WATCH: Temporal Discounting

Today, I’d like to talk about the concept of ‘Temporal Discounting’ and how it can interfere with our thinking or with our motivation. So, if I were to offer you ten pounds now, this week, or say wait until next week and I’ll give you twelve pounds. What would you do? Most people will actually say “I’ll take the ten pounds now. Who knows what’s going to happen or where I’ll be next week. I might not even see you.” And likewise, if I were to say well, “I’ll give you ten pounds in three weeks’ time or if you wait, I’ll give you twelve pounds in four weeks’ time. Then again, you’ll probably just say look “I’ll take the ten pounds in three weeks’ time”.

However, if we were to say “If I were to give you an offer of ten pounds in 52 weeks’ time, in a year’s time, or wait another week and you get 12 pounds. You’ll probably go like “What’s the difference, just let me know in 53 three weeks’ time and I’ll take the twelve pounds reward, but it’s no big deal.”

Temporal Discounting

A reward in the future is actually, less valuable than a reward right now. So, if you were thinking as well, Monday or Tuesday let’s say you say, all the things that you need to do in the weekend. You need to do some repairs, you need to plan some menus for the rest of the week and you need to be able to you know make the house look a lot better because there are things that you know that are outstanding.

But you also know that you like to relax and there’ll be a temptation to do that. But you’ll say “… I’ll do it. I’ll be able to get have the motivation to do all those things”. However, come Friday you’re looking forward to the weekend and come Saturday you’ll probably go like, “You know what I deserve a break”. There’s an opportunity to relax, it’s your day off and then you actually take that opportunity to relax because it’s right there in front of you. Rather than doing all those chores and working yourself up to do all those things that you know you ought to do. You take the immediate reward. Because the resistance of that is much easier when it’s in the distance and when it’s right there in front of you just take it because it’s right there in front of you. So, I’d like you to consider how this can affect the motivation of your people as well.

Because, if you offer them lots of rewards in the future. It might not be as motivating as being able to have some more incremental rewards in the shorter term. And, think about it as well at that if there’s a danger like, perhaps, that you need to do new contracts in a year’s time. That how easily it could be, “That’s far away we don’t really need to think about it much”.

We’re actually you’re better off thinking about it now, in being concerned about it now and taking action on it now. Rather than saying “Well, it’s a discounting because it’s in the future”.

So, think about that with your team. Thank you!

With best regards,

David Klaasen

Talent4Performance help business leaders clarify complexity. We inspire people and drive continuous performance improvement, so they can convert thinking into action and results.

©David Klaasen – 2023