Lesson preview · Now vs later
Present bias: why "later" keeps losing
~7 min · Free to read
On Friday you plan to start Monday’s essay first thing on Saturday. On Saturday morning you watch videos instead. On Sunday night you write it in a panic. Nothing new happened between Friday and Saturday. The essay just stopped being “later” and became “now”.
Economists start from a model of a rational chooser: someone who weighs costs and benefits and picks the best option. This chooser sticks to a plan unless something new happens. Your Saturday doesn’t fit that model.
Key Term
Preferring sooner can be sensible
Wanting good things sooner is often sensible. 100 dollars today can earn interest in a savings account (extra money the bank pays you for keeping it there). A promise of money later might not be kept. And most people simply prefer good things sooner: economists call this steady preference impatience. It isn’t a mistake either.
Both money questions offered 10 dollars more for one more week of waiting. Only the start of the wait changed. If you took 100 dollars today but waited when both dates were a year away, your choice flipped because the first wait started now.
Key Term
Present bias
Present bias is an extra pull, on top of ordinary impatience, towards what feels good right now and away from effort right now. It shows up as a preference reversal: a choice that flips just because one option has moved to today.
Steady impatience treats every week of waiting the same, so it gives the same answer whether the week starts today or in a year. Present bias doesn’t.
Present bias helps explain why people put off homework and saving. It may also explain a gym puzzle. Researchers studied 7,752 members of three gyms in the United States from 1997 to 2001. Those paying over 70 dollars a month went only about 4 times a month. By the researchers’ sums, each visit cost them over 17 dollars, though a 10-visit pass cost 10 dollars a visit. Their leading explanation: members were too hopeful about their future self-control. That over-optimism is robust: a survey in the same study and a later study both found it.
Trap · Warning
How strong is the evidence?
Over money, the evidence is mixed. Studies with made-up money find a strong pull towards now. A careful experiment published in 2012 paid real money, made later payments as easy to collect as today’s, and found no such pull. Also, people can save money they get today, so getting it sooner doesn’t mean enjoying it sooner.
Over effort, the finding is robust: people plan to do a dull task later, then do less of it on the day. A 2021 review of 28 papers found the same split on average, though only nine of its studies measured effort.
Trap · Common Misconception
"Choosing sooner means present bias"
Taking the sooner option isn’t the test. 100 dollars today beats 101 dollars in a year: saved at 2% interest, it grows to 102 dollars. The sign of present bias is the flip: sooner when the wait starts now, later when the same wait is far off.
Trap · Common Misconception
"Putting things off means not knowing better"
Seeing your own present bias coming doesn’t switch it off. In an experiment published in 2015, 59% of students chose to make their week-ahead plan for a dull task hard to change on the day. Those who had shown the bias earlier were more likely to choose this, as if they knew they would back out.
Tip
Design the choice, don't rely on willpower
A commitment device is a choice you make now that makes giving in later hard or costly. For example:
- A deadline someone else checks, or a study session with a friend.
- An automatic transfer into savings on payday.
- A fixed-term savings account, where taking money out before a set date costs a penalty or isn’t allowed.
Check yourself · no marks
On Monday, Lena signs up for a 7 am running club on Thursday, because she wants to get fitter. At 6:45 on Thursday she turns off her alarm and stays in bed. Nothing else has changed. Is this ordinary impatience or present bias? What could she do next week?
Commit to one first. Guessing and being wrong beats reading the answer cold.
Practice · 1 / 5
Four friends answer the same two questions. Question A: 50 dollars today, or 60 dollars in one month? Question B: 50 dollars in 12 months, or 60 dollars in 13 months? Whose answers show present bias?
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