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OPINION26 January 2016

Bias in the spotlight: the power of now

Behavioural economics Opinion

People tend to discount the future in favour of today, says Crawford Hollingworth in his latest blog on behavioural biases. 

We prefer to enjoy things now rather than wait to enjoy them in the future. We want our cake now and we want to eat it now not ‘tomorrow’. We put off doing things that are difficult or dull (I’ll start my diet on Monday) in favour of more immediately enjoyable activities (and enjoy that chocolate brownie right now). 

Laura Carstensen, Professor in Public Policy at Stanford University notes that we are simply not built to cope with thinking about the future:

"Humans are wired to live in the present, not plan for the future. Our evolutionary survival hinged on our adroitness in dealing with the problems of the here and now, not our ability to stock-pile resources and make plans for some vague distant future we might never enjoy. If anything, biology tells us to eat, drink and be merry, for tomorrow we die.”

Take this example – imagine you were offered:

  • £100 today or
  • £105 tomorrow.

What would you choose? Most people would take £100 today.

In contrast, what would you choose if you were offered:

  • £100 in 3 months or
  • £105 in 3 months and 1 day?

In this case most people will take £105 and wait the extra day – 3 months away from now is a blur in their minds and an extra day’s delay really makes no difference. Compare what they prefer in the present to what they prefer in the longer term future and their choices are clearly inconsistent.

Even though the above example is extremely simple, even trivial, our tendency to discount the future is fundamental to the mental battles we have with ourselves everyday. American economist Thomas Schelling describes these battles as being fought by two mind sets in the same person – rather like having a devil on one shoulder and an angel on the other:

"People behave sometimes as if they had two selves, one who wants clean lungs and long life and another who adores tobacco, or one who wants a lean body and another who wants dessert, or one who yearns to improve himself by reading Adam Smith on self-command and another who would rather watch an old movie on television. The two are in continual contest for control.”

Here are a few familiar-sounding lines you’ll typically hear from people who tend to discount the future: 

  •        Next month, I’ll quit smoking.
  •        Next week, I’ll catch up on the required reading for my course.
  •        Tomorrow morning, I’ll wake up early and exercise.
  •        After Christmas, I’ll start eating better.
  •        Next weekend, I’ll send in this tax rebate form.
  •        Next month, I’ll start saving for retirement.
  •        And finally – Da mihi castitatem et continentiam, sed noli modo. (Give me chastity and continence—but not yet.)—Saint Augustine of Hippo

We can try to reduce present bias by using tools such as pre-commitment devices by binding ourselves to a future choice; helping people to visualise the future by making different scenarios more salient; or by changing people’s behaviour through environmental design. We can also try to strengthen our self-control with practice over time, or by building strong habits which mean we no longer have to exercise self-control.

It is almost impossible to eliminate this tendency completely, but simply being aware of what behavioural scientists call our – ‘sophisticated present biased’ tendency can help us to manage it better.

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