Discounting the Future

Posted on Friday, December 4th, 02009 by Alexander Rose - Twitter: @zander
link Categories: Long Term Thinking, Seminars   chat 0 Comments

Upcoming seminar speaker and neuroscientist David Eagleman published an excellent piece that appeared in the New York Times yesterday.  While the piece keys on the events of this week, the broader point of the piece touches on an important element of human nature and long-term thinking.  Excerpt:

Some years ago, psychologists posed a deceptively simple question: if I were to offer you $100 right now, or $110 a week from now, which would you choose? Most subjects chose to take $100 right then. It didn’t seem worthwhile to wait an entire week for only $10 more.

And the further an event lies in the future, the less people care about it. So if offered $100 now or $500 18 months from now, many people still take the $100. The consequence is that there’s little difference between President Obama promising 18 months from now versus 18 years from now. In the human ken, both are obscured in the mists of the distant future.

Eagleman is also the author of Sum: Forty Tales from the Afterlives for which Brian Eno composed a special music concert along side a reading in Sydney earlier this year.

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  • paul martin

    Just watching BBC and man says the APR for such a loan would be 994%, sounds a lot. However as I am just from Tim O’Reilly who says “$$ are not the only metric” I would argue for me the opportunity cost of having lots between now and then is equivalent to a week is a long time in politics. However I clearly (maybe not) would be unable to hold this discussion if it were not for some generous banker who has deigned to lend me collateral so I can survive the subzero temps outside. Happy Christmas

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