I have been listening to a very good book (“Rapt”) and she mentioned a study that was done measuring the way we respond to situations where there is an immediate payoff which offsets some longer term goal.
Essentially, if you are presented with the choice between taking $100 now, or $200 three years from now, most of us would choose the $100 now. When they asked if you would rather have $200 6 years from now, or $300 in 9 years from now the difference in preference went down significantly. This same situation presents itself in many scenarios.
How many lottery winners actually take the annuity instead of the lump sum? I would guess that almost none do, and many end up poorer than when they started. [Those who play the lottery are not necessarily the best equipped to deal with financial things].
The study found that this was true in the animal kingdom as well. While not suggested in the book, I think this has to a lot to do with how we assess future items. Something now is a known quantity, something in the future is inherently uncertain. This sense of uncertainty at the time of decision can causes us to make the irrational decision of choosing that which benefits us now.
This is, of course, where self regulation comes into play. At the moment we are tempted to make “now” decisions, we need to recognize the value of the longer term pursuits and recognize that the thing that is right in front of us, it likely not nearly as important as it seems when we are paying attention to it.
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