Time Preference and Culture – Examples ~ by Ransom

My previous article discussed time preference and how culture introduces factors that can align short-term incentives with long-term interests.

As a summary, “time preference” describes how much consideration a man gives to rewards that are in the far future versus the near future. A man with low time preference weighs distant events greater than a man with high time preference. A man with low time preference will tend towards long-term decision making. A man with high time preference will mostly consider the immediate future.

While a man's time preference probably isn't going to change much, the culture he lives in can provide short-term incentives that lead him to make short-term decisions that are also in his long-term benefit, even though he isn't actually thinking long term.

In the comments section Jammy asked for some examples to illustrate the ideas. Here we go.

Male Courage

Courage is a virtue each of us possesses in varying amounts. We know that courage is usually beneficial in the long run and we admire it in others, but it it comes at a cost that often cannot be quantified until after the act is done – that's what makes it courageous, after all.

A man has his own courage and no more, but the company of peers can influence his decision making by introducing additional short-term considerations.

“What are you, chicken?”

“Do you want to live forever?”

Impressing others, avoiding ridicule, and not wanting to be thought badly of are not considerations to a man acting in isolation but among peers is another matter. The ability to pound his chest or avoid ridicule is a short-term consideration that decays quickly but can incentivize behavior with long-term consequences.

Whether those consequences are good or bad depends on the situation but the point remains that his time preference is unchanged. The accrual of long-term benefit or cost did not tip his decision-making; the short-term incentives of peers did.

Female Promiscuity

Promiscuity seems to have been condemned in women more than men for pretty much all of human history. Speculation as to why has lit up many a women's studies essay but I will focus on two – pair-bonding and the raising of children.

A woman who cannot bond with her husband is less likely to be happy and more likely to be unfaithful, leading to divorce and other decisions destructive to herself and those around her. Children raised in a healthy family are better behaved, more successful, and more supportive of their parents as they age.

Both of these arguments make sense in the abstract but how compelling are they to a lass chock full o' eggs who wants to have fun and has the body to do it? Not only are these considerations far in the future they are difficult to relate to and thus difficult to valuate.

The scorn of peers, a lowered position in society, and parental disapproval formed appreciable short-term considerations that entered a girl's calculations. In addition to that the existence and enforcement of social alternatives such as clubs, dances, and early marriage addressed and circumvented many of the desires and pressures.

Each of these social pressures (scorn, lowered position, parental disapproval) need not be rooted in the long-term judgment of the person exerting it; they can have their own short-term valuations. Each person may shame the slut simply because she believes others expect her to. Slut-shaming becomes the safe social position and reinforces behavioral norms that the participants may not privately hold.

Also, promiscuity is not a sudden occurrence but occurs a ways down a progression of behaviors. Disapproval of those behaviors and the provision of alternatives tended to suppress promiscuity in general if not in every particular.

Dieting

For many of us sticking to a healthy diet is not trivial. The promise of a fit body someday is far less shiny than the candy bar now. Giving lip service to the abstract concept of health is cheaper than actually implementing it every single bite.

Combine poor eating with the censure and abuse of peers and the short-term decision making can change. Eating well to avoid ridicule is a short-term strategy but it leads to good health just the same – so long as he isn't a closet junk food junkie.

Religion

Religion may be considered the top level example of cultural pressure that aligns short-term decision making with long-term interests. Religion provides a conceptual framework with proscribed behaviors and the expectation of social reinforcement (at least inside the religion).

Heaven, hell, and karma are all long-term ideas but the social structures built around them provide rapid social reinforcement of behavior patterns. The long-term thinking is in the rules, not the enforcers.

Marshmallows

You may have read of the “marshmallow test” in connection with low and high time preference.

In short, experimentors left children alone with marshmallows & the promise that, if they didn't eat it before the experimentor returned, they would get more treats. The idea was to sort between the children who were willing to wait for big rewards in the future from those who took their sugar hits up front – low and high time preference, respectively. The kids who waited were more likely to become wealthy than the kids who did not.

Here's an interesting article addressing an alternate explanation. In short, the children were likely to follow the wealth path of their parents, and their response to marshmallow opportunities were related to the life expectations they had learned at home.

Children of wealthier parents grew up in an environment where promises were more likely to be kept. Being told they would have more marshmallows if they waited was a statement they were more likely to believe.

Children of poor parents grew up in an environment where financial buffers were thin, promises were not always kept, and a bird in the hand was worth two in the bush.

Just something to think about as you encounter these concepts.