April 01, 2010
With More Information People Make Worse Choices?

The better the trade-offs of smaller short term versus bigger long term gain were explained the more the experimental subjects preferred the short term immediate but smaller rewards.

When faced with a choice that could yield either short-term satisfaction or longer-term benefits, people with complete information about the options generally go for the quick reward, according to new research from University of Texas at Austin psychologists.

The findings, available online in the journal Judgment and Decision Making, could help better explain the decisions people make on everything from eating right and exercising to spending more on environmentally friendly products.

"You'd think that with more information about your options, a person would make a better decision. Our study suggests the opposite," says Associate Professor Bradley Love, who conducted the research with graduate student Ross Otto. "To fully appreciate a long-term option, you have to choose it repeatedly and begin to feel the benefits."

Humans apply too large a discount rate to the future. We are in an environment where a smaller discount rate would work better for us. But we evolved in environments where higher discount rates were adaptive. What I'd like to know: which genetic variants influence discount rates humans use when making various types of decisions. When offspring genetic engineering becomes possible will people decide to give their children stronger preferences for deferred consumption?

With better understanding of the choices the experimental subjects went for the immediate reward.

As part of the study, 78 subjects were repeatedly given two options through a computer program that allowed them to accumulate points. For each choice, one option offered the subject more points. But choosing the other option could lead to more points further along in the experiment.

A small cash bonus was tied to the subjects' performance, providing an incentive to rack up more points during the 250 trial questions.

However, subjects who were given full and accurate information about what they would have to give up in the short term to rack up points in the long term, chose the quick payoff more than twice as often as those who were given false information or no information about the rewards they would be giving up.

Share |      Randall Parker, 2010 April 01 12:10 AM  Brain Economics


Comments
dave.s. said at April 1, 2010 3:04 AM:

Thinking about the conditions in which we evolved - another evobio just so story! - my guess is that the short term was all our ancestors should have seen. Saving up just meant you had stuff the neighborhood bully could take from you, planning for five years hence meant that someone else got it after you died of lockjaw, or malaria, or whooping cough. Only more recently has long-range planning actually paid off for any large fraction of the breeding population.

bbartlog said at April 1, 2010 8:30 AM:

We are in an environment where a smaller discount rate would work better for us.

I don't think you appreciate that the discount rate is considered to be genuinely subjective. You can't make the objective claim that that the smaller rate 'would work better for us', much as you personally might prefer a society where people had a smaller discount rate (lower time preference).

Lono said at April 1, 2010 8:58 AM:

Randall,

I would expect that this is IQ dependant as well.

Individuals with higher IQ's are naturally going to more carefully weigh the importance of a larger set of information than those with lower IQ's.

Frankly I have impulse control issues - because I get bored so quickly - but I would have easily seen and acted on the benefit of delayed gratification given complete information in a study such as this. I know from experience many of my co-workers and friends of more average intellegence - no matter how well educated - would have often gone for the short-term satisfaction despite the trade off costs - especially when presented with more accurate information.

Like you said - this is logically an environmental adaptation that has become somewhat less advantageous in modern industrialized civilizations - however it is also the dominant phenotype so I cannot see the majority of citizens seeing the long term benefit of making their own offspring so different in this regard.

I do think it will happen as a natural side effect anyways - when people are able to choose for higher intelligence in their offspring - as many average people believe high IQ's are a magic bullet for social and financial success.

Ahh... good ol' UT's psychology experiments - paying for beer for undergrad's since 1989!

:-)

th said at April 1, 2010 3:46 PM:

"The findings, available online in the journal Judgment and Decision Making, could help better explain the decisions people make on everything from eating right and exercising to spending more on environmentally friendly products."

boy, these are some really difficult issues, right up there with should my nissan leaf trailer have whitewalls or greenwalls?

Brett Bellmore said at April 1, 2010 3:51 PM:

Of course, there's the question: They may have been given "complete and accurate" information, but how much reason did they have to trust it? Obviously, people are going to use a higher discount rate than somebody who might be lying to them about the applicable discount rate would tell them is rational. Depending on how likely they consider their being lied to.

th said at April 1, 2010 4:45 PM:

Don't expect this to get any better. The tendency to reward stupidity is govt sponsored group think. can't buy a house? we'll pay for it, car too expensive? we'll pay for it, college too expensive? we'll pay for it, going bankrupt? its that banks fault we'll pay for it, and this passes for brilliant political strategy.

random said at April 2, 2010 8:54 AM:

"Only more recently has long-range planning actually paid off for any large fraction of the breeding population."

Does long-range planning really pay off (genetically)? It seems more likely the people who don't think long-range are having more children than those who plan for the future. Child mortality in developed countries is low even among the poor, so the highest selection bias favors those who simply have more children.

dick fuel said at April 2, 2010 1:45 PM:

you know you are alive now, you don't necessarily know you'll be alive then.

Kralizec said at April 2, 2010 6:25 PM:

The structure of many long-range plans includes numerous short-term plans along the way. One must frequently choose now to act for the sake of the long-term goal. Even the ideas of a long-term goal and a long-range plan usually need to be maintained all along the way. That is, one must frequently choose now to think about one's long-term goal, review the series of steps to one's achievement of it, consider changes in circumstances, and revise one's plan. So one must choose whether to act now or think now for the sake of the long-range goal. But one usually has more than one long-range goal, so that one must choose the one about which to act or think now, and sometimes even choose now to think about the problem of reconciling the demands of competing long-range goals, rather than act for the sake of any of them. But one must often choose to act now rather than think now.

The problem is recondite. When men undertake to genetically adjust their offspring or their subject populace, I wonder whether they'll choose to think long and hard or to act precipitately. Some goals are not short-term or long-term in themselves, but become so as a result of this choice to act now or think now.

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