“Perhaps no one comprehends the roots of depravity and cruelty better than Philip Zimbardo.” At least, that’s what it says here. They’re referring to the fact that Zimbardo — a psychologist who long ago supervised the notorious Stanford Prison Experiment (chilling video here) — is an expert on the psychology of “evil” behavior. But he’s also an expert on the psychology of time, which we can all agree is much more interesting.
I recently got to hear a talk by Zimbardo, in which among other things he discussed the Stanford Marshmallow Experiment — a rather more adorable experience than the prison experiment, from what I understand. The Marshmallow experiment, originally conducted by Walter Mischel in 1972, was aimed at understanding how we think about different times — the future vs. the present. Children were asked to do some easy tasks, and then were rewarded by being given a marshmallow. But! They were told that the experimenter had to step outside for a few minutes, and if they could just sit tight and not eat their marshmallow until he came back, they could have that and also an additional marshmallow.
It’s a matter of future vs. present rewards. It’s natural (and totally rational) to discount rewards that are promised in the future — after all, the future is hard to predict, and anything can happen. If I offered you a choice between $4 today and $5 ten years from now, you’d be sensible to take the lower amount today — depending on how much you trusted me, of course. But if there is a good reason to trust, and the future isn’t that far off, it makes sense to delay gratification a bit. So what happens when some four-year-olds are put to the test?
As you see, the results were mixed. But most importantly, Mischel followed up years later, looking into how the kids who participated in the study ultimately turned out. There was a remarkable amount of correlation with this simple test and success later in life — kids who were able to hold off at age 4 for the second marshmallow turned out years later to have higher SAT scores and generally seem more competent. The hypothetical explanation is that our personalities are strongly influenced by our attitude toward time — whether we are focused primarily on the past, the present, or the future.
Zimbardo has learned a lot about how people treat different times differently, depending on personality and culture and numerous other factors. Here’s a great animated version of a talk he gave on the subject.
This topic was covered in an equally entertaining/informative fashion on the public radio program RadioLab. Link: http://www.radiolab.org/blogs/radiolab-blog/2009/mar/09/mischels-marshmallows/
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>>Not really. A 25% return over 10 years is more than you currently get with treasuries (yielding less than 2% annually and thus returning about 22% over 10 years).
Nitpick: You are using 1-year rates and you should be using 10-year rates, which actually do return more than $5. Never mind that you should be comparing to the individual’s next best use of the money, which is certainly not to invest them in Treasury Bills.