(featured image: aitoff/Pixabay)
Time is money, it is often said, but it is also distance. By bridging these distances, we can make better life decisions
In one of the most memorable scenes from the sitcom Father Ted, the main character and his younger and somewhat dim colleague, Father Dougal, are on holiday in a tiny caravan, on a rainy, deserted campsite. Dougal has discovered a box with plastic model farm animals, which he has placed on the table.
Ted holds up two of the toy cows, addressing Dougal very slowly, “OK, one last time… these are small, but the ones out there are far away.” The puzzled look on Dougal’s face suggests the message has not quite penetrated. Ted repeats, gesturing with the plastic cows, “Small…”, and then looks out of the window, “…far away…”. Dougal’ s face betrays the huge effort he is making to understand, but eventually he shakes his head in defeat, upon which Ted throws the toys back on the table, muttering, “Ah, forget it!”.
It is hard not to laugh at clueless Father Dougal’s inability to realize that far-away cows are, in fact, large, and only look small because of the distance, and indeed feel a bit smug. But substitute time for distance, and perhaps we are not all that smart either.
Small in the future
One of the first practical problems the (then fledgling) field of behavioural economics tackled, now nearly 25 years ago, was the fact that many of us fail to set aside enough money for a comfortable retirement. One of the reasons is that time and money right now look quite different compared to some point in the future.
Discounting money over time in itself makes perfect sense. Most of us prefer £50 (or $50, €50 or whatever the rough equivalent is in your everyday currency) today over £50 next year. Even if there was no uncertainty involved and we would be guaranteed to receive the amount, getting it now means we can invest it, and end up with more than £50 in a year’s time.
But it’s not that simple. If we could choose between receiving £50 in a year’s time, and £60 in thirteen months’ time, most of us would see an extra £10 well worth an additional month’s wait: a gain of 20% in just one month corresponds with an annual interest rate of nearly 800%. Yet, intriguingly, when offered the choice between £50 today and £60 in a month’s time, many people would prefer the money now, even though the financial benefit is exactly the same. It is just like with Father Dougal’s cows: a period of one month in the distant future isn’t really small, it only looks that way.
This phenomenon is known as hyperbolic discounting, and is one of the explanations for why we don’t save enough – and in particular why we delay starting to save. Saving is very much the ‘more money later’ option. So, putting money in our pension (instead of spending it on something we enjoy) feels like a totally sensible thing to do in a year’s time, and we may well plan to do precisely that. But as we actually get to next year, we come to the conclusion that we’d rather spend the money than save it. And so we keep on postponing …
Nobel laureate Richard Thaler and Shlomo Benartzi developed a novel way to overcome this tendency, known as Save More Tomorrow (one of the most widely cited case studies in behavioural economics). They invited employees to commit now to put some (but not all) of a future pay increase into a retirement plan. Thanks to this pre-commitment element, the temptation to delay yet again was removed by taking the decision away from the moment the money for saving was available. Furthermore, leaving some extra money from the pay rise available for spending reduced the pain of paying (and the impulse to reverse the decision). It was a success: 78% of employees joined, four pay rises later 80% of them were still in the scheme, and over 40 months, the average savings rates increased from 3.5% to 13.6%.
But we do not just distort information about the future. We do the same with memories.
Small in the past
As a student (and, to be honest, somewhat later too) your correspondent occasionally experienced a phenomenon commonly known as the hangover. More often than not, this led to a vow to drink less alcohol at the next opportunity (even once or twice never to drink alcohol again at all). If this next opportunity was the night of the day after, it had some effect. But if there were more than a few days in between, the memory of the hangover was distant, the temptation of the booze was salient, and the cycle was repeated. Perhaps you recognize it.
It’s a similar story when we’re behind the wheel. We are happily zooming along, and all of a sudden traffic slows down. Flashing blue lights, fire brigade, ambulances – fragments of glass, plastic and metal, and tangled wrecks. As we squeeze past the spot of the collision and accelerate away, we usually do so more thoughtfully. Our right foot feels a lot lighter and we keep well within the speed limit. We pay more attention to the road users around us. For a while at least. An hour later, the memory has begun to fade, and our behaviour soon returns to how we habitually drive.
We even see it in our collective memory. On 27 January, we commemorated the liberation of the Nazi extermination camp of Auschwitz, 75 years ago. The number of survivors of the unspeakable horrors that took place there (and in the other camps) is inevitably dwindling, and with them, the direct memories of arguably the most gruesome period in human history. These memories have helped us resist the forces that led to the monstrosity of the gas chambers. But they are fading.
If we fail to remember the mistakes we made in the past – or those that we know others have made – we are doomed to repeat them. That is true for us as individuals when we drink too much, or when we drive like arseholes.
Keeping the memory alive
It is just as true for us collectively. Can we afford to forget what the human race was capable of, a mere three generations in the past? Can we risk allowing it to happen again because the memories of it seem distant? These indescribable atrocities took place before most of us were born, quite likely even before our parents were alive. But that doesn’t make them any less significant, and we should not assume that the capacity for such evil has disappeared.
Every day, small steps are taken, steps very similar to those that led to the evil of Auschwitz, Treblinka, and the other extermination camps – as this tweet illustrates:
Events like this may seem trivial, unconnected to this terrible past, and nothing much to worry about. But we have the power to zoom in to those distant, small looking memories, and undo this distortion. If we make them life sized, we can judge acts of antisemitism, and more broadly intolerance for people because of their race, their faith, their sexual orientation or their ethnicity, for the loathsome and dangerous behaviour they really are. I invite you to read the article to which the tweet refers (use Google Translate if your Italian is not up to it), while thinking of Auschwitz, and you’ll see what I mean.
Even if, soon, there will be nobody left who has personally experienced the wickedness of the camps, the annual commemorations can help us reflect on the horrors as if they happened last year, rather than the best part of a century ago. We should pay attention to them.
“The past is a foreign country”, the first sentence from L.P. Hartley’s The Go-Between reads, but it doesn’t have to be. We can make the past our country, and keep on drawing its lessons.
It is up to us.