Why do we value short-term gains more than long-term advantages?

We like to think of ourselves as rational decision makers - dispassionate information processors, coolly and calmly, logically evaluating the costs and benefits of each alternative we encounter. But we're much more primitive than most assume. We may look like a Wall Street type on the outside, but there's still a good deal of Fred Flintstone on the inside. We're hard-wired through the amygdala to react to emotions, not intellect, which is why we can have financial troubles. Just consider this example:
Recently a team of Ivy League economists looked at how consumers reacted to various pitches by banks to take out a loan. A purely rational view would have predicted that interest rates would be the only factor that had an impact - the lower the rate, the more people will borrow money from that bank. But the scientists varied more than just the interest rate; they also tested how persuasive other approaches might be. For instance, some letters offered a chance to win a cell phone in a lottery if the customer came in to inquire about a loan. The researchers found that many non-financial factors had an effect equal to one to five percentage points of interest. An offer of a free cell phone increased demand among men by as much as dropping the interest rate five points. For a $50,000 loan, this meant some men were in essence willing to pay $16,000 more in interest to receive a $100 cell phone. So much for logical decision-making.

Find out more about this book: YOU: Being Beautiful: The Owner's Manual to Inner and Outer Beauty

Buy Book