Failing to plan for your future is selfish and myopic

Failing to plan for your future is selfish and myopic
12 April 2013

It is widely accepted in behavioral science that humans are prone to have two selves; these two selves are often in conflict with each other. The self that wants immediate gratification and the self that wants to plan for the future.

In his first book, The Theory of Moral Sentiments, published in 1759 the founding father of modern day economics, Adam Smith argued that behavior was determined by the struggle between these 2 selves and called them the ‘passions’ and the ‘impartial spectator.’

The passions include drives such as hunger and emotions; which are brief in duration and consist of positive and negative feelings, and motivational feelings such as pleasure and pain. Smith viewed immediate behavior as under the direct control of the ‘passions,’ but believed that people could override passion-driven behavior by viewing their own behavior from the perspective of an outsider, which he called the ‘impartial spectator.’ The impartial spectator is similar to what Freud later called our conscience.

Modern day psychologists and behavioral economists refer to these two selves as different thinking states, e.g. Daniel Kahneman refers to them as System 1 and System 2 thinking.  System 1 is quick and automatic; System 2 is effortful and deliberate. Other psychologists and behavioral economists refer to the 2 mental attributes of thinking as automatic and controlled, or as Kahneman says; thinking fast and automatic which is often lazy, unintentional, or thinking slow; with deliberation and carefully which is effortful.

Lets think of these two versions of us as the one that acts on impulse and seeks immediate gratification, and the one that delays gratification to protect our long term goals. Our present day self and our future self. Your present self wants something now (the extra dessert, the big mac meal and super sized soda or the Armani jacket), your future self would be better off if you did something different.

Scientists from Harvard and Princeton carried out fMRI scans on people and published the results of their research in the Journal of Cognitive Neuroscience, it transpires that the fMRI scans were able to identify the exact different parts of our brain that light up when we think about our present self and future self. The author’s state: “One of the enduring mysteries of human behavior is that people who can foresee the consequences of shortsighted decisions make them anyway.” The studies were especially relevant to: “shortsighted monetary decisions.”

The authors discovered these two parts of the brain seem to indicate: “we perceive our future self as “someone else”—a distinct entity whose preferences are distinct from or less important than those of our present self,” and therefore: “we will tend to act myopically against our long-term best interests.”

Hence: “shortsighted decision-making occurs in part because people fail to consider their future interests as belonging to the self.” People tend to think of their future selves as someone else!

Here we should turn to biology, in his book The Selfish Gene, Dawkins shows that "Selfish", when applied to genes, doesn't mean "selfish" at all. Our genes are in-fact altruistic; they thrive and reproduce by helping other genes. Our genes are able to evolve because there is no power struggle or conflict between today and tomorrow as that would be a conflict of their self-interest. Dawkins shows our genes act altruistically against their individual immediate interests, the: “actions of genes lead to unselfish actions.”

In their often cited research paper, An Economic Theory of Self Control, Thaler and Shefrin refer to our present self as the ‘Doer’ and the future self as ‘the Planner,’ they indicate in the extreme case that the ‘doer’ does not care at all about the ‘planner,’ in other words our present self is taken a selfish approach to living now and not caring for our future self by carefully considering the consequences of today’s actions of over-spending, over-eating, procrastinating and not exercising – we are not thinking about the impact the bad habits we do today have on our future well-being – we are living selfishly.

That may sound hard but when I think of the selfish behavior I do, or am about to do, it makes me correct course. Who wants to live selfishly, myopically or shortsighted?

Would viewing your self as selfish when overspending today improve your ability to control your urges and think more compassionately about your future self? 

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Author
Head of Behavioral Finance
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