5 ms·

I think it's important to note that the measure of "patience" is this survey question: "Please consider the following: Would you rather receive 100 Euro today

by opencl 7y ago

I think it's important to note that the measure of "patience" is this survey question: "Please consider the following: Would you rather receive 100 Euro today or x Euro in 12 months?" posed with x varying between 103 and 212. Seems a hell of a lot more meaningful than the "marshmallow experiment" that I was afraid the article would be about but also like it would very obviously skew towards labeling rich people as more patient. The linked article is pretty devoid of meaningful content but the survey is relatively interesting.

ginko 7y ago
If that's the question, then I'm not surprised when wealthier people score as more patient: They don't need the money now, so might as well wait it out for a higher payout.
- IshKebab 7y ago
  Right, that question is pretty much asking you directly if you are poor (or stupid I guess).
- LanceH 7y ago
  What a horrible experiment, too. You could conclude that wealthier people are more able to trust commitment over time. In a $100 context, I would be considered wealthy, but I still might take $100 now just because who knows where this guy will be a year from now. This is measuring time value of money versus risk, imo. Time value of money is also different for someone without money, as well. 100 Euro might buy a quality item now that will last, instead of a cheap version that needs to be replace multiple times in a year. When I think of patience and building wealth, my first thought is always the college grads who get recruited from university and immediately go out and buy a really nice car. A lot of them even had perfectly functional cars going into their first jobs. In fact, several of them when to work for consulting firms where their nice new cars would be sitting at the airport parking lot 5 days out of every week. Put off that fancy car just a bit and then you can have that little nest egg which will kick off that patience<->wealth feedback loop.
  - Bartweiss 7y ago
    > more able to trust commitment over time Not only are wealthier people better placed to trust (or risk) commitment, but the world map in the article is hilariously similar to a map of high-trust societies. If someone in Sweden is more willing to wait for money than someone in Russia, does that mean they're actually higher patience? Intuitively, I think it just means they have a higher expectation of actually getting paid in a year. (And if Nicaragua is bright red, how much of that is that people aren't even sure what address they'll have in a year, so even if they trust you they know they won't get paid?)
rlpb 7y ago
Since my savings are well in excess of 100 Euro, and I don't expect them to dip below 100 Euro in the next twelve months, I don't need 100 Euro right now. Therefore my calculation is simple and unemotional: is the interest I'll get from saving what I could receive now higher or lower than the additional amount you're offering me in twelve months if I wait? For those who aren't lucky enough to not need 100 Euro right now, the calculation is entirely different. Do you want to be hungry, or not? This makes the question so skewed I don't think it's any valid measure of "patience" at all. I don't need to be patient to wait.
- noonespecial 7y ago
  The entire "payday loan" industry depends on this calculation. If you're desperate enough you'll pay almost any future cost for that 100 today.
- ovi256 7y ago
  >is the interest I'll get from saving That's good, but you also must consider counterparty risk. Will these people offering me x euros in 12 months still realistically be around then ? If the counterparty risk is very low, their offer must be considered at face value. If the risk is higher, the present value of the future x euros must be discounted.
  - hellisothers 7y ago
    The other point (I assume) the OP is making is that they don’t need the money, at all, so if they can get it then go ahead and take the risk. A poorer person _needs_ that money, so it’s less a patience thing and more a calculated risk tolerance thing. But the wealthy do like having it reinforced that they earned their wealth because they’re better...
- Bartweiss 7y ago
  Thank you - this is a bizarrely bad question. Not only is "earn interest" a very different use than "eat dinner", but someone short on money is also more likely to have access to short-term, high-yield "investments" like avoiding fees. Investing 100 Euro for a year might earn 5%, but if 100 Euro today lets me avoid taking a payday loan, I could 'earn' 30%+ in interest not incurred, and should take the money now in more cases. If I'm 100 Euro behind on my gas bill and know the fee for late payment is 80 Euro, I should obviously pass up 150 Euro in a year. If my car I use to get to work is broken, I need 80 Euro to repair it, and I'll make 150 Euro tomorrow by not missing work, then taking the money now is higher payoff (250 Euro total) than any return offered (max 200). It's a constant frustration I have with econ experiments, even when they're less blatantly silly than this. The Allais paradox (https://en.wikipedia.org/wiki/Allais_paradox https://en.wikipedia.org/wiki/Allais_paradox) is interesting, but it ultimately shows that people's preferences change when you add an equal amount of expected value to every choice in a wager. When you look at the actual uses of money (e.g. the sub-linear correlation with happiness), it stops being surprising or irrational that people's appetite for risk varies with the dollar value being wagered.
war1025 7y ago
Honestly for $100, I'd be indifferent to receiving it at all.
- sokoloff 7y ago
  Agreed. Which means I'd be extremely likely to just take the $100 right now in order to be forever done thinking about the topic.
jhoechtl 7y ago
My economics background hits through. Secure income now compared to insecure income at x might be preferable. Especially if investment opportunities of these 100 curreny units look favourable for the year to come
Bartweiss 7y ago
I think the study mistakes as patience wealth, social trust, and stability. This feels almost as bad as world heatmaps that don't correct for population. If you've got money to eat, you can afford to wait. If you know people in your area follow through on their contracts, research, etc, you can trust that you'll actually see the money in a year. And if you're confident you'll still have money to eat in six months, you don't need it now for a rainy day fund. (And if you know you'll have the same address in a year, you can expect to get found with the money; Nicaragua isn't crimson just because people are impatient.)

by opencl 7y ago

ginko 7y ago

If that's the question, then I'm not surprised when wealthier people score as more patient: They don't need the money now, so might as well wait it out for a higher payout.

IshKebab 7y ago
Right, that question is pretty much asking you directly if you are poor (or stupid I guess).
LanceH 7y ago
What a horrible experiment, too. You could conclude that wealthier people are more able to trust commitment over time. In a $100 context, I would be considered wealthy, but I still might take $100 now just because who knows where this guy will be a year from now. This is measuring time value of money versus risk, imo. Time value of money is also different for someone without money, as well. 100 Euro might buy a quality item now that will last, instead of a cheap version that needs to be replace multiple times in a year. When I think of patience and building wealth, my first thought is always the college grads who get recruited from university and immediately go out and buy a really nice car. A lot of them even had perfectly functional cars going into their first jobs. In fact, several of them when to work for consulting firms where their nice new cars would be sitting at the airport parking lot 5 days out of every week. Put off that fancy car just a bit and then you can have that little nest egg which will kick off that patience<->wealth feedback loop.
- Bartweiss 7y ago
  > more able to trust commitment over time Not only are wealthier people better placed to trust (or risk) commitment, but the world map in the article is hilariously similar to a map of high-trust societies. If someone in Sweden is more willing to wait for money than someone in Russia, does that mean they're actually higher patience? Intuitively, I think it just means they have a higher expectation of actually getting paid in a year. (And if Nicaragua is bright red, how much of that is that people aren't even sure what address they'll have in a year, so even if they trust you they know they won't get paid?)

rlpb 7y ago

Since my savings are well in excess of 100 Euro, and I don't expect them to dip below 100 Euro in the next twelve months, I don't need 100 Euro right now. Therefore my calculation is simple and unemotional: is the interest I'll get from saving what I could receive now higher or lower than the additional amount you're offering me in twelve months if I wait? For those who aren't lucky enough to not need 100 Euro right now, the calculation is entirely different. Do you want to be hungry, or not? This makes the question so skewed I don't think it's any valid measure of "patience" at all. I don't need to be patient to wait.

noonespecial 7y ago
The entire "payday loan" industry depends on this calculation. If you're desperate enough you'll pay almost any future cost for that 100 today.
ovi256 7y ago
>is the interest I'll get from saving That's good, but you also must consider counterparty risk. Will these people offering me x euros in 12 months still realistically be around then ? If the counterparty risk is very low, their offer must be considered at face value. If the risk is higher, the present value of the future x euros must be discounted.
- hellisothers 7y ago
  The other point (I assume) the OP is making is that they don’t need the money, at all, so if they can get it then go ahead and take the risk. A poorer person _needs_ that money, so it’s less a patience thing and more a calculated risk tolerance thing. But the wealthy do like having it reinforced that they earned their wealth because they’re better...
Bartweiss 7y ago
Thank you - this is a bizarrely bad question. Not only is "earn interest" a very different use than "eat dinner", but someone short on money is also more likely to have access to short-term, high-yield "investments" like avoiding fees. Investing 100 Euro for a year might earn 5%, but if 100 Euro today lets me avoid taking a payday loan, I could 'earn' 30%+ in interest not incurred, and should take the money now in more cases. If I'm 100 Euro behind on my gas bill and know the fee for late payment is 80 Euro, I should obviously pass up 150 Euro in a year. If my car I use to get to work is broken, I need 80 Euro to repair it, and I'll make 150 Euro tomorrow by not missing work, then taking the money now is higher payoff (250 Euro total) than any return offered (max 200). It's a constant frustration I have with econ experiments, even when they're less blatantly silly than this. The Allais paradox (https://en.wikipedia.org/wiki/Allais_paradox https://en.wikipedia.org/wiki/Allais_paradox) is interesting, but it ultimately shows that people's preferences change when you add an equal amount of expected value to every choice in a wager. When you look at the actual uses of money (e.g. the sub-linear correlation with happiness), it stops being surprising or irrational that people's appetite for risk varies with the dollar value being wagered.

war1025 7y ago

Honestly for $100, I'd be indifferent to receiving it at all.

sokoloff 7y ago
Agreed. Which means I'd be extremely likely to just take the $100 right now in order to be forever done thinking about the topic.

jhoechtl 7y ago

My economics background hits through. Secure income now compared to insecure income at x might be preferable. Especially if investment opportunities of these 100 curreny units look favourable for the year to come

Bartweiss 7y ago

I think the study mistakes as patience wealth, social trust, and stability. This feels almost as bad as world heatmaps that don't correct for population. If you've got money to eat, you can afford to wait. If you know people in your area follow through on their contracts, research, etc, you can trust that you'll actually see the money in a year. And if you're confident you'll still have money to eat in six months, you don't need it now for a rainy day fund. (And if you know you'll have the same address in a year, you can expect to get found with the money; Nicaragua isn't crimson just because people are impatient.)