The science of neuroeconomics is about tradeoffs. Our ancestors spent millions of years learning to be impatient. We eat a lot today because we are hardwired to think that food might not be available tomorrow. Our bodies know this as fact: It’s why college students in surveys take $10 today instead of $11 tomorrow.
This is in spite of the fact that, if one measures 365 days, that the time value of $11 tomorrow vs. $10 today is the equivalent of 10% daily growth, which computes to an amazing annualized return. Assuming you could find someone who would make the same offer every day for a year, postponing enjoyment of the funds to Day Two would bring you $12.10, and so forth. Good luck finding someone who will do that.
Please go to your bookseller of choice and find an Hyperion book titled Long Fuse, Big Bang -Achieving Long-Term Success Through Daily Victories. It’s by a psychologist, Eric Haseltine. The book should help you and your practice. It will also get the message across, indirectly, of why Warren Buffett is one of a handful of supremely rational investors. He is able to set aside impatience, and does not require instant gratification.
How much better our world would be if customers did not require exceptional returns every year. Again, impatience is inbred and overcoming it is hard, hard work.
Have a great week and keep helping people. One way you can help is by teaching customers to have patience.
Check out more blog entries from Richard Hoe.