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.