Constraints can be valuable
Tim Harford points to an interesting discussion of how “short-termism” can affect your behaviour. Basically, when making choices about what to do right now, it seems we often choose the thing that gives instant gratification, even if it’s not the most beneficial for us in the long run. When making choices about future plans, we’re more likely to choose the thing that’s “better for us”. His illustration is an experiment which showed that given choice between fruit and chocolate right now, most people tend to choose the chocolate. However if the reward is promised for one week in the future, people tend to choose the fruit.
The post Harford links to discusses the implications of this for online news. The internet relaxes a lot of constraints, and one of them is the necessity to bundle “hard news” with celebrity gossip and other trivial things in paper newspapers. These are unbundled online — just click the one that you want. As a result of relaxing this constraint, plus people’s propensity to go for the instant gratification, people tend to read more celebrity gossip and less hard news. This might give short-term happiness, but it’s not necessarily what people might want in the long-run.
To put it another way, think about how you would plan to spend your time next week. I guess you may not allocate a lot of time to reading celebrity gossip. However, when next week really comes, and that gossip is just a click away, it’s very tempting to read it. You get a little short-term happiness, but it’s not what you wanted when you made your plan. The plan not to read gossip is not subgame perfect in the game between current-you and one-week-in-the-future-you.
A basic principle here is that constraints can be valuable. People can be willing to pay for them, as StickK illustrates. The Internet gives us a lot of freedom to choose, but maybe people would be happy to have less freedom, fewer choices. Perhaps there’s a market for the ultimate “net nanny” software, which places hard limits on the amount of time that you spend on frivolous online activities?
3 Comments
Don’t people go for instant gratification because of their discount factor? After all the choice to read ‘hard news’ creates a positive externality that benefits yourself in the future. Assuming standard discounting you should take this into account and make the optimal decision now - which is to read about Britney.
Your future self doesn’t like it because the benefit from that consumption decision is gone, but the opportunity cost (in terms of the lost externality remains). However, that doesn’t make the choice sub-optimal.
For the choice to be sub-optimal we would require a cost in the period ‘a week before’ you make the choice about whether to read about Britney or not. What would some of these costs be?
Matt: Very good points. I guess you are right that we need a better model of why people behave in this way. “Instant gratification” doesn’t quite cut it as a theory. I’ll have a think about it …
I wasn’t trying to say anything against it, after all you could just use hyperbolic discounting and you’re away laughing.
If we introduce another element where you need to pre-commit to work for two days in order to get a contract. However, you know that on the first day the temptation of Britney becomes too much and you end up reading about that all day, and as a result can’t do the job. In this case the fact that you can’t commit to not looking up celeb news would be sub-optimal. Maybe.
However, isn’t this sort of like saying that instant gratification makes your preferences time dependent? (Note: I don’t know anything, so feel free to correct me lots :))