Grooving: The Impact of Temporal Discounting
In this grooving episode, Kurt and Tim discuss Temporal Discounting and it’s closely related cousins. Temporal discounting is where we tend to value events in the near term more than similar events that are off in the distance. Another way to say it is that we discount – or reduce – our perceived value of events scheduled far off in the future. (The “timing” element is what gives it the name “temporal.”)
This is a very common bias and is closely related to Hyperbolic Discounting, which is the tendency for people to have a stronger preference for more immediate payoffs relative to later payoffs. (Think of Seinfeld’s Nighttime Guy vs. Morning Guy.) And Temporal Construal, where near-term events are valued in very concrete ways, but distant-term events seem very vague. And, a slightly more distant relative in this family of biases is Preference Reversal. With Preference Reversal, we see how the relative preference for one option over another changes with order or framing, such as when we see it.
All of these biases evolved for good reasons over thousands of years of human development and in much simpler times. But today, our world is very complex. And these biases can get in the way of our best decision making.
NOTE TO LISTENERS: This episode was recorded on March 11, 2020, just two days after the World Health Organization declared coronavirus a pandemic and Kurt and Tim were in the studio together. But it was still days before any cities declared shelter in place and a full two weeks before Minnesota, where Kurt and Tim live, made the declaration. Since then, we’ve been recording remotely.
Links
Kurt Nelson, PhD: @WhatMotivates
Tim Houlihan: @THoulihan
Common Biases and Heuristics: https://docs.google.com/document/d/1XHpBr0VFcaT8wIUpr-9zMIb79dFMgOVFRxIZRybiftI/edit#
Gretchen Chapman, PhD: https://journals.sagepub.com/doi/abs/10.1177/0272989X9501500408
Seinfeld Night Guy vs. Morning Guy: https://www.youtube.com/watch?v=W-Cz-LK16g4
Tim Urban, “Wait, but Why?”: https://waitbutwhy.com/2016/03/doing-a-ted-talk-the-full-story.html
Veruca Salt in Willy Wonka “I Want It Now”: https://www.youtube.com/watch?v=Pqsy7V0wphI
Christopher Hsee on General Evaluability Theory: https://journals.sagepub.com/doi/10.1177/1745691610374586
Bazerman, Max, The Power of Noticing: https://www.amazon.com/Power-Noticing-What-Best-Leaders/dp/1476700303
Harris CJ, Laibson D., “Hyperbolic Discounting and Consumption.” Advances in Economics and Econometrics: Theory and Applications, Volume 1. Eighth World Congress; 2002 p. 258-298: https://scholar.harvard.edu/laibson/publications/hyperbolic-discounting-and-consumption
