The term time preference is an economic concept that refers to the importance we place on future outcomes relative to current outcomes. Here are 10 reasons why people care less about a future consequence and more about the present—and why it's so often a mistake.
1. A desire to avoid delay.
Generally speaking, we want things now rather than later. There is psychological discomfort associated with self-denial. From an evolutionary perspective, our instinct is to seize the reward at hand, and resisting this instinct is hard. Evolution has given people and other animals a strong desire for immediate rewards. In prehistoric human environments the availability of food was uncertain. Like other animals, humans would survive and reproduce if they had a strong tendency to grab the smaller, immediate reward and skip the larger but delayed reward.
A lifetime of learning not to trust others to deliver what they promise in the future (e.g., growing up with a sense of total helplessness) may play a role in one’s resistance to delaying gratification. Similarly, the short duration and uncertainty of life influence our time preference. Poor health especially is an indicator of mortality, and therefore increases one’s uncertainty about whether a future reward will be received.
Young adults tend to be impulsive. Experiencing life events that bear lessons about time can change one’s time preferences. For instance, experiencing the death of someone close encourages young adults to reflect upon their long-term futures, and become more focused on these. Mark Twain once said “life would be infinitely happier if we could only be born at the age of 80 and gradually approach 18.” (The 2008 movie The Curious Case of Benjamin Button is a dramatic illustration of the idea of aging backward.)
Resisting short-term reward in favor of a longer-term reward requires a capacity to envision the distant future. Having a vivid view of the future is a sign of social maturity for young adults. Education may enlighten a person with regard to the value of deferred versus current consumption. We might also spend time with our parents to remind ourselves of what our needs will be when as we age.
5. Cognitive capacity.
Higher intelligence is associated with a more future-focused tendency. Future planning involves the executive brain, which is linked to intelligence through the function of the prefrontal cortex. Children with higher intelligence tend to be better at shifting attention away from the affective properties of rewards. This explains why individuals with lower intelligence may be more prone to financial hardship, and tend to have lower levels of financial asset accumulation.
Poverty and the pressure of present needs can blind a person to the needs of the future, leading (necessarily) to a stronger focus on the present.
People with an impulsive personality are simply more prone to be in a spontaneous mood, and to show intolerance to any delay of gratification. Individuals with impulsive traits are at greater risk for problems such as substance abuse and obesity.
Time preference is associated with the emotional environment in early childhood development. Children of disengaged and unresponsive parents tend to have a poor ability to delay gratification. Emotional distress also causes a behavioral shift toward immediate improvements in mood, leading people to make poor decisions.
9. The importance of mood.
Our sense of time is altered by our moods. Time seems to go painfully slow when you find a class boring, for example, but fly when you are with a lover. The adage that time flies when you are having fun has been empirically demonstrated: Individuals in a state of craving experience time passing slowly.
Generally speaking, people tend to derive pleasure from anticipating good things and discomfort from anticipating bad things. Pleasant experiences like vacations or dates may be deliberately postponed or planned well ahead of time so they can be “savored.” On the other hand, the desire to reduce dread implies people may prefer to consume a bad experience (like a trip to the dentist) earlier rather than later. For example, people tend to prefer to pay parking tickets immediately rather than defer payment.
The take-home message
People are not equally patient. In the same way that preferences for food items differ among people, so do preferences for time. Some people like vanilla, others like chocolate. Similarly, some people favor the present and others the future. One decides to go college and become a doctor and another student decides to settle for immediate gain by attending trade school. Caring less about the future than the present can be rational. However, philosopher Jon Elster notes that rationality differs from wisdom. He defines wisdom as the ability to make choices toward improving one’s well-being. If a person heavily discounts the future, consuming an addictive substance may, for him or her, be a form of rational behavior.