What is the correlation between hyperbolic discounting and temptation?

-Temptation is the spice in our lives, without it, our lives will be tasteless, but too much of it will make us miserable-

In the quest to find out how our decisions are made, I came across a very interesting cognitive phenomenon called hyperbolic discounting (HD). Apparently, once we are put on the spot to take a decision to choose between a smaller immediate award versus a potentially larger one in the future, we are inclined to choose the former than the latter. For example, if we are offered $20 now, and $100 in a year, most of us automatically take the former option rather than the latter one. Having said that, if time is extended to 12 months for the $20 award and 18 months for the $100, we tend to choose the $100.

Obviously, if we are attentive we may think twice to choose the most beneficial option instead of the immediate and short-sighted choice. This peculiarity is not isolated to certain personality profiles, cultures, or classes, as a matter of fact, it has been even observed in other animals as well.

In some sense, we have not evolved much beyond the cavemen/women, at that time we were satisfied with whatever we were offered. Just imagine as a hunter, if we had the prey in front of us, we wouldn’t hesitate to strike it, simply because if we had missed the target we would go hungry for another day or even starve to death. After living as a hunter and gatherer for thousands of years, we invented agriculture and started to live off the land to secure our future food stocks for the next season, instead of living on desperate day-to-day conditions. But still, the immediate NOW satisfaction outweighs the future rewards, and we can’t escape from it, this has been codified into our DNA. In the time of uncertainty and emergency this automatic decision-making mechanism is more obvious, where we don’t have the amenity of choice, but to take whatever we are offered to survive, a typical animal instinct.

Timing is everything, the more "urgent" we are offered, the less we will think about the details and react automatically to satisfy our NOW-abstinence, i.e. most of us take the offer to buy something we want now and pay a 20% higher price later, but once we have to pay at the counter we are desperately hunting discounted items instead. This is how most of us buy properties, cars, etc. relying on unfavorable debt terms that we later regret, but at that particular moment we are too “intoxicated” to have IT, and we find all kinds of justifications to move ahead to buy it.

Actually, HD clouds all our decisions, anything that requires us self-control over temptations, from sex to power to food and beverage. For example, once we are tempted, we tend to take more automatic and less calculated decisions by following our animal instincts, the higher probability that we cheating on our partners, end-up in a feast fight, or doing other stupid things by taking risks. We actually become temporally an adrenaline junkie, by enjoying the instant-kick and ignoring the future consequences.

We tend to put ourselves on the edge to enjoy the present time, but at the same time, the FEAR of the uncertain future put us in check that is the way most of us have comprehensive planning for our retirements. Fear has an interesting effect on us, it both influences our decisions to be short-sighted and in other situations thinking about the long-term consequences. Going back to the argument on the $20 award today vs $100 next year, maybe the reason we choose today’s $20 option rather than $100 next year, actually is the fear that WE or the CONTRIBUTOR (lack of trust) wouldn’t be around next year, especially during a volatile period we don’t believe in the future. After all, our ultimate fear is the fear for the UNKNOWN, that is why from the day we get to know ourselves we are living in fear of our death and all our lives revolve around preparation to confront it.

Our individual impulsive and short-sightedness is enrooted in our modern civilization. The one that is affecting us most is climate change, we have gambled our futures to hedge short-term profit gains and consequently caused irreversible havoc to our environment. Here is not the forum to elaborate on the millimeter and centimeters the sea levels are rising on annual basis and how many plant/animal species are being extinct on a monthly basis or water/air/soil being polluted in seconds, etc. For sure we have had a hell of a ride on this planet by depleting its finite resources, but it is unfortunate that our children would suffer the consequences. 

Being aware of how HD may impact our impulsive decisions might give us a reason to think twice and show discipline and restraint before making a choice to satisfy our instant needs. It is not easy to distinguish between our intuitive decision-making mechanism and hyperbolic discounting, each of them has an impulsive nature and might stem from the same source our animal instincts, the difference might be that HD is mostly related to our self-control over temptations i.e. sex, money and power, etc.

Here you can find some suggestions on how to detect HD around us, to apply, and avoid it so that it doesn’t impact our lives negatively.

1-   Indecisiveness is not necessarily a bad trait: most of the time we pay a high price to not think through, and take an impulsive decision simply because IT FELT GOOD. Maybe indecisive people move slower, but in the long-term more steady, while the quick thinkers move like a rabbit and end-up trapped in a hole.

2-   Be aware of temptations: We cannot enjoy our lives without tapping into all the great temptations, it is an inescapable flavor of our lives. Having said that, we should still be aware and acknowledge it as a weakness and make an honest effort to restrain ourselves, but if we fail we shouldn’t punish ourselves.

3-    Stop living in fear: “Through every generation of the human race, we have been in constant war with fear. Those who have the courage to conquer it are made free and those who are conquered by it are made to suffer until they have the courage to defeat it, or death takes them.” Alexander the Great.

4-   There is a fine line between bravery and stupidity: If you want to satisfy your ego, or impress others, think twice about what you try to achieve and its consequences. We all have been carried away some time to impress others to show that we are fearless, especially while being drunk and/or under peer pressure, many have lost their lives or became incapacitated while committing high-risk/low-reward stupidity.

5-   Long-term vision: having a goal helps us to have a better perspective on our lives and not get too worried about small changes and issues, after all, there is a reason we are born, we are not a random act of creation/evolution/mutation. At least if this idea of purpose gives us a boost to live a better life, it is worth pursuing.

6-   Selfishness limits our minds: imagining ourselves as the center of the universe is as incorrect as our pre-renaissance world view that viewing the earth as the center of our "little" world. The more we give to others the more it is returned to us, not necessarily from the same person but from somewhere else. That is the rule of the universe if we defy it we end up shrinking our space, but if we embrace it we become infinite and eternal.

7-   It is a gift and curse to be in the present moment: HD is about how to seize the moment but unfortunately mostly influenced by temptation that raises our awareness to take impulsive decisions, if we see a chocolate cake in front of us, we forget about the risk of stroke and bypass surgery. Being aware of it might help us to enjoy the present while making a more calculated decision for our future.

<div class="LI-profile-badge" data-version="v1" data-size="medium" data-locale="en_US" data-type="vertical" data-theme="light" data-vanity="ali-jahanshahi"><a class="LI-simple-link" >Ali Jahanshahi</a></div>