Hyperbolic Discounting
If you were offered $1 or wait till tomorrow to get $1.50.
What would you do?
Or let’s say you have a pile of work that you need to finish by EOD tomorrow. Would you rather get down to finish that task or hop on YouTube for the next few hours thinking you’ll do the work tomorrow?
While in theory, the better choice is obvious, we do have a tendency to choose smaller, immediate rewards rather than larger, later rewards — and this occurs more when the delay is closer to the present than the future.
This is known as hyperbolic discounting.
Now or a year from now.
In an experiment people were offered an amount X if they took it on that day or get 1.2X in a week's time. Most people chose X over 1.2X.
However, when people were offered an amount of X in a year but if they wait another week after that year they’ll get 1.2X, they mostly chose 1.2X.
TLDR; People prefer immediate rewards in the short-term but better rewards in the long-term.
Healthy Diet
Would you rather have a cookie now? Or have six-pack abs in 1 year?
These are the types of choices that we have to constantly make on a daily basis.
And no, it is not completely your fault. We are wired this way.
Our ancestors didn’t have the choice when it came to things like food.
Historically speaking, it is not that long ago that we didn’t even have the concept of food storage and conservation.
Environment’s Time
Bill Maher had a great quote on his show - “Bangladesh will be underwater in 20 years? I’m underwater (debt) today.”
In this case, people would rather prioritise getting out of debt by working at a petroleum plant than take a pro-environment stance by quitting their job.
People are primed to prioritise what’s closer.
Hence, why when most climate change warnings that are shared do not bother the average person because it is 10-20 years into the future.
So a good way to reframe these messages would be to put into the context of the present.
Framing into the present
This model of hyperbolic discounting can be used in crafting your messages to ensure that people take a favourable action.
Let’s say you are a gym owner and you want to attract people to join your fitness program.
Rather than go with “Shed 10 kgs in 60 days”, try “Burn 1000 calories today, so that you don’t have to burn extra calories tomorrow.”
Now you’ve put into context the near time consequences of not going to the gym which in this case is “doing more work tomorrow”.
Another example could be making people quit smoking - Instead of saying “You’ll likely get lung cancer in 5 years”, we can reframe like “Every cigarette you smoke, makes it that much harder for you to quit.”
What you have done in this case is telling the other person to stop digging his own grave and make it easier for him to grasp the idea of the trouble he is in. So now, he understands that by smoking today, he is likely to increase his addicted days by 1 at least. And by not doing it today, he is moving forward.
Also, it helps to pre-commit to goals. We will deal with this in a different mental model’s essay.
Final example, the software subscription - Monthly vs Annual Plans.
Instead of saying, you’ll save $20 dollars by buying our yearly subscription of $100. We can try reframing it by saying - “You only pay $8.40 this month instead of $10.”
Both are the same, but putting it in the context of the current month will increase the likelihood of an upgrade to the yearly plan.
So that is it!