Tag Archives: retirement

The Forbidden Marshmallows

14 Feb

                     

                           During the past holiday season my wife Diane prepared an advent calendar for our four grandchildren. This calendar is shaped like a house with 24 doors. Beginning in December the grandchildren open one door every day until Christmas. Each door opens a tiny compartment that contains a small gift for each grandchild. This whole process drove our four-year-old grandson crazy. He kept sneaking into the room where Diane was working and by his own admission, later opened several doors, when no one was looking. This charming yet frightening  preschool impulsiveness reflects the nearly universal human preference for immediate gratification.  

             The inability to delay gratification is seen clearly in how much more we spend than save. Historically American have been notoriously poor savers.   On the average we save only about  6% of our  annual incomes compared to 13% for the  Germans, 14% for the Swiss,  and  a whopping 30% for the Chinese.

Besides our need for instant gratification, some of the other  common reasons for our lack of savings are (1) our insistence  on  maintaining  our current standard of living, (2) our wish to keep with our peers,  (3)  our inability to manage  credit card debt,  and (4) our talent for avoiding the truth.  After years of keeping my head in the sand, Diane recently shamed me in to seeing a retirement planner. It was like getting a financial root canal. 

Wells Fargo Bank’ s Annual 2011 Retirement Survey found  that  on the  average, Americans have only managed to  put away  only about  7%  of  their desired retirement savings.  The median retirement savings is only  $25,000 as opposed  to a goal of $350,000.  Experts estimate that less than 5% of Americans will achieve anything approximating financial security in their retirement and today almost two thirds of American workers put nothing aside for  the future.

In a recent Newsweek  article, science writers Sharon Begley  and Jean Chatzky say that our instant-access culture, in which we can have almost any product delivered to our door overnight is doing little to train the next generation in how to delay gratification.  Northeastern University economist William Dickens believes that our preference for current consumption over future consumption may even be hard-wired into our brains.

           In a  study from the  1960s, psychologist Walter Mischel  from   Stanford University   offered to give 4 year-olds subjects one  marshmallow now, but two marshmallows later,  if they would only wait for while to  get it. Some  of the children  ate the marshmallow  immediately, and the majority  lasted less than 3 minutes. Some children, however, were able to wait much longer to get their marshmallows.   Fourteen years later,  Mischel found that children  who could wait fifteen minutes for their marshmallows had  S.A.T. scores that were two hundred and ten points higher on the average,   than kids who could wait only thirty seconds. The delayers were less likely to be obese, addicted to drugs, or divorced. I also wonder what their  401k balances were.

             Thirty-five years after the  marshmallow experiment, researcher  B. J. Casey from  Cornell Medical College managed to tracked down  59 of the original subjects and  conducted brain imaging analyses,  finding  that in  subjects, able  to delay gratification, the prefrontal cortex, which is associated with reasoning  was much more active. Also active was an area of the brain  which   control impulses. Subjects less able to delay gratification had less activity in both of these regions, but more activity within the limbic system, an area associated with pleasure and fear.

Other  areas of the brain that are involved in the ability  to delay gratifications  are those that deal with estimating consequences, processing rewards, controlling memory, and activating motivation. Neuroscientists found that activity in   all of these areas were  correlated with people’s attitudes toward spending and  saving.  For spend-it-now folks, activity in these regions fell dramatically when future gratification was proposed. In people who could delay gratification,  activity was the same whether they were thinking of  current  or  future gratification.

The   prefrontal cortex, however, may be the key player.   When it is temporarily  “deactivated” by the use  of strong magnets, people becomes more impulsive, however, when it is artificially stimulated, people actually become more willing to save for the future.  

               In another follow-up study  researchers   also indentified   a  substantial number  of original subjects  who failed the marshmallow task as four-year-olds,  but ended up becoming responsible adults who were   able  to routinely delay gratification. Mischel is especially interested in learning more about these subjects, since, at sometime during their lives, they seem to have found the secret to learning self-control.

            Behavioral psychologist  B.F. Skinner believed that humans could be trained to delay gratification, by the use of contingent reinforcers. In his 1948 science fiction novel Waldon Two,  Skinner provided his unique vision of a futuristic society,  grounded in the tenets of radical behaviorism. In his world of Waldon Two young children spend the day with a “forbidden lollipop” hanging around their necks, in order  to teach them how to delay gratification. Only after a specified period of time elapsed, were the children allowed to eat  the lollipop, which had been dipped in powdered sugar, in order to detect licking transgressions.

More recently psychologist Warren Bickel of Virginia Tech  conducted  memory improvement training and  found  that as subject’s memory improved,  they  also developed more appreciation for the future and thus greater ability to postpone  gratification.

   Economist Antony Davies of Duquesne University believes one reason younger workers do not save, is that they simply cannot that they cannot imagine themselves as getting old. I can certainly identify with that.  In his classic book Future Shock  Alvin Toffler discussed how our age  effects our subjective perception  of time.  For example asking a three-year-old to wait an hour for a cookie, is roughly equivalent  to asking a thirty-year-old to wait ten hours for a cup of coffee. Thus asking a twenty-year-old to put aside money for retirement in forty-eight years is like asking him to give it to a complete stranger.  

Impulsive shopping, of course, applies to buying things for other people, as well as yourself. As “Black Friday” kicks off the holiday shopping season an estimated 212 million Americans will spend over 45 billion dollars today alone. This may be just the year to try to control some of those built-in shopping impulses. Crank up your prefrontal lobes, don’t buy that marshmallow shooter,  don’t eat the marshmallows, and leave that lollipop alone.

Based on a column that appeared  in the News Tribune of Southern Indiana.

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