6 ms·

I don’t know about children but it makes sense that poorer adults have worse impulse control. Poorer people have more worries and less to look forward to. Maybe

I don’t know about children but it makes sense that poorer adults have worse impulse control. Poorer people have more worries and less to look forward to. Maybe a 12-hour workday rather than an eight-hour one. I’m sure that overworked wealthy people have plenty of vices, i.e. “poor impulse control”. But they have successful careers so those things are coping mechanisms, really. It’s compartmentalized. In any case my cynicism would just be vindicated if a study just turned out to rationalize (as an emergent property because, duh, there is a population overlap between researchers and this group) the position of the upper-middle class.

ethbr1 2y ago
The acoup blog series on medieval agrarian societies made an interesting point that resonated with me. Things that look like failures in long term planning (to people with resource surpluses) can actually be optimal decisions (to people without resource surpluses). In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized. In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils. If you're poor and don't have a stable living situation, delaying gratification presents risks to you. (ones that people with money and stability don't have to consider) Sometimes people are dumb, but sometimes they're optimizing for factors others are oblivious to.
- jkolio 2y ago
  People might reply, "Well, take the risk," without acknowledging that risk is two-dimensional. There's a range of success and and range of consequences. Something traditionally considered "high risk", like investing millions of a billionaire's money in a start-up, might have low consequences for the direct investor. It sucks if the start-up fails, but they're still a billionaire, probably. Their lifestyle doesn't change substantially. Compare to a low-income worker choosing a car: maybe a cheap used one that could break down at any time, or a more expensive one is less likely to break down (if you stay up-to-date with expensive maintenance), or a much more expensive new car that is unlikely to break down (but that puts them in a substantial amount of debt). In every case, there's a way for the prospect to go sideways in a manner that would likely end with the worker losing their job, with (statistically-speaking) no savings cushion. However you rank the risk of each (at least one being the lowest financial risk), you have high negative potential consequences.
  - watwut 2y ago
    My impression is that people who say "take risk" literally always mean "take bets where you have little to loose and a lot to gain". And they look down on people who took actual risk and lost. What "take risk" means is that you should try to be entrepreneur in situation where you can fall back and be well paid programmer again if it does not work out. Or that you should risk someone elses money. EDIT: I guess good rephrase would be that "take risk" usually means "overcome irrational fear when you are in perfectly safe situation". That is what actually people mean.
    - Qem 2y ago
      This nails it. If Elon Musk loses 220 billion, he still does just fine. If a subsistence farmer in a remote place loses his couple hectares cassava crop, he and his family risks famine.
      - pcl 2y ago
        Wow, that’s an insane fact. Right now, the internet says he’s got $232 billion. So he could lose $231.9 billion and still be really really rich.
    - KennyBlanken 2y ago
      They also look down on people who could not take the risk, calling them cowardly, lacking boldness, entrepreneurial spirit, etc. "Sell everything and fund my startup" is fine when you've got a 12 month emergency fund, living in a paid-off home, , and you parents are able to bail you out. It's not fine when failure means you're penniless and homeless. Further: it's much less of a risk when you have a metaphorical rolodex of wealthy friends from university or business school. You're not cold pitching - not even slightly. Doors open for you, instead of being slammed in your face. Yet they'll tell you shit like "Try hard enough and you will succeed! I worked long and hard, people saw that, and were willing to invest. Good hard honest work is rewarded." The people working on their startup 12 hours a day who don't have connections have no idea that the bit left out is that "people were willing to invest in my idea because we chugged beers together in the basement of Sigma Chi."
- Terr_ 2y ago
  Ref: https://acoup.blog/2020/07/24/collections-bread-how-did-they-make-it-part-i-farmers/ https://acoup.blog/2020/07/24/collections-bread-how-did-they... > But because these households wobble on the edge of disaster continually, that changes the calculus. These small subsistence farmers generally seek to minimize risk, rather than maximize profits. > [...] Consequently, for the family, money is likely to become useless the moment it is needed most. So while keeping some cash around against an emergency (or simply for market transactions – more on that later) might be a good idea, keeping nearly a year’s worth of expenses to make it through a bad harvest was not practical.
- thaumasiotes 2y ago
  > In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized. > In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils. Social ties are no more helpful in a famine than currency is. People who can't sell you food can't give you food either. They are insurance against the case that your crop fails, not that everybody's crop fails. Currency is fine in that scenario. The tendency not to grow the most profitable set of crops is a method of avoiding crop failure, not a method of mitigating it when it happens.
  - ethbr1 2y ago
    From Terr_'s helpful digging up of the link: https://acoup.blog/2020/07/24/collections-bread-how-did-they-make-it-part-i-farmers/ https://acoup.blog/2020/07/24/collections-bread-how-did-they... See "Risk Control", "Banking the Yields", "Banqueting the Yields" for why currency was a terrible idea and relationships were superior.
    - thaumasiotes 2y ago
      Under "Risk Control": > Avoiding risk for these farmers comes in two main forms: there are strategies to reduce the risk of failure within the annual cycle and then strategies to prepare for failure by ‘banking’ the gains of a good cycle against the losses of a bad cycle. > If you only farm one crop (the ‘best’ one) and you get too little rain or too much, or the temperature is wrong – that crop fails and the family starves. But if you farm several different crops, that mitigates the risk of any particular crop failing due to climate conditions, or blight (for the Romans, the standard combination seems to have been a mix of wheat, barley and beans, often with grapes or olives besides; there might also be a small garden space. Orchards might double as grazing-space for a small herd of animals, like pigs). By switching up crops like this and farming a bit of everything, the family is less profitable (and less engaged with markets, more on that in a bit), but much safer because the climate conditions that cause one crop to fail may not impact the others. Under "Banqueting the Yields": > The most immediate of these are the horizontal relationships: friends, family, marriage ties and neighbors. While some high-risk disasters are likely to strike an entire village at once (like a large raid or a general drought), most of the disasters that might befall one farming family (an essential worker being conscripted, harvest failure, robbery and so on) would just strike that one household. So farmers tended to build these reciprocal relationships with each other: I help you when things are bad for you, so you help me when things are bad for me. You might notice that this is exactly what I said above. What did you want me to see?
ants_everywhere 2y ago
> I’m sure that overworked wealthy people have plenty of vices, i.e. “poor impulse control”. I once watched a movie about this called The Wolf of Wall Street
knallfrosch 2y ago
"worse impulse control" or better grabbing-opportunity skills. If you repeat the experiment and the "doubling" of the marshmallow turns into "a teen barging into the room and stealing the marshmallow", who'd be the wiser kid?
- throwway120385 2y ago
  The teenager is a good metaphor for what your creditors will do when they find out you have enough money to make a payment.
- Eddy_Viscosity2 2y ago
  A factor in this study that I don't know was mentioned in 'trust'. Did the kids trust the adult to deliver on the promise of the extra mashmallows. If the kids had low trust in adults, its very rational to take the marshmallow you see rather the ones you don't.
  - _aleph2c_ 2y ago
    This is very insightful.
  - selcuka 2y ago
    Great insight. This also correlates with household income, as promises are more frequently broken with lower income.
    - philipswood 2y ago
      Are you sure? Why? And with what statistics?
      - 392 2y ago
        >In 2008–12, the rate of violent victimization was highest for persons in poor households (39.8 per 1,000) and lowest for persons in high-income households (16.9 per 1,000) (table 1). This pattern was consistent across all types of violent crime.
calvinmorrison 2y ago
Poor people are better at cash flow management. That's why poor people like the dollar store. They're not dumb. They know you can buy soap in bulk at Costco, but buying a small $1 bottle is better than the 55 gallon barrel to manage cash flow. Likely this is related to the marshmallow. I need to eat. I will eat it now. I cannot guarantee the marginal return on more marshmallows. I mean maybe if real life was like "wait one minute and double your money" people would do it, but typically it's like, lock up your cash for weeks, months, years at a time for margins, not for doubling your marshmallow count. In real life, realized savings or gains of 1 or 2 or 4 percent for a 6 month wait is not worth the RISK of locking up that marshmallow (or T-bond) when having that marshmallow locked up may result in say, no housing.
- dmurray 2y ago
  This was posted 53 minutes ago and no one has given us the Vimes Boots Theory of Economics yet?
  - astrange 2y ago
    Don't believe everything you read. Fiction isn't real. There's an opposing wise saying too: https://kottke.org/10/10/andy-warhol-on-coca-cola https://kottke.org/10/10/andy-warhol-on-coca-cola
    - harimau777 2y ago
      Coke isn't comparable to boots in this case. Unlike boots, there is relatively little difference in price or quality in colas and the price is low enough that almost everyone can afford them. On the other hand, there is a dramatic difference in price and quality in footwear. Sam's Cola is $8.54 for a 24 pack while Coca-Cola is $13.48. (Both prices taken from Walmart). Cheap work boots are $30 at Walmart while Red Wing Super Soles are $250 while Iron Rangers are $350.
      - calvinmorrison 2y ago
        Skip the Iron Rangers and go straight for the Thorogood Moc Toe
vishnugupta 2y ago
> Poorer people have more worries and less to look forward to. The authors in a book “The Poor Economics” make a similar assertion. It did make a lot of sense to me.
blackeyeblitzar 2y ago
Are cause and effect reversed?
- keybored 2y ago
  Does cause start from the Big Bang or from where you/I want it to?
  - goatlover 2y ago
    It starts when you collapse the wavefunction /s.
insane_dreamer 2y ago
> poorer adults have worse impulse control I would dispute that line of thinking. Wealthier people who are used to getting what they want when they want it would have worse impulse control. Poorer people are used to having to wait already.
- selcuka 2y ago
  This is not the point. Wealthy people have no rush, because they are always guaranteed to get what they want when they want it as you said. Poorer people can't risk to miss the opportunity, even when they don't necessarily want it right now.
  - Jensson 2y ago
    I don't think poor kids has less candy than rich kids, normally it is the opposite poor kids are fat since they eat too much candy. If it was money, sure, but this is candy.
  - Moru 2y ago
    And in reality there is no guarantee that the offered double reward actually materialize later. Better take what is offered now.
- rincebrain 2y ago
  I think it's more complicated than both of these, honestly. Past a certain level of desperation, there can be a hard-to-escape level of nihilism - "why bother saving, something's going to take it and I'm going to be fucked tomorrow no matter how much I do". Whether this is an accurate description of the situation or not is going to depend, but I have met a number of people who think like this even when they've not been that desperate in decades, and it bites them as soon as they stop making so much that it masks the problem. And in some cases, it can be practically true - there's various systems that are designed with nasty edges where if you have enough resources accrued, you stop being given support, but the thresholds, by design or incident, are far below the point where you might be able to escape the pit, so you can't save your way out of it - you'll suffer a catastrophic penalty for accumulating wealth, and then be worse off. Once you get past a certain level of instability, you start seeing gains again from saving if you do it, but not necessarily immediately - after all, if you're earning $9 an hour, at perhaps 160hr/month, and you're spending $800/mo on rent, that's $640 ignoring taxes to spend on anything else, so even if you somehow spent _none_ of that on taxes or food or w/e, it'd take more than a month to save one month's rent. So the benefits of saving are slow to accrue, when your income is not much past your expenses, and it can be hard to convince someone who's never had that level of safety and stability that it's worth it when it's going to take a long time to be worth it. If your income is outsized enough to your expenses, then it can be more obvious much faster, _but only if you've ever had to think about it_ - if you've been externalizing your life expenses to your parents or a trust fund, it's even more foreign to you than the people described above who have concluded saving isn't useful, because you've never had to think about money as a resource in your life, it's just a thing you spend unendingly.
momojo 2y ago
I'm reminded of one of the stories from "Poor Economics" (Abhijit V. Banerjee and Esther Duflo, ISBN: 978-1-58648-798-0). Consistently, those in poverty (living on < $1 per day) do not simply 'try harder' to save and make better financial decisions by being restricting their impulses. Instead they find clever ways to outwit themselves. One mother in India, intent on accruing $2000 (?) for her daughter's dowry, knew she didn't have the willpower to "just save $200 per year over 10 years", though her annual income was greater than $200. But she had the foresight to take out a $2000 loan from a bank, immediately move it to a saving account, and pay back the bank. The interest on her loan was almost like an extrinsic-motivation fee.
- dr_dshiv 2y ago
  I think this might be missing information? I don’t understand
  - qsantos 2y ago
    The mother forced herself to save by punishing herself if she did not. The $2000 in the saving account was earmarked for the dowry, and she would not touch it. So, she had to save every month to pay back the loan to the bank. The longer she took to do this, the more interest she paid. This is a kind of non-rational trick that some people use to "trick themselves into doing the right thing". This is like paying some random stranger $100 if you do not accomplish some task.
    - eru 2y ago
      Well, some people in rich countries take out a mortgage and buy a house on similar grounds.
      - fireflash38 2y ago
        With the differences of: 1. Immediate use of the home 2. Collateral that can be taken back of the loan isn't repaid 3. Often the collateral gains in value over the duration of the loan 4. The interest rate on the loan is way lower than a personal loan or a credit card.
II2II 2y ago
It's not just impulse control. That poor adult probably needs the "marshmallow" now while the wealthy adult has enough resources to "invest the marshmallow". There is also perceived risk. If the marshmallow is there for the taking, you are guaranteed to receive that marshmallow if you take it now. The promise of receiving more marshmallows now is just that, a promise not a guarantee. (And, of course, many real life future gains are not even promises. Many people invest a lot into their homes with the expectation that it will increase in value. For most it will. For some it won't.) It may sound silly when everything is framed in terms of marshmallows, but it's probably a safe bet that lessons learned in life will carry over to an experiment unless they carefully consider what the experiment is asking of them.
- Aerroon 2y ago
  I think if you're trying to make a choice yourself then making it sound silly is a good way to take the emotion out of the decision. Another way I've seen people reason over things like this is in terms of an MMORPG/ARPG. 'You need to invest in your character to get stronger to beat the next boss. That will pay back in X amount of time, but if the value of the loot drops too much in that time then it's not worth it.'

ethbr1 2y ago

The acoup blog series on medieval agrarian societies made an interesting point that resonated with me. Things that look like failures in long term planning (to people with resource surpluses) can actually be optimal decisions (to people without resource surpluses). In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized. In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils. If you're poor and don't have a stable living situation, delaying gratification presents risks to you. (ones that people with money and stability don't have to consider) Sometimes people are dumb, but sometimes they're optimizing for factors others are oblivious to.

jkolio 2y ago
People might reply, "Well, take the risk," without acknowledging that risk is two-dimensional. There's a range of success and and range of consequences. Something traditionally considered "high risk", like investing millions of a billionaire's money in a start-up, might have low consequences for the direct investor. It sucks if the start-up fails, but they're still a billionaire, probably. Their lifestyle doesn't change substantially. Compare to a low-income worker choosing a car: maybe a cheap used one that could break down at any time, or a more expensive one is less likely to break down (if you stay up-to-date with expensive maintenance), or a much more expensive new car that is unlikely to break down (but that puts them in a substantial amount of debt). In every case, there's a way for the prospect to go sideways in a manner that would likely end with the worker losing their job, with (statistically-speaking) no savings cushion. However you rank the risk of each (at least one being the lowest financial risk), you have high negative potential consequences.
- watwut 2y ago
  My impression is that people who say "take risk" literally always mean "take bets where you have little to loose and a lot to gain". And they look down on people who took actual risk and lost. What "take risk" means is that you should try to be entrepreneur in situation where you can fall back and be well paid programmer again if it does not work out. Or that you should risk someone elses money. EDIT: I guess good rephrase would be that "take risk" usually means "overcome irrational fear when you are in perfectly safe situation". That is what actually people mean.
  - Qem 2y ago
    This nails it. If Elon Musk loses 220 billion, he still does just fine. If a subsistence farmer in a remote place loses his couple hectares cassava crop, he and his family risks famine.
    - pcl 2y ago
      Wow, that’s an insane fact. Right now, the internet says he’s got $232 billion. So he could lose $231.9 billion and still be really really rich.
  - KennyBlanken 2y ago
    They also look down on people who could not take the risk, calling them cowardly, lacking boldness, entrepreneurial spirit, etc. "Sell everything and fund my startup" is fine when you've got a 12 month emergency fund, living in a paid-off home, , and you parents are able to bail you out. It's not fine when failure means you're penniless and homeless. Further: it's much less of a risk when you have a metaphorical rolodex of wealthy friends from university or business school. You're not cold pitching - not even slightly. Doors open for you, instead of being slammed in your face. Yet they'll tell you shit like "Try hard enough and you will succeed! I worked long and hard, people saw that, and were willing to invest. Good hard honest work is rewarded." The people working on their startup 12 hours a day who don't have connections have no idea that the bit left out is that "people were willing to invest in my idea because we chugged beers together in the basement of Sigma Chi."
Terr_ 2y ago
Ref: https://acoup.blog/2020/07/24/collections-bread-how-did-they-make-it-part-i-farmers/ https://acoup.blog/2020/07/24/collections-bread-how-did-they... > But because these households wobble on the edge of disaster continually, that changes the calculus. These small subsistence farmers generally seek to minimize risk, rather than maximize profits. > [...] Consequently, for the family, money is likely to become useless the moment it is needed most. So while keeping some cash around against an emergency (or simply for market transactions – more on that later) might be a good idea, keeping nearly a year’s worth of expenses to make it through a bad harvest was not practical.
thaumasiotes 2y ago
> In that case, it was the observation that maximizing currency profit from farming in a society that experiences arbitrary taxation and repeated famine is useless -- if no one has food then no one will sell you any, assuming your saved currency hasn't already been seized. > In contrast, optimizing for familial and social ties were much more reliable ways to see yourself through then-common perils. Social ties are no more helpful in a famine than currency is. People who can't sell you food can't give you food either. They are insurance against the case that your crop fails, not that everybody's crop fails. Currency is fine in that scenario. The tendency not to grow the most profitable set of crops is a method of avoiding crop failure, not a method of mitigating it when it happens.
- ethbr1 2y ago
  From Terr_'s helpful digging up of the link: https://acoup.blog/2020/07/24/collections-bread-how-did-they-make-it-part-i-farmers/ https://acoup.blog/2020/07/24/collections-bread-how-did-they... See "Risk Control", "Banking the Yields", "Banqueting the Yields" for why currency was a terrible idea and relationships were superior.
  - thaumasiotes 2y ago
    Under "Risk Control": > Avoiding risk for these farmers comes in two main forms: there are strategies to reduce the risk of failure within the annual cycle and then strategies to prepare for failure by ‘banking’ the gains of a good cycle against the losses of a bad cycle. > If you only farm one crop (the ‘best’ one) and you get too little rain or too much, or the temperature is wrong – that crop fails and the family starves. But if you farm several different crops, that mitigates the risk of any particular crop failing due to climate conditions, or blight (for the Romans, the standard combination seems to have been a mix of wheat, barley and beans, often with grapes or olives besides; there might also be a small garden space. Orchards might double as grazing-space for a small herd of animals, like pigs). By switching up crops like this and farming a bit of everything, the family is less profitable (and less engaged with markets, more on that in a bit), but much safer because the climate conditions that cause one crop to fail may not impact the others. Under "Banqueting the Yields": > The most immediate of these are the horizontal relationships: friends, family, marriage ties and neighbors. While some high-risk disasters are likely to strike an entire village at once (like a large raid or a general drought), most of the disasters that might befall one farming family (an essential worker being conscripted, harvest failure, robbery and so on) would just strike that one household. So farmers tended to build these reciprocal relationships with each other: I help you when things are bad for you, so you help me when things are bad for me. You might notice that this is exactly what I said above. What did you want me to see?

ants_everywhere 2y ago

> I’m sure that overworked wealthy people have plenty of vices, i.e. “poor impulse control”. I once watched a movie about this called The Wolf of Wall Street

knallfrosch 2y ago

"worse impulse control" or better grabbing-opportunity skills. If you repeat the experiment and the "doubling" of the marshmallow turns into "a teen barging into the room and stealing the marshmallow", who'd be the wiser kid?

throwway120385 2y ago
The teenager is a good metaphor for what your creditors will do when they find out you have enough money to make a payment.
Eddy_Viscosity2 2y ago
A factor in this study that I don't know was mentioned in 'trust'. Did the kids trust the adult to deliver on the promise of the extra mashmallows. If the kids had low trust in adults, its very rational to take the marshmallow you see rather the ones you don't.
- _aleph2c_ 2y ago
  This is very insightful.
- selcuka 2y ago
  Great insight. This also correlates with household income, as promises are more frequently broken with lower income.
  - philipswood 2y ago
    Are you sure? Why? And with what statistics?
    - 392 2y ago
      >In 2008–12, the rate of violent victimization was highest for persons in poor households (39.8 per 1,000) and lowest for persons in high-income households (16.9 per 1,000) (table 1). This pattern was consistent across all types of violent crime.

calvinmorrison 2y ago

Poor people are better at cash flow management. That's why poor people like the dollar store. They're not dumb. They know you can buy soap in bulk at Costco, but buying a small $1 bottle is better than the 55 gallon barrel to manage cash flow. Likely this is related to the marshmallow. I need to eat. I will eat it now. I cannot guarantee the marginal return on more marshmallows. I mean maybe if real life was like "wait one minute and double your money" people would do it, but typically it's like, lock up your cash for weeks, months, years at a time for margins, not for doubling your marshmallow count. In real life, realized savings or gains of 1 or 2 or 4 percent for a 6 month wait is not worth the RISK of locking up that marshmallow (or T-bond) when having that marshmallow locked up may result in say, no housing.

dmurray 2y ago
This was posted 53 minutes ago and no one has given us the Vimes Boots Theory of Economics yet?
- astrange 2y ago
  Don't believe everything you read. Fiction isn't real. There's an opposing wise saying too: https://kottke.org/10/10/andy-warhol-on-coca-cola https://kottke.org/10/10/andy-warhol-on-coca-cola
  - harimau777 2y ago
    Coke isn't comparable to boots in this case. Unlike boots, there is relatively little difference in price or quality in colas and the price is low enough that almost everyone can afford them. On the other hand, there is a dramatic difference in price and quality in footwear. Sam's Cola is $8.54 for a 24 pack while Coca-Cola is $13.48. (Both prices taken from Walmart). Cheap work boots are $30 at Walmart while Red Wing Super Soles are $250 while Iron Rangers are $350.
    - calvinmorrison 2y ago
      Skip the Iron Rangers and go straight for the Thorogood Moc Toe

vishnugupta 2y ago

> Poorer people have more worries and less to look forward to. The authors in a book “The Poor Economics” make a similar assertion. It did make a lot of sense to me.

blackeyeblitzar 2y ago

Are cause and effect reversed?

keybored 2y ago
Does cause start from the Big Bang or from where you/I want it to?
- goatlover 2y ago
  It starts when you collapse the wavefunction /s.

insane_dreamer 2y ago

> poorer adults have worse impulse control I would dispute that line of thinking. Wealthier people who are used to getting what they want when they want it would have worse impulse control. Poorer people are used to having to wait already.

selcuka 2y ago
This is not the point. Wealthy people have no rush, because they are always guaranteed to get what they want when they want it as you said. Poorer people can't risk to miss the opportunity, even when they don't necessarily want it right now.
- Jensson 2y ago
  I don't think poor kids has less candy than rich kids, normally it is the opposite poor kids are fat since they eat too much candy. If it was money, sure, but this is candy.
- Moru 2y ago
  And in reality there is no guarantee that the offered double reward actually materialize later. Better take what is offered now.
rincebrain 2y ago
I think it's more complicated than both of these, honestly. Past a certain level of desperation, there can be a hard-to-escape level of nihilism - "why bother saving, something's going to take it and I'm going to be fucked tomorrow no matter how much I do". Whether this is an accurate description of the situation or not is going to depend, but I have met a number of people who think like this even when they've not been that desperate in decades, and it bites them as soon as they stop making so much that it masks the problem. And in some cases, it can be practically true - there's various systems that are designed with nasty edges where if you have enough resources accrued, you stop being given support, but the thresholds, by design or incident, are far below the point where you might be able to escape the pit, so you can't save your way out of it - you'll suffer a catastrophic penalty for accumulating wealth, and then be worse off. Once you get past a certain level of instability, you start seeing gains again from saving if you do it, but not necessarily immediately - after all, if you're earning $9 an hour, at perhaps 160hr/month, and you're spending $800/mo on rent, that's $640 ignoring taxes to spend on anything else, so even if you somehow spent _none_ of that on taxes or food or w/e, it'd take more than a month to save one month's rent. So the benefits of saving are slow to accrue, when your income is not much past your expenses, and it can be hard to convince someone who's never had that level of safety and stability that it's worth it when it's going to take a long time to be worth it. If your income is outsized enough to your expenses, then it can be more obvious much faster, _but only if you've ever had to think about it_ - if you've been externalizing your life expenses to your parents or a trust fund, it's even more foreign to you than the people described above who have concluded saving isn't useful, because you've never had to think about money as a resource in your life, it's just a thing you spend unendingly.

momojo 2y ago

I'm reminded of one of the stories from "Poor Economics" (Abhijit V. Banerjee and Esther Duflo, ISBN: 978-1-58648-798-0). Consistently, those in poverty (living on < $1 per day) do not simply 'try harder' to save and make better financial decisions by being restricting their impulses. Instead they find clever ways to outwit themselves. One mother in India, intent on accruing $2000 (?) for her daughter's dowry, knew she didn't have the willpower to "just save $200 per year over 10 years", though her annual income was greater than $200. But she had the foresight to take out a $2000 loan from a bank, immediately move it to a saving account, and pay back the bank. The interest on her loan was almost like an extrinsic-motivation fee.

dr_dshiv 2y ago
I think this might be missing information? I don’t understand
- qsantos 2y ago
  The mother forced herself to save by punishing herself if she did not. The $2000 in the saving account was earmarked for the dowry, and she would not touch it. So, she had to save every month to pay back the loan to the bank. The longer she took to do this, the more interest she paid. This is a kind of non-rational trick that some people use to "trick themselves into doing the right thing". This is like paying some random stranger $100 if you do not accomplish some task.
  - eru 2y ago
    Well, some people in rich countries take out a mortgage and buy a house on similar grounds.
    - fireflash38 2y ago
      With the differences of: 1. Immediate use of the home 2. Collateral that can be taken back of the loan isn't repaid 3. Often the collateral gains in value over the duration of the loan 4. The interest rate on the loan is way lower than a personal loan or a credit card.

II2II 2y ago

It's not just impulse control. That poor adult probably needs the "marshmallow" now while the wealthy adult has enough resources to "invest the marshmallow". There is also perceived risk. If the marshmallow is there for the taking, you are guaranteed to receive that marshmallow if you take it now. The promise of receiving more marshmallows now is just that, a promise not a guarantee. (And, of course, many real life future gains are not even promises. Many people invest a lot into their homes with the expectation that it will increase in value. For most it will. For some it won't.) It may sound silly when everything is framed in terms of marshmallows, but it's probably a safe bet that lessons learned in life will carry over to an experiment unless they carefully consider what the experiment is asking of them.

Aerroon 2y ago
I think if you're trying to make a choice yourself then making it sound silly is a good way to take the emotion out of the decision. Another way I've seen people reason over things like this is in terms of an MMORPG/ARPG. 'You need to invest in your character to get stronger to beat the next boss. That will pay back in X amount of time, but if the value of the loot drops too much in that time then it's not worth it.'