, a painful medical procedure that ends abruptly will be remembered as worse than a similar procedure that contains just as much intense pain, for just as long, but then adds a period of milder pain at the end. Similarly, a life is judged happier if it ends happily than if a few unhappy years are added at the end.

Paradoxically, the remembering self has the final say on how good or bad an experience was, not the self that actually went through the experience. Moreover, it is the remembering self that gets to decide whether an experience is worth repeating. Example: A person’s diary may record one enjoyable day after another on a vacation, but if the last day or two was disappointing, the remembering self will look back and say, “I’m not doing that again.”

The remembering self is not even particularly good at reconstructing how things were for the experiencing self. For instance, people overestimate how much pleasure they get from their car. The car may be well built and nicely appointed, but people don’t actually spend much time being conscious of their car and its features, even while they’re driving it. The bottom line is that people do a poor job of answering what seems like a very basic question: “How happy is the life I’ve been leading lately?”

In the last chapter, Conclusions, Kahneman tries to draw some broad, practical lessons from everything that has come before. Where the tension between the experiencing self and the remembering self is concerned, he suggests that experienced, not remembered, happiness is a good, objective measure of how well-off people are. He also says that there are ways of actually carrying out the measurement, and that someday, objective measures of well-being could become regularly reported national statistics that influence government policy.

Where the tension between Econs and Humans is concerned, Kahneman has broad, positive things to say about a policy approach called libertarian paternalism. In this approach, people are left free to make their own, private choices about a great many things, but each choice is framed to encourage a response that is socially preferable. Example: People are free to say that in the event of accidental death, they do not want to be organ donors. But if they say nothing, by default they consent to be donors. Countries with this “opt out” framing of the choice about organ donation have dramatically higher donation rates than countries with an “opt in” framing.

Lastly, where the tension between System 1 and System 2 is concerned, Kahneman emphasizes that System 1 performs admirably well much of the time but needs help spotting threats of error. Organizations can provide that help. They “can institute and enforce the application of useful checklists, as well as more elaborate exercises, such as reference-class forecasting and the premortem.” More generally, organizations can “encourage a culture in which people watch out for one another.”

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