Professional Documents
Culture Documents
Weber 2017
Weber 2017
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T
he long-term well-being and survival existence of societal challenges, such as
of the human species depend on the current global obesity epidemic, the
forward-looking decisions that weigh popularity of balloon mortgages during
current costs and benefits of different courses the recent US subprime mortgage crisis,
of action against future ones. The fact that, insufficient pension savings in countries
over the course of only a few centuries, we that do not mandate such savings, and
have nearly depleted the earth’s fossil fuel a general unwillingness by individuals,
resources, which took 300 million years to organizations and governments to engage
create, and that large portions of the earth in environmental preservation and damage
TYLER E NIXON / MOMENT / GETTY
are facing water shortages as the result of prevention. In each case, the costs of future-
past and current consumption, suggest that oriented actions are incurred immediately,
we find it problematic to plan wisely for the and the benefits that would compensate for
future. Technological change — from the such immediate sacrifices in consumption,
industrial revolution to the information quality of life or comfort levels come much
revolution — might be advancing faster than later and with considerable uncertainty.
our ability to rationally trade off current Even when decisions have future
opportunities and needs against future ones, outcomes that are much closer in time (for
because our cognitive capabilities of self- example, the purchase of a new refrigerator
control and prefrontal executive functions or light bulbs), consumers heavily discount
advance on a far slower evolutionary scale. Cognitive myopia and present bias future cost savings that come with energy-
‘Rational’ decision-making that calculates Human attention is limited and needs to be efficient technology. Consumers shy away
the best course of action — by examining allocated strategically. Immediate survival from energy-efficient appliances and
all available choice options and their is a priority, so greater attention is given compact fluorescent or light-emitting diode
immediate consequences as well as future to people and objectives that are close in (LED) light bulbs, largely because of their
consequences — is an assumption made in terms of time and social distance than more greater upfront cost, even when future
economics that requires perfect information distant ones. But the resulting cognitive energy savings more than offset that cost.
and no limitations in processing capacity. myopia or shortsightedness makes it hard
‘Homo economicus’, who is capable of for decision makers to fully and accurately Status-quo bias and risk aversion
making such decisions, is an aspiration consider the future benefits of actions that Cognitive myopia focuses attention on
and a convenient fiction that allows for are costly in the short term or do not have actions or regimes that are already in place
the prediction of behaviour. By contrast, immediate benefits2. Studies of decisions that and makes us ignore available, but less
ordinary people (Homo sapiens) often offer a choice between an immediate smaller salient, alternatives that could increase
use automatically activated associations, reward and a later larger reward, conducted individual or public welfare. The result is a
including emotional association, instead of in both lab and field settings, show evidence widely observed status-quo bias4 that has
rational analysis to guide their decisions. of present bias (that is, a premium is put been shown for consequential financial
As a way of dealing with limitations in our on immediate consumption). People often decisions, for example, the purchase of
cognitive processing capacity, we construct choose the immediate reward even if the liability insurance and social decisions such
preferences based on partial information, reward is far less than what they could get as signing up to be an organ donor 5.
assembling different subsets of information in a year’s time. For example, people turn Arriving at a decision can be described
in a different order depending on how a down an interest rate of 100%, an order of as arguing with oneself — it is a process of
question is asked. Several of the barriers to magnitude larger than what they can gain automatically and unconsciously generating
forward-looking decision-making result in interest on the very best investments and arguments for each choice option and
from such selective processing, which instead choose an immediate payout that’s the resulting balance of arguments drives
is both a liability, because of resulting half the size3. the decision6. The choice option that is
inconsistency, and an asset, because it allows Strong discounting of future considered first has a large advantage; since
preferences to be influenced1. consequences, in turn, explains the status-quo arguments are usually considered