> Finally, most people who cite these experiments simply assume that it’s better to take a bigger pay-off later than a smaller pay-off now. But is that always true?<p>I've always thought that this was the key element of the research: that delaying gratification indicates your time-value of gratification is higher, that your "discounting rate" for future gratification is low.
<a href="http://en.wikipedia.org/wiki/Time-value_of_money" rel="nofollow">http://en.wikipedia.org/wiki/Time-value_of_money</a><p>It happens that basically every observed behavior which is common and financially detrimental for low-income individuals and uncommon for high-income individuals can be explained by a single intuitive variable in the human mind: the discounting rate of future gratification. For example, engaging in rent-to-own is more expensive in total than saving up over time to buy out-right. But if your personal discounting rate for that future spent money is high, the extra money is less valuable to you than the current gratification of purchase, and your choice is the rational one.<p>This expands beyond the obvious example and into basic life choices: school or no? Depends on how you value the future benefits of school, relative to the current difficulties. Work day and night for years on a startup? Likewise.<p>If this basic model is correct, then our decisions are profoundly, fundamentally affected by our personal discounting rate. If that's true, then education can likely focus on this aspect of our perspective to improve children's appreciation for the payoff of work and so on.<p>The comments are interesting, and I'd love to see research expand on the question and address his concerns, but there's a reason this interpretation is repeated: it seems consistent with observed behavior.