Ayelet Fishbach's research has new insights about the value of patience.
- November 22, 2013
- CBR - Behavioral Science
Ayelet Fishbach's research has new insights about the value of patience.
People hate to wait. We don't like being placed on hold, or getting stuck in traffic, or standing in line at the bank or the supermarket. In the information age, when the speed at which data and information travel is measured in microseconds, our impatience is reaching unprecedented levels. According to engineers at Google, 40 percent of users abandon a website that takes more than three seconds to load. Even a quarter of a second of delay sends internet users to competing websites.
But for people who believe patience is a virtue and a positive attribute, suffering through a wait has an upside. According to Chicago Booth's Ayelet Fishbach, Jeffrey Breakenridge Keller Professor of Behavioral Science and Marketing, waiting may actually make people more patient. Fishbach is exploring why that is, and the reasoning behind it may help companies and consumers make better, more patient decisions.
Researchers have been studying patience for decades, and they commonly approach it by offering people the choice between a smaller reward soon or a larger reward later. Given the choice between $10 now or $15 a month from now, people often choose the smaller but immediate payoff, even though it makes them less well-off financially. Behavioral economists refer to this as intertemporal discounting—people tend to value things more in the present and discount their worth in the future. In one particularly famous study, published by psychologist Walter Mischel at Stanford in the early 1970s, researchers offered four-year-olds a marshmallow now, or two marshmallows if they waited for approximately 15 minutes. In that study, most children tried but failed to wait for two treats. The marshmallow study showed that kids who spent more time waiting had higher test scores and healthier body mass–index scores years later.
Researchers have also been looking at what can be done to increase patience. Richard H. Thaler, Ralph and Dorothy Keller Distinguished Service Professor of Behavioral Science and Economics, among others, suggests that one thing that makes people particularly impatient is having an immediate wait. A wait that is farther off into the future is easier to bear, even if it is just as long. Psychologists call this the common difference effect—a person will probably choose to have one cookie right now rather than two in a week, but when offered one cookie in five weeks' time or two cookies in six weeks' time, he becomes much more patient. Thaler's research from 1981 indicates that people will also wait longer for larger rewards and demonstrates that increasing the value of a reward increases a person's willingness to wait patiently for a larger reward. Intuitively, that makes sense: more people will wait a month to get the latest version of the iPhone than will wait for the newest, just-released flash drive because there's more to be gained from waiting.
While Thaler continues to study the dynamics behind patience, Fishbach's research contains new thinking about how to increase it. She suggests that making people wait to make a decision can improve their patience because the process of waiting can make the reward for waiting seem more valuable.
Fishbach and Xianchi Dai, a former Booth postdoctoral student now at the Chinese University of Hong Kong, tested this hypothesis in a series of studies conducted in the United States, mainland China, and Hong Kong. In one study, the researchers invited participants to sign up to join a subject pool for online studies. In exchange for signing up, all participants were invited to enter one of two lotteries: one would pay out a $50 prize sooner, the other would pay out a $55 prize later. The researchers wanted to know whether participants would opt to try their luck for the larger but delayed prize if they were made to wait before making their choice.
The participants were divided into three groups, and what differed was the amount of time people in each group had to wait before potentially getting their prize. Researchers told the first group that they could win $50 in three days or $55 in 23 days. They told the second group they could win $50 in 30 days or $55 in 50 days. The third group, like the second, was told they could win $50 in 30 days or $55 in 50 days, but they had to wait before choosing a potential reward. Researchers contacted members of the third group 27 days later to ask for a decision, at which point the participants, like those in the first group, had to choose between waiting three days or 23 days to potentially receive a prize.
Fishbach and Dai found that in the first group only 31 percent of participants chose to wait for the larger reward. In the second group, for whom the lotteries were farther off, that number rose to 56 percent. But among people in the third group, who had been waiting several weeks to make their choice, 86 percent chose to wait for the larger reward. Even though they were making the same choice as people in the first group ($50 in three days or $55 in 23 days), the fact that they had been waiting to choose increased their patience.
People reacted similarly even if the reward was something other than money. Fishbach and Dai conducted similar studies using consumer products such as iPod shuffles and boxes of chocolate as rewards. Once again, people who had to wait before making a choice demonstrated more patience. And when asked how much they valued the prizes, people made to wait placed a higher monetary value on the iPods and chocolates than people spared the wait.
To explain this phenomenon, Fishbach employs a two-step logic: when people wait, it makes them place a higher value on what they're waiting for, and that higher value makes them more patient. They see more value in what they are waiting for because of a process psychologists call self-perception—we learn what we want and prefer by assessing our own behavior, much the same way we learn about others by observing how they behave. When we see people camping out to get the latest iPhone, we infer that the campers must find the iPhone valuable and worth waiting for. When we find ourselves waiting in that same line, we make a similar inference about ourselves, particularly when we are uncertain about the value of what we're waiting for. Fishbach theorizes that when people wait, their self-perceptions unconsciously raise the value of the object they're waiting for. And building on Thaler's insights, people become more patient when a larger payoff is involved.
It’s a textbook case of intertemporal discounting: people prefer a smaller amount of money right now to a larger sum that they won’t receive until many years later. Even though people may intend to save, they often lack the willpower to carry out their plans.
Richard H. Thaler has a response to this problem: don’t ask people to save part of the paychecks they’re holding in their hands today. Instead, let them decide now to save starting with their next paycheck. Thaler, along with UCLA’s Shlomo Benartzi, has called this the Save More Tomorrow plan, and a key feature is that workers are approached to make their retirement savings decisions several months before a scheduled raise. Because their decision concerns income that they won’t receive for several months, people find it much easier to part with the money. Thaler likens it, in a 2002 article in Capital Ideas, to the difference between the difficulty of passing up the dessert sitting in front of you right now and agreeing today to forego the same dessert in three months—you may have good intentions in both cases, but it takes a lot more willpower to follow through when the reward is immediate.
In addition, the plan encourages workers to have their contribution grow automatically each time they get a scheduled raise, so they only have to make the difficult decision once, instead of being forced to revisit it. And it doesn’t hurt that the decision to increase savings coincides with a raise—that way, even though people are saving more, their take-home pay never shrinks.
With this approach, people aren’t forced to do anything. Rather, a person is merely pursuing her own plan without the interference of weak willpower. People want to save more but find it’s hard to do it right now. As Saint Augustine said: “Grant me chastity, but not yet.”
The key point, therefore, is that waiting leads people to value the things they're waiting for more. This understanding can be useful knowledge for businesses. Financial advisers can use waiting to inspire people to save responsibly for retirement. If an investor has paperwork to fill out, it may be beneficial to have her hold off on making investment decisions until after she has completed it. It could also help to thank her for being patient, providing a gentle reminder that the investment is worth the wait. Then she may be more patient and may make more sensible choices.
Some companies already use waiting to entice customers. Apple, by announcing a product and making people wait for it, makes people excited to shop and willing to pay for the latest gadget. Celebrity chef Grant Achatz sells tickets to his restaurants, creating a system where people pay for their meal several months in advance. When people wait for their dining experience, they value the experience of eating at one of his restaurants more highly, enough that they pay several hundred dollars (or more) for a ticket. These strategies may be effective for other reasons as well, but they help reinforce Fishbach's research.
Better understanding the psychology could help customers, too, by improving their patience and, using related logic, helping them avoid overpaying. Fishbach's conclusions suggest that because self-perception generally happens automatically, if customers pay close attention to what they value, they may be less vulnerable to automatic influences. A person looking to buy a car can tame the influence of self-perception if she goes shopping with a plan. If she is determined to buy a basic car model, she may be less swayed by a salesman who makes her wait before pushing an upgraded model. It's something to ponder while waiting at the financial adviser's office, the dealership, or during that agonizing, four-second wait for a website to load.
Richard H. Thaler and Shlomo Benartzi, “Save More Tomorrow: Using Behavioral Economics to Increase Employee Saving,“ Journal of Political Economy, 2004.
Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness, Yale University Press: 2008.
“Save More Tomorrow: A Simple Plan to Increase Retirement Saving,” Capital Ideas, 2002.
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