NEW YORK – Would you rather have $5 today or $10 in a month? Eat a donut or an apple? Save for retirement or buy something new? When making these choices, you're weighing two kinds of options: a short-term reward that is worse for your longer-term outcomes, or a less immediately satisfying reward that's better for your future. This decision-making framework, known as intertemporal choice, often comes down to a singular characteristic of human evolution: patience.
In new research recently published by the Proceedings of the National Academic of Sciences, decision-making experts from Columbia Business School, Temple University, and Carnegie Melon University shows that how information is presented to people can greatly affect whether they chose immediate gratification and less value, or greater value at a later time.
Subject participants chose between receiving smaller amounts of money delivered sooner ($44.80 today) or larger amounts of money delivered later ($51.50 in four weeks). The researchers, including Eric Johnson, the Norman Eig Professor of Business at Columbia Business School, tracked which pieces of information the participants considered as they weighed their options. For example, people might look at one amount of money, then the time it would be delivered; then they would examine the other amount of money, then the time it would be delivered.
The researchers discovered that there were essentially two different ways that participants chose to view the information. Roughly 50 percent first looked at all of the information about one option (meaning they looked at the dollar amount and how long it would take to receive that amount), and then all of the information about another option. The other half of participants compared features between the options (meaning they compared the two different amounts of money against each other, and then compared the different amounts of time it would take to receive either dollar amount).
The researchers discovered that way people compared the information significantly affected their decision: When participants evaluated a complete story (i.e. the amount of money and the time it would take to obtain that money) against another complete story, they almost always displayed greater patience by choosing the option that would yield the greatest payout, even if that meant waiting much longer to receive it. Conversely, participants who compared parts of the stories’ to each other (i.e. the different amounts of money) were far more likely to choice the short-term reward.
Determined to prove more than a correlational finding, the researchers added a one-second delay in accessing information when hovering over a box on the screen, so that participants were subtly encouraged to compare options via features (dollar vs. dollar, then time vs. time) or as entire stories (dollar and time vs. dollar and time).
Professor Johnson explained the significance and effect of this change: "This change was so subtle that most participants didn’t even realize anything was different from the first to second experiment. Yet this minute augmentation changed almost instantly how people made their choice. More importantly, it changed what they chose: If they were encouraged to compare the complete stories to one another, participants instantly became more patient."
Professor Chrystal Reek of Temple University and co-author of the study summarized the research’s findings by saying: "Everyone encounters these intertemporal choices, often with decisions that are very important to us. Our research shows that by subtly changing how people search for information during these choices, we can encourage patience."
"I’m a pretty impatient person. This research has helped me reframe the self-control decisions I struggle with as comparisons between salient options," said Daniel Wall, a Ph.D. student in social and decision sciences at Carnegie Mellon.
To learn more about the cutting-edge research being conducted by Columbia Business School researchers, visit www.gsb.columbia.edu.
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