Present Bias 😪
🧠 Psych - 59 / 100
Hey,
Today, We will be talking about the Present Bias 😪.
What is it?
You may prefer to settle for a smaller reward given to you right now rather wait for a bigger reward which will be given to you in future.
Example -
A present-biased person might prefer to receive ten dollars today over receiving fifteen dollars tomorrow, but wouldn’t mind waiting an extra day if the choice were for the same amounts one year from today versus one year and one day from today.
Where does it occur?
In general decision making activities where you prefer making choices that feel good in the moment while discounting the future implications.
Why do I need to know?
Things like overspending or anticipating a future windfall may create barriers to current saving and hamper long-term investment success.
It is said to start saving at young age but most of us reply with the phase, “Yeah, I will do it later.” Eventually, that lack of long-term planning and saving can have a significant impact on your readiness for retirement. [2]
Takeaways:-
Everything aside, Start saving for your future self. Compounding is magic and you will thank yourself later.
Only prefer the present decision when it is really important & urgent.
References & Studies:-
https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/present-bias/
https://www.economicshelp.org/blog/glossary/present-bias/
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