Hyperbolic discounting and eschatological myopia

The title of this article may sound scary, but hopefully it's not that so.

One of the many discoveries from the field of behavioural economics is the concept of hyperbolic discounting. Hyperbolic discounting occurs when someone chooses a smaller payoff sooner rather than a much larger payoff later, but would reverse that choice if the payoffs were moved further along in time.

For example, if I present you with a choice of either (a) getting $10 today or (b) getting $15 next week, you may choose (a). But if I reframe that choice to (a′) getting $10 in 52 weeks time or (b′) getting $15 in 53 weeks' time, you may choose (b′), even though the choice is exactly the same: whether to wait a week for an extra $5.

This means that we discount distant outcomes much more than we should---we think much less about consequences which occur far out into the future, especially when compared with the costs we may have to bear right now.

This phenomenon, which is very common among everyone, appears in many forms---procrastination, gambling and other addictions, inadequate saving for retirement are just a few.

However, it also explains why we have so much trouble in trusting God's promises, many of which will only be seen fully at the end of the world. It's a case of eschatological myopia: we worry so much about the present that we don't pay enough attention to eternity. In the end, hyperbolic discounting is one of many symptoms of our sinful nature.

At least it's useful to know what you are up against.

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