“we irrationally find present costs more salient than future costs”
Present Bias is not always irrational!
it can be rationalized (as in, “find rational cause” not “make up excuse”) as hedging against uncertainty. the future is never certain. our predictions about the future aren’t even probable. if you save your money instead of spending it, you might lose it all to madoff. if you don’t use that giftcard to some restaurant, your tastes might change and it won’t be worth anything.
in fact, Geometric Discouting maximizes average (undiscounted utility) if, every moment in time, there is some probability that you will transition to a state where you won’t ever be able to get more utility. i think of it as the Apocalypse. then the discount is less about preference and more about an uncertain future.
even better, let’s say you know THAT there is some “Apocalypse probability”, but not WHAT it is. put a beta distribution on it, a natural prior on probabilities. then every day, when you wake up (i.e. the Coin Of Fates lands heads), it’s a little more likely that the daily apocalypse is less likely (e.g. think about how unlikely flipping a fair coin 365 times is, you need to be a fool to not lower your estimate of the tails odds). update by bayes, you get laplace’s rule, and Hyperbolically Discounted reward. it’s like the Anthropic Principle.
i had to put in the math there to say that present bias can be rational and logical, and this can be shown formally and precisely. but really, it comes from common sense. just because a behavioral economist tells you that they’ll give you money tomorrow (and you know he’s telling the truth, since unlike psychology, the journals won’t accept deceptive experiments), doesn’t mean you’ll get the money (the world changes, e.g. they forget or err in mailing the check), and it doesn’t mean you’ll want the money (you change, e.g. you win the lottery). shit happens. people change.
having said all that, it’s safe to say that most of present bias is irrational. this is obvious from the frequent feelings of frustration with our present problems and anger against our past self for not solving them. at least, for me.
it’s just i’ve been smelling this Fetish lately for hating heuristics, biases, and intuition. but really, these things work really well much of the time for many tasks. and that’s often the first thing we hear in informed discussions, but i think people get caught up and forget about it (not saying lukeprog did, just making a big deal about one word he used).
(it’s like Lazy Evaluation. haskell is often fast despite, not because of, it. but sometimes, you really didn’t need to do something, and since everything is like a generator, you save big on computation.)
anyway, great post! (i stopped reading it halfway through because of the silliness of reading the internets to procrastinate my chores, and finished after :) i need to keep rereading it and thinking about it until i can figure out a way to remember and implement these things in my own mind.
ps check out “Strotz Meets Allais: Diminishing Impatience and the Certainty Effect”