Wednesday, September 22, 2010

Trade Off #9: Some Now vs More Later

In expected value terms, this trade off is everywhere. By doing work, we are trading some of our freedom now for more freedom later, since you can usually buy freedom (see here). When we invest, we give up some cash $ now to get more later, since interest rates typically beat inflation.

But, taking the long view of time preference, why would anyone ever rationally prefer less of something they want? There are a few reasons:
  • Everything is ephemeral (including, probably, the universe itself). So, there is no guarantee that if you wait until later, either you or the thing you are waiting for will even exist.
  • Values usually change as time passes. So, you might expect to value something so much less later that you can justify settling for the relatively lesser current amount of it.
  • If you learn to always delay gratification, you may find it difficult to ever actually reap the rewards you are meant to be aiming for, and continue to put off having fun into it is too late (see here).
You might have expected me to write that "there is only so much you can want of a good thing," but that is hippie nonsense. Also, while it's probably true that humans are irrationally biased to over-value immediate rewards (as in, I want another piece of cake right now), that isn't the whole story of this trade-off.

Ultimately, there actually are some legit reasons to prefer some now to more later. Sometimes there really is a dark, beneficial side to procrastination. Honesty demands us to admit these things, even though it might be simpler and easier to have a rule towards always favoring the delayed reward.

(Photo of clouds covering all but the tops of buildings in london from trexcali)