Temporal Myopia: Making Bad Long-term Decisions

The United States is $16 trillion in debt. There is widespread agreement among scientists that the planet is warming and water levels are rising as a result of man-made causes. The average American household holds $6,770 in credit card debt. Without intervention the Medicare system will be bankrupt in the 2020s. Over a third of Americans are obese.

Many of the most serious and pervasive problems we face as individuals and as a society reflect the fact that we are temporally myopic creatures who are inherently inept at long-term planning.

Which of the following two options would you choose: $100 now, or $120 one month from now?

The average economist would argue that the rational decision is to take $120 one month from now—because an additional $20 in one month is a very good yield. But studies show that given this type of “intertemporal” choice most people choose the immediate $100.

Now what about the following choice: $100 in 12 months, or $120 in 13 months?

In both sets of choices, you would gain an extra $20 by waiting one month. Logically one would expect that people who chose the $100 option in the first case would again choose the $100 option in the second scenario. Yet, studies show that many people reverse their strategy, waiting the extra month for the additional $20 in the second scenario. In other words, when the immediate award is off the table, and both rewards are placed in the future we behave more rationally. Our thirst for immediate gratification clouds our judgment: It is simply inherently more exciting to learn that we will be given $100 right now. Brain imaging studies support this rather intuitive insight by showing that different brain areas are preferentially engaged when we are making decisions about immediate or delayed rewards. One theory proposes that that the evolutionarily older or more “primitive” parts of the brain (for example, the so-called limbic areas that contribute to emotion processing) are strongly activated by the promise of immediate gratification. In contrast, activity in areas associated with more recent human brain evolution (areas in the frontal cortex) tends to better reflect a more rational evaluation of rewards.

Although no one has probably ever offered you these exact set of choices, we are continuously making real life decisions that require balancing short and long-term trade-offs. Should I purchase the new TV today using my credit card and pay interest over the next six months, or wait until I have the cash on hand? Should I buy the cheaper gas-fueled car, or the more expensive hybrid, which, in the long run, will be better for the environment and allow me to save some money on fuel? Similarly, politicians throughout the world are currently making even more important decisions relating to the economic health of nations: Should they cut spending and increase taxes immediately, or continue borrowing money? The upside of borrowing is to potentially stimulate the economy, postpone difficult decisions now, and probably increase one’s chances of remaining in power. But the downside of continued borrowing is that more and more tax payer money will be devoted to paying interest, not to mention the possibility of economic collapse at some point in the future. The teetering economy of Greece nicely illustrates the consequence of politicians clinging to short-term “solutions” for too long.

There is no mystery as to why the brain comes with a strong built-in bias towards immediate gratification. For our ancestors, life was a shorter and a much more unpredictable journey. The immediate challenges of obtaining food and survival took precedence over thoughts about what was to come in the months or years ahead. If someone offered our Homo erectus ancestors one apple now or two apples in a full moon from now, what’s the correct choice? If you are hungry now, or have any reason to believe there is a chance you may not be alive in a month, or that the person making the offer is not trustworthy, the correct decision is to take the apple and run.

The degree to which making long-term decision is unnatural from an evolutionary perspective is even more obvious if we take a look at the nonhuman creatures roaming the planet. Psychologists have trained monkeys to choose between receiving two food pellets now or six food pellets at some future point in the time. How long are the monkeys willing to wait for the four extra pellets? The monkeys make an impulsive five-year-old trying to wait a few minutes to get an extra marshmallow look like a Buddhist monk. The patience limits of the monkeys seemed to run out at around 14 seconds! That is, they were not willing to wait more then 14 seconds to get three times the amount of food. Animal studies remind us of just how complex intertemporal decisions are, and why it does not even make sense to ask if other animals can make choices that will only payoff in months or years. Part of the problem is the concept of months and years! There is no evidence that other species can conceptualize time or think about the future, or are capable of understanding or quantifying periods of time. Of course, some animals store food for future consumption, but these caching behaviors seem to be innate, inflexible, and devoid of understanding. In the words of the psychologist Daniel Gilbert, “The squirrel that stashes a nut in my yard ‘knows’ about the future in approximately the same way that a falling rock ‘knows’ about the law of gravity.”

In a world in which life was short and governed by the unpredictability of disease, the availability of food, and weather, there may have been little advantage in tackling the strenuous complexities that arise from long-term planning. But in the modern world, the opposite is true: the biggest threats to human beings arise from the lack of long-term thinking. Yet, as a consequence of our evolutionarily inherited present bias, we tend to make temporally myopic decisions that influence not only our health and finances, but also encourage us to elect officials who promise short-term “solutions” aimed at exploiting our shortsightedness rather than actually solving problems. Long-term planning is a skill best accomplished by conscious awareness of how the disproportionate sway of short-term gratification affects our allegedly rational decisions. Additionally long-term planning benefits from practice and foresight. Given the current state of affairs—not to mention the fact that the word foresight does not even exist in some languages—we clearly need a lot more practice.

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