Impatience and addiction

1. Impatience and addiction

2. Elephant in charge Short-term Impulsive Doer Passions Affective/Visceral Hot state

3. Problems with an untrained elephant� Decisions dominated by the short-term, impulsive self tend to reduce future happiness and success due to: Excessive future discounting Finding negative addictions Avoiding positive addictions

4. Problems with excessive future discounting

5. Discounting Being happy in the present (today, this week, this year) is typically worth more to us than the prospect of being happy in the future (tomorrow, next week, next year) Suppose happiness during a time period (day, week, year) can be measured The discount rate is the additional future happiness that can compensate for the loss of one unit of happiness in the present

6. Discounting Example: For Alice, suppose the loss of one unit of present happiness can be compensated by the gain of 1.07 units of future happiness Alice�s discount rate is 0.07 For Bob, suppose the loss of one unit of present happiness can be compensated by the gain of 1.02 units of future happiness Bob�s discount rate is 0.02 Who is more patient, Alice or Bob?

7. Discounting The higher your discount rate, the more important the present is to you (relative to the future) The higher your discount rate, the more impatient you are

9. Excessive future discounting The rate at which we are willing to trade current experience for future experience reflects our rate of future discounting.

10. Future discounting If you were in a mall and wanted to buy something, how much would you be willing to pay for $100 right now?

11. Future discounting in other areas Short-term Impulsive Doer Passions Affective/ Visceral Hot state

12. Future discounting in eating

13. Future discounting in drinking

14. Future discounting in education

15. Future discounting in sex

16. Future discounting in exercise

17. Excessive future discounting Short-term Impulsive Doer Passions Affective/Visceral Hot state

18. Future discounting and success in children �Those 4-year-old children who delayed gratification longer in certain laboratory situations developed into more cognitively and socially competent adolescents, achieving higher scholastic performance and coping better with frustration and stress.� http://www.youtube.com/watch?v=M0yhHKWUa0g

19. Time horizon and wealth building In 1998 about 5,000 people were asked: �In planning your saving and spending, which of the following time periods is most important to you, the next few months, the next year, the next few years, the next 5-10 years, or longer than 10 years?� From the Health and Retirement Study, Author�s data analysisFrom the Health and Retirement Study, Author�s data analysis

20. Wealth growth and time horizon Comparisons of wealth accumulation of different people with the same starting wealth: Note: comparison group are HRS members who were not asked the question in the 1998 survey. Linear regression on wealth.Note: comparison group are HRS members who were not asked the question in the 1998 survey. Linear regression on wealth.

21. Other research finds:Planning ahead ? wealth �Why do similar households end up with very different levels of wealth?� �We use new and unique survey data to assess these differences and to measure each household�s �propensity to plan.� We show that those with a higher such propensity spend more time developing financial plans, and that this shift in planning is associated with increased wealth.�

22. Problems with an untrained elephant� Decisions dominated by the short-term, impulsive self tend to reduce future happiness and success due to: Excessive future discounting Finding negative addictions Avoiding positive addictions

23. Finding negative addictions Short-term Impulsive Doer Passions Affective/Visceral Hot state

24. Variety enhances experiential utility Variety is important because of �diminishing marginal utility:� more and more of the same stuff leads to boredom. So, we switch to something else.

25. But, unlimited experimentation is risky due to negative addiction �traps� The rider �knows� that meth generates a high (and has terrible future consequences). Although the elephant doesn�t care about the future, it hasn�t experienced the effects, so it isn�t tempted.

26. Negative addictions as a path dependent preference

27. Anhedonia The inability to experience pleasure from normally pleasurable life events Can result from the use of artificial dopamine stimulants like cocaine or amphetamines (negative addictions)

28. The negative addiction trap How does a negative addiction affect Future Choices? Future Satisfaction? The Future Brain? Work in groups of 2-5 people. After the video, discuss and have one person write down your thoughts

29. �Rationality� inside a negative addiction �[previous research shows] people who discount the future heavily are more likely to become addicted.

30. �Rationality� inside a negative addiction We could work through the mathematics of the model from Nobel prize winning economist Gary Becker� but, instead, let�s try�

31. Translating Gary Becker using Jeff Spicoli Look, it�s not like he is giving up a future career as a brain surgeon or something. Even if he could have done that at one point in his life, that is no longer an option due to the effects of addiction. So he isn�t giving up that much more by continuing to diminish his (already limited) future prospects.

32. Rationality inside a negative addiction Picture from faces of methPicture from faces of meth

33. Path dependent preference: negative addiction A low concern for the future addictive consumption (diminishes future options) Diminished future options means additional loss from further consumption is less

34. Applying concepts to practice An Interview with Kathleen T. Brady, M.D., Ph.D., Professor and Director of the Clinical Neuroscience Division at the Medical University of South Carolina. Anhedonia and early intervention

35. Negative addictions and the paradox of consumption variety Unlimited consumption experimenting risks negative addiction. Negative addiction leads to exclusive focus on the addictive item.

36. Problems with an untrained elephant� Decisions dominated by the short-term, impulsive self, tend to reduce future happiness and success due to: Excessive future discounting Finding negative addictions Avoiding positive addictions

37. A negative addiction is initially pleasurable gradually requires more consumption to reach the same level of satisfaction lowers satisfaction from other items (Anhedonia) creates future harm

38. Discussion question Can you think of things that are Good for you (or are at least not harmful) May not be initially enjoyable Gradually become more enjoyable with continued experience?

39. Potential positive addictions Education in a particular field of study Exercise Religious practice Reading complex novels or non-fiction Watching opera, ballet, football, equestrian, basketball Playing a musical instrument or a sport

40. Consumption capital and positive addictions Experience leads to greater understanding, appreciation, and enjoyment. This accumulated experience resulting in greater enjoyment is called �consumption capital�

41. Path dependent preference: positive addictions Low current utility but with future benefits Practice increases enjoyment of future consumption Increased current utility leads to more practice

42. Planned and unplanned focus Unintentional focus Ignoring long-term outcomes Negative addictions Increasing focus on addictive substance Decreasing opportunities

43. If you feed it, it will grow Early decisions are like yeast (a.k.a. �path dependent preferences�) An early decision for short-term, visceral choice can reduce future options and lead to preference for more short-term, visceral choices An early decision for long-term goal achievement can lead to more opportunities for goal achievement

44. Overcoming misleading experience In the case of both negative and positive addictions, initial experience is misleading. Negative addictions provide initial positive feedback Positive addictions provide initial negative feedback

45. Overcoming misleading experience Because of this false experience feedback, ideal outcomes require externally influencing the choice environment.