MarkThe place where you live looks something like this are you thinking about discounting the future?
Zebra graze in the Masai Mara, Kenya.
Unlikely.
Finding food, avoiding becoming food and getting to the nearest fresh water at the base of the hill in the distance before dark.
There is no chance of spearing any of the healthy zebra out in the open, but a good chance there is a lion or six between you and the water.
Your brain is working overtime at the signs, especially the sounds and smells of the savanna, to survive and glean what you can from the daylight hours.
You will think about your fellows, the tribe, or the extended family you rely on to help with all the vigilance and foraging. Some thoughts of communication, perhaps even some empathy, allow you to act on keeping the bonds of cooperation tight.
What you need more time or energy for is to think much about the future.
Daydreamers die of thirst.
Discounting the future because the present is more important.
Fast forward to today, and your brain retains much of the adaptations evolved to survive without modern technology on the savanna. We worry about the present disproportionately more than the future for evolutionary reasons—short life spans, risk of food expropriation, and unpredictable environments.
As Daniel Kahneman describes, our brain thinks fast, only occasionally slow, and cares much more about the present than the future.
Economists recognise this innate response and evaluate it through a ‘discount rate’ that makes the future disproportionately less costly than the present—they are discounting the future. The steeper the discount rate, the more “addicted to the present” the person is. For example, drug and alcohol users, risk takers, persons with low I.Q. scores, people with severe cognitive workloads, and men, compared to women, tend to discount future events or concerns more sharply.
Here is a trivial ramification of our immediacy.
When asked to select chocolate and fruit as a snack for the following Monday, individuals chose fruit 75% of the time. But 70% of people prefer chocolate as today’s snack.
Regarding movies next week, 63% prefer informative documentaries, while 66% prefer comedies or sci-fi for their viewing pleasure tonight.
The problem with our immediacy is that for most people, the evolutionary reasons for worrying about now have, to use Nate Hagen’s phrase, are “can’s kicked down the road”. We don’t have to worry about food, water, or shelter because we invented economies and social systems that, for most people, take care of these things for today.
But those same systems push the cost into the future that we have an innate ability to ignore because we are discounting the future.
The fossil fuel pulse has generated wealth, and a lot of people with the bandwidth to think up clever ways of keeping it all going. Instead, we spend our time worrying about the modern equivalent of finding food, avoiding becoming food and getting to the nearest fresh water.
If you want to know what this worry looks like, watch an episode of The Real Housewives. Any city will suffice.
That economists have incorporated discount rates into their models is simply criminal.
What sustainably FED suggests
Daydreamers died of thirst back in the day.
Daydreamers today are the only way to stop kicking the cans and tackle the many issues that threaten human survival.
We must start thinking slowly, logically, imaginatively and outside our innate tendency to worry only about today.
Check out this option for hedging the future.
Science sources
Chabris, C. F., Laibson, D. I., & Schuldt, J. P. (2010). Intertemporal choice. In Behavioural and experimental economics (pp. 168-177). Palgrave Macmillan, London.
Hagens, N. J. (2020). Economics for the future–Beyond the superorganism. Ecological Economics, 169, 106520.
Read, D., Loewenstein, G., & Kalyanaraman, S. (1999). Mixing virtue and vice: Combining the immediacy effect and the diversification heuristic. Journal of Behavioral Decision Making, 12(4), 257-273.
Hero image from photo by Dan Maisey on Unsplash
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