Now or later

The decision to pick now over later is a phenomenon that’s prevalent across everything, from biology to economy. Genes must decide whether to build strong young bodies now at the expense of weak ones later. Plants must decide whether to use up their resources now or save them for the future. Bears must decide whether to overeat now or face a deprived winter later. People must decide whether to splurge everything or set aside funds for expenses later. The psychologist Steven Pinker observes that at every moment, consciously or unconsciously, we’re choosing between good things now or better things later.

The economist Thomas Schelling explains that people behave as if they have two selves. One wants good things now and the other wants better things later. One wants a cigarette and the other wants clean lungs. One wants a dessert and the other wants a lean body. One wants to watch television and the other wants to read economics. The two selves are always fighting for control. An imminent reward engages the self that deals with immediate sure things. A distant reward engages the self that deals with uncertain future things. Schelling believes that one outranks the others, as if the whole person was designed to believe that a bird in hand is worth two in the bush.

Even the most rational of us end up defaulting to good things now over better things later. Our preference for immediate certainty over distant uncertainty is evolutionary. As nomadic tribes, our ancestors couldn’t really store things for longer. So they had to be on the move, searching for greener pastures. And with the imminence of death, lower life expectancy and an inability to accumulate possessions, the payoffs for consuming something immediate over later was higher. As a result, an urge to indulge now was built into our emotions.

So people have a tendency to prefer smaller payoffs now over larger payoff later. With instincts evolved to appreciate things without delay or risk missing out altogether. Which is why we disregard long-term disasters in favour or short-term happiness. This is what economists call ‘hyperbolic discounting’.

The same reasoning explains why people are happier to make commitments long in advance provided that commitment doesn’t require immediate action. The same reasoning causes people to underestimate the future consequence of things like having unprotected sex, losing temper, procrastinating, buying junk food or taking drugs. So powerful is this instinct that businesses benefit from it everyday. For instance, the finance industry owes its fortunes to hyperbolic discounting. Because borrowing money and paying interest are actions that spend future resources for benefit in the present.

Picking good things now over better things later is not treated as a sign of intelligence. Because it highlights our weak will; that of poor self-control. And by undervaluing the future we fail to anticipate it and plan accordingly. We give in despite knowing that it may not be the most rational thing to do.

But we try hard to defeat our own self-defeating behaviour. Through ways, which Schelling calls rightly as strange. Like putting the alarm clock away from our beds so we have to walk up to switch it off, setting up a bank account that prevents us from cashing out, keeping snacks out of reach or setting our watches ten minutes ahead.

No matter how hard we try, our brain, which is very good at doing many things well, is surprisingly bad at planning for the future.

1 comment:

Unknown said...

Are you familiar with the term, "spannungsbogen"?

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