Hi, I trust you and yours are well.
Thank you always for reading my books and free bi-monthly broadcasts, and using my tools and strategies for winning in a VUCA world with freedom, power and peace of mind.*
*You probably know by now: VUCA stands for Volatility, Uncertainty, Complexity and Ambiguity. Perhaps you also know the Chinese curse: May you live in interesting times 😉
Tradeoff of current versus future
Would you rather have five dollars now, or ten dollars in a month? Both options have an upside and a downside. Those who wait will be rewarded with double the amount. But who knows what will happen in a month? What if a war (or at least a pandemic, or a market crash) breaks out and the money will be gone anyway? Isn’t it smarter to invest in an ice cream now while the sun is still shining?
It’s a well-known dilemma, usually known as the short-term vs. long-term dilemma. There are three other key dilemmas, or right-versus-right decisions, that you face and must resolve on a weekly basis as you lead your life and/or your company: Individual vs. group, truth vs. loyalty, and justice vs. mercy; but that’s another story that I cover in The Rabbi and the CEO.
By the way, the word “decision” comes from the Latin decidere, which literally means to kill off one option. So, when you choose, the option you decide against dies.
Anyway, U.S. researchers confronted study participants with exactly this dilemma. They wanted to find out how savers make decisions.
Of course, buying shares or building a retirement fund is much more complex than the researchers’ experiment. But there is a similar idea behind both: The saver is doing without something today in order to have more of that same thing in the future.
My wife and I (and I don’t think we are all that different from other couples in this) face these dilemmas all the time: Should we buy that Porsche Electric now or save the money for buying a rental property and more income in the future?
(Surprise: The one who wants the Porsche now is not me.)
Speed of Decision Made
Previous studies assumed that savers would think long and hard about their decisions and thoroughly weigh the advantages and disadvantages, while “spend now” people were quicker and more impulsive.
This study contradicted that assumption, as the research team from Duke University reported in the journal Nature Human Behaviour. Savers made their decisions much faster than those who immediately took the smaller sum. Usually within a few seconds.
Savers Are Focused and Decisive
“Patient people no longer do analytical work,” says Scott Huettel, co-author of the study. “They actually make these decisions fastest.” Savers are also not necessarily more resistant to seduction by temptations. They can cave to desires just as easily as the spenders. They are merely more focused.
For the study, the researchers observed a total of 217 people making a decision and analyzed with cameras exactly how their eyes moved. The promised sum varied, as did the waiting time. With the help of the cameras, the researchers were able to determine at any moment which information appeared to be most important for each test subject.
It turned out that the savers’ gaze almost exclusively wandered back and forth between the individual sums. Other information, such as when they would actually receive the money, was virtually ignored.
These findings matter. If saving is at one end of a continuum, the other extreme is not spending, but addiction. And if these findings help us manage addictions like
shop-aholism, that is probably a good thing.
What Do You Say? Think about a short-term vs. long-term dilemma you are facing. Are you deciding whether to spend on a vacation now, or to forego the vacation so you can buy that home in the future? Are you a saver or a spender? And: Did you come up with the decision slowly or quickly? Observe yourself. And post the dilemma below. I look forward to reading your comments and feedback.
For additional details or questions on effective and faster decision making for you or your team, or to schedule a complimentary coaching session on how to lead a more balanced, happier and fulfilled life, with more impact, freedom and control, email me at email@example.com