Future Selves

Via the Freakonomics blog I found this pointer to an article in today’s New York Times: The New, Soft Paternalism by Jim Holt.

It relates to one of the most curious of human failures, our inability to successfully act in our own self-perceived best interest. Now, it’s not clear that this is actually a case of bias in the sense of inability to see the truth. It may be the case that we often take actions we know we will regret, and fully and correctly predict our attitudes and responses throughout the time in which we will experience the consequences of our actions. Yet we find that as we move from one time period to the next, we perceive that the actions that we have taken were not in our self-interest.

The Times article discusses various measures which have arisen to try to help people guard against falling into this error, along with skeptics who question whether it is an error at all. One example is a system where compulsive gamblers can voluntarily put themselves on a list to be excluded from casinos. More commonplace examples include throwing out all the cigarettes in the house, or buying only small containers of ice cream when you know you’ll eat the whole thing.

Robin pointed a few years ago to a paper by Caplin and Leahy which discussed some similar issues: The Social Discount Rate (pdf). They argued that inconsistent time preferences were a dominant feature of human psychology and suggested that social welfare could be improved via institutions to encourage (or coerce) a longer-term perspective in human action. Caplin and Leahy want to overthrow the "dictatorship of the present" and give future selves a greater say in decisions which will affect their welfare.

I am not convinced about these issues; it’s confusing to consider one’s future self as a different person. And there is also the problem of uncertainty, in that I don’t know what his circumstances will be or if he will even be alive. I think this does justify a certain amount of discounting of his preferences over those of the present self, but probably not as much as is commonly done.

GD Star Rating
Tagged as:
Trackback URL:
  • This article reminds me of a nice review in Trends in Cognitive Sciences (Decision and experience: why don’t we choose what makes us happy? by Christopher K. HseeE-mail The Corresponding Author and Reid Hastie, Volume 10, Issue 1 , January 2006, Pages 31-37)

    They point out that we often 1) make errors in predicting our reactions to the consequences of our options and 2) fail to make choices based on these predictions. The later failures are due to impulsivity, various decision heuristics (often intended to reduce impulsivity), lay rationalism, medium maximation etc. Ulysses contracts help us with 2. But the contracts appear to mainly aim at reducing impulsivity, which means that the anti-impulsivity biases may now become stronger than is rational, especially given the problems with 1.

    As an example, if elderly people are better off spending their money on a good life rather than saving it for “the future” (discussed in the paper) the availability of Ulysses contracts (say, a deal with a bank putting part of the income into a long-term savings account) combined with strong anti-impulsivity memes promoting saving would tempt people into not just an irrational action but a hard to reverse irrational action.

    Again, I think the utility of this approach depends on the domain. If we can identify the domains where the biases would not make it irrational (gambling might be a good example) it might be worth focusing there.

  • Future Imperfect

    Hal Finney at Overcoming Bias ponders the nature and consequences of present orientation. It relates to one of the most curious of human failures, our inability to successfully act in our own self-perceived best interest. Now it’s not clear that this …

  • John DePalma

    A couple related references …

    From the lead to a NY Times magazine article that Roger Lowenstein wrote about Chicago economist Richard Thaler in Feb 2001:

    “It is possible that Richard Thaler changed his mind about economic theory and went on to challenge what had become a hopelessly dry and out-of-touch discipline because, one day, when a few of his supposedly rational colleagues were over at his house, he noticed that they were unable to stop themselves from gorging on some cashew nuts he’d put out.”

    From “The Odyssey”:

    “Therefore pass these Sirens by, and stop your men’s ears with wax that none of them may hear; but if you like you can listen yourself, for you may get the men to bind you as you stand upright on a cross-piece half way up the mast, and they must lash the rope’s ends to the mast itself, that you may have the pleasure of listening. If you beg and pray the men to unloose you, then they must bind you faster.”

  • Is that the story depicted in the masthead of this blog? I’ve been wondering what it is.

  • John DePalma

    Earlier this year MarginalRevolution.com had a post on using markets to encourage exercise and restrain inconsistent time preferences:

    “Post a bond with your friend, your spouse, your exercise partner, or someone you won’t (or can’t) lie to. You lose the money if you don’t exercise according to a pre-arranged plan with well-defined quantitative goals …

    Or why not have the gym collect a bigger upfront fee, and they pay you each time you show up and complete an exercise program under their supervision?”

    (source: http://www.marginalrevolution.com/marginalrevolution/2006/02/why_how_and_how.html )

  • Hal, yes, the masthead is of Ulysses and the Sirens.

  • g

    Comment spam! Luvverly comment spam! Get it while it’s ‘ot!

  • g

    Spam spam spam spam…

    Robin or Eliezer or Nick, is there any approved way of reporting blogspam here? Or is it safe to assume that you check every comment without any prompting? There’s another one from “mary” on “The 80% Forecasting Solution”, btw.