I find the psychology of investing and human incentives to be very interesting, and while this post isn’t about finance per se, I do think it is related.
I teach evening classes at a community centre every Wednesday. The students pay for 4 classes per month, and I receive a healthy portion of that as my salary.
Today was an unseasonably snowy day here. In fact, we usually only get about 1 or 2 days of snow per year, and that usually happens in January. Certainly not in March, but here we were getting over 15cm throughout the day.
All day I was thinking “class has got to be cancelled,” as I started to think about what to do with my apparently free evening. But as time went on and there was no call from the centre, I got into the mindset of teaching and prepared my lessons.
I even gave myself a reality check: the students get 4 classes no matter what. They paid for them. So even if class were to be cancelled today, I’ll have to hold a make-up lesson on what would otherwise be one of my nights off. “Of course I’m glad to work tonight,” I thought. “It ensures my free time in the future.”
Then at about 4:30 the call came. Class was cancelled.
I had resolved to have class. I prepared for class. I had even proven to myself that it was best to have class. Yet when it was cancelled, I was exuberant, knowing full well that I have paid for it with future time. The instant reward of a night off and not having to drive in this weather far outweighed sacrificing a future evening.
I would love to know more about the science behind the synapses that fired today, but I imagine it might be similar to that at work in someone who buys something on credit knowing full well they will have to pay at some future date, yet races home to open the box.
It reminds me of a study (I’m going from memory here) where people were offered $20 today, or $25 in two weeks. The majority chose to receive the $20 at the time offered rather than getting an amount 25% larger after a mere two weeks.
Ironically, the $20 dollars was paid by cheque. The average time for the participants to cash their $20 cheques?