At the age of 21, Daniel Kahneman, PhD, then a lieutenant in the Israeli army, constructed a groundbreaking interview system for assigning new soldiers to appropriate posts and weeding out unfit recruits. Still in use today, the system remains one of his proudest accomplishments in psychology, a field he studied almost by accident, he says.

"Like a few others I know, I came to psychology as a substitute for philosophy," Kahneman says. Fifty years later, few can imagine the field without him. Overturning many traditional assumptions of economic theory, his research demonstrated that, more often than not, individual decisions are based on context, faulty reasoning and perception, rather than on cost-benefit analyses.

For his many advancements in the field of psychology, Kahneman will receive APA's most prestigious honor--the APA Award for Outstanding Lifetime Contributions to Psychology, which will be presented at APA's 2007 Annual Convention in San Francisco, Aug. 17-20.

"Danny has an uncanny eye for how to take a problem and bring rigor to it in a way that...makes the problem more interesting and relevant to the real world," says Lee Ross, PhD, professor of psychology at Stanford University. "He's really boosted the self-esteem of the field."

Breadth and depth

Kahneman, the Eugene Higgins Professor of Psychology and professor of public affairs in the Woodrow Wilson School of Public and International Affairs at Princeton University, received the 2002 Nobel Prize in economics for his research with the late Amos Tversky, PhD, in the areas of judgment and decision-making under uncertainty. Their work helps explain irrational economic behaviors such as why people will drive to a distant store for a discount on a small item but not for the same discount on something expensive.

Continuing to tackle issues in human decision-making, Kahneman now focuses on the study of hedonics--what makes experiences pleasant or unpleasant--and the development of a scientific measure of well-being. In one recent study examining money's effect on happiness, Kahneman found that people with a relatively high income are barely happier at any given moment than those with a significantly lower income, shattering the age-old speculation that money buys happiness.

"Kahneman and his colleagues and students have changed the way we think about the way people think," says APA President Sharon Stephens Brehm, PhD, who selected Kahneman for the APA award. Brehm says she chose Kahneman for the breadth and depth of his contributions to both psychology and economics. His colleagues and friends agree. Longtime research partner and friend Richard Thaler, PhD, professor of economics and behavioral science at the University of Chicago, says Kahneman's work with Tversky is the reason today's thriving field of behavioral economics exists. "Their work provided the conceptual framework that made our field possible," he explains.

Through their collaboration, Kahneman and Tversky examined why an individual's response to loss is much more intense than one's response to gains, leading to the notion of loss aversion, one of the main fields of study in behavioral economics. This same theory helps explain the behavior of a gambler on a losing streak who refuses to leave the table, hoping to break even.

Team science

Kahneman quickly points to his many collaborators as his source of success. He thrives on opportunities to exchange ideas with colleagues in a variety of fields, and come to better solutions than he would working alone, he says. For instance, Kahneman compares his partnership with fellow psychologist Tversky with "owning a goose that could lay golden eggs"--a "joint mind" far superior to their own separate ideas.

"On the morning I received news I'd been selected for the Nobel Prize, I was asked the secret of my success and answered, without hesitation, 'my choice of friends,'" Kahneman notes. "I've been extremely fortunate to have had many brilliant collaborators who have also been great friends."

A few of these friends often wondered whether their work together would ever meet Kahneman's high expectations.

"At some point during every project, there comes a time when he becomes convinced that everything you're working on is crap," says Thaler. "Those periods can be difficult, but the work always gets better."

After publishing more than 150 articles, writing one book and co-editing four, Kahneman plans to retire from teaching at the end of the year. He will continue to run an ambitious research program, but he also looks forward to devoting more time to his "principal hobby"--three grandchildren. Kahneman says he was flattered but a bit sad when APA sent word they would be honoring him at the upcoming convention.

"It just reminds you how old you are," he says.