Time Preference and Marshmallows
Jonah Lehrer’s article DON’T: The secret of self control in a recent issue of the New Yorker describes some fascinating research by on the importance of time preference by Stanford psychologist Walter Mischel.
Though he doesn’t call it time preference, Mischel measured children’s ability to choose between some candy now and more candy in a few minutes. Mischel found that children generally have very high time preferences, that there was considerable variability among children. (Friends of mine have estimated their own childrens’ time preference at around 100% per two minutes).
Later in life, Mischel returned to the data to do follow-up studies on the adults he had studied decades before. He found that a relatively higher or lower time preference (within the study group) was consistent over the individual’s life, and that low time preference correlated with greater success in all areas of life, including work, friends, family, substance abuse, and weight control.
This is consistent with the findings of political scientist Edward Banfield whose argued that time preference was the major factor in determining the ability of urban poor people to earn income and maintain employment.
The findings not surprising to Austrian economists, who have demonstrated that societies with a lower average social rate of time preference will accumulate more capital and experience a more rapid rise in their standard of living over time.