Friday, November 13, 2015

Recent findings on Impatience

Inter-temporal choices are ubiquitous. As the economic literature on time preferences highlights (Frederick et al., 2002), they affect our health, wealth and happiness. In this post, we want to briefly present three recently published studies which help to elucidate the human eagerness to procrastinate, do some things immediately, without waiting for future rewards, or what behavioural studies conceptualize as impatience.

The first distinctive finding is that impatient individuals are more likely to procrastinate. Researchers collected lab and field evidence in a study which measured the propensity of MBA students from the University of Chicago to postpone the accomplishment of different tasks (in number of days) under costly procrastination, for example an online game, and their application to the university. Impatience was measured in a conventional smaller-sooner versus larger-later monetary reward task which infers participants’ short-term discount rates, but the researchers made use of a novel payment mechanism: participants were paid with a check they would have to cash later. 

Figure 1. Two-week discount rates

This allowed them to observe the number of days the students take to cash the checks, and then test its relationship with their procrastinating behaviour in the tasks and with their elicited short-run discount rates. They find that even these highly skilled and financially literate MBA students have time inconsistent behaviour since the majority of them who preferred to receive their payment immediately instead of waiting two weeks for a larger amount (see Figure 1 to check how high were the discount rates!), actually procrastinated and took more than two weeks to turn their payments into cash.

The second finding comes from an experiment with kindergarten children from Austria which suggests that simple defaults can help to attenuate impatience and promote delay of gratification in early childhood. In a control treatment, two units of a previously chosen gift (gummy bears, crazy bands, banana chips, and lollipops) were put on a table in front of the child, and then the child was asked whether it wanted to take one unit immediately or wait and receive both units the next day. In the case of preference for the delayed gratification, both items were put into an envelope and sealed to be distributed to the child the next day. In the default treatment, the two items of the most preferred gift were first put into the envelope so if a child wanted to receive one item immediately, the experimenter took it out of the sealed envelope.

Figure 2. Decisions of children to wait by age group and treatment

While fifty per cent of the kids delay gratification in the control condition, this proportion increases to seventy per cent in the default condition (see Figure 2). The authors also show that the more patient kids had lower body-mass index (BMI). This research builds on the literature of how some interventions, for example educational programs and commitment devices, could make children more forward-looking and less present-biased.

The other finding we want to address is about how economic incentives in the form of food prices interact with impatience to determine obesity. Using data from the National Longitudinal Study of Youth – NLSY, researchers tried to explain why the observed increases in BMI among American citizens have been concentrated in the distribution's right tail. This fact is intriguing because if declining food prices affect consumption decisions homogeneously across individuals, there should be only an increase on average BMI but no change in the variance of the distribution. Interestingly, they show that interacting impatience measures (discount rates) with food prices reveals that the gap between the BMI of impatient and patient individuals is larger in counties with lower food prices.

Figure 3. BMI distribution

These recent findings help us to better understand how impatience is related with procrastination. Also, they highlight whether policies, such as default choices and economic incentives, might be effective to alter behaviour.

No comments: