Occasionally the financial world throws up headlines that just don’t make sense. I mean they don’t make sense to the likes of us.
“Government to Appeal Being Offered €13 Billion” is one but smarter people in better suits know the story so .. em I suppose I’ll just leave it to them. Another one is “Banks to bring in negative interest rates”. Negative interest rates. COULDJAMAGINE? It’s like being up a tree and being hit with an apple that fell up from the ground. This kind of stuff doesn’t do much for my short-termist tendencies. If up is down and down is up, what’s the point in planning anything?
Sometimes in this column, in order to cover up for deficiencies in other areas, I like drop a bit of science in — The Stanford Marshmallow test to be precise. In a scientific experiment, to test delayed gratification, a group of children were presented with a marshmallow. They were told that if they managed to resist the temptation to eat it, they would get another marshmallow in a few minute’s time.
Later in life they found that the children who waited for the second marshmallow seemed to have got on better in life, and had a lower body mass index. Although I don’t know how that is given that they were getting twice as many marshmallows.
There were probably other factors as well. Maybe their parents at the time asked them how they got on and on hearing they stole a marshmallow, said to themselves “I can’t take you anywhere” and generally stopped taking them to career-improving events.
I would have failed that test. I just wouldn’t have trusted that the second marshmallow would have been available. I didn’t grow up in a chaotic environment, I just believed in the maxim that a marshmallow in the hand was worth two at the end of an experiment.
As one of four brothers at dinner time, the meat and some of the veg was rationed out reasonably fairly but the potatoes were in a bowl in the middle. If you didn’t grab enough or more than enough they wouldn’t be there. It’s basic spud-enomics.
Like lots of things to do with science, the marshmallow test has been grossly simplified by the likes of me over time but regular readers will know that if it’s peer-reviewed scientific discourse you’re looking for, I’m not your man.
Marshmallows are not investment products, although they should be, but you can understand why people have difficulty delaying gratification if they don’t know if the gratification will be along later. In an uncertain economy, is there any point in investing in growth if it’s doubtful it’s going to happen? Or maybe it’s that people’s attention span is just shorter now anyway. If the world as a whole becomes more short-termist then TOO LONG, DIDN’T READ becomes a mantra.
Short and long termism is a concept I still struggle with. Chiefly it’s to do with what work should I do at any particular point in time. Scratch the surface of many comedians, writers or any other person who uses creative as a noun and quite often you will find underneath someone who’s convinced they are this close to creating a masterpiece that will redefine their chosen art-form, if only they had a bit of headspace.
But to do that requires investment of time – and when you invest time you also invest the money you could have been earning during that time.
I guess that’s about confidence. It’s hard to know which is the work worth pursuing – which is the worthwhile investment. So if someone promises you a quicker return on effort, it’s hard to turn them down and delay gratification.
Anyway back to procrastinating about writing my novel. If negative interest rates are the new normal, I’ll probably be paying you to read it anyway.
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