13: On Time preference, danger of safety, and fielding errors

3..Notes from the Greats 🏆

Professor Jonathan Haidt on the danger of safety:

"A culture that allows the concept of “safety” to creep so far that it equates emotional discomfort with physical danger is a culture that encourages people to systematically protect one another from the very experiences embedded in daily life that they need in order to become strong and healthy."

Napoleon on why you should stop worrying and take action:

"The torment of precautions often exceeds the dangers to be avoided. It is sometimes better to abandon one's self to destiny"

Investor and mathematician Eric Weinstein on framing a debate:

2..Notes to Know 🧠

Fielding Errors: Fielding errors in decision-making refer to mistakes we make in handling or interpreting information, similar to how a baseball player might mishandle a ball. These errors can lead to poor decisions or flawed reasoning. It is not enough to have the correct information, but also necessary to ensure proper interpretation of the information.

Present Value: The fundamental financial concept that an asset's value today is the sum of all future cash flows. This presupposes the time value of money, which is the principle that money available now is worth more than in the future due to its potential earning capacity.

1..Note From Me 📓 On Time Preference

Our lives today have everything on-demand. Entertainment on-demand (Netflix), food on-demand (DoorDash), communication on-demand (iPhones), and even attention on-demand (Instagram/Facebook). Everything designed to be consumed as quickly and conveniently as possible.

Clearly a world built with a bias toward consumption now.

When Eugen von Böhm-Bawerk, an Austrian economist, was writing in the late 1800s, he couldn't have possibly imagined the hyper-immediate world of today. His writing on time preference was meant to be an economic explanation for interest rates, and is well documented as an investment strategy in the Dao of Capital by Mark Spitznagel.

But ultimately, Böhm-Bawerk's idea revealed something much more universal among humans. His idea of time preference has implications across productivity, investing, health, and even salvation.

Time preference is the degree to which people prefer present consumption over future consumption. To have a high time preference is to say a person prefers immediate consumption over future consumption.

In 1970, a Stanford experiment measured the time preference of children by leaving them alone with a marshmallow. If they could hold out, there would be a future reward. The ability to delay gratification in the present for the promise of a future reward is the application of a low time preference.

Perhaps a more relatable example is that of everyday procrastination. Those situations when someone really does intend to do something...just not right now.

Procrastination involves a discount on future enjoyment, which is to say that we don't value time equally. Time inconsistency is this uneven perception of the value of time across the past, future, and present.

We often think what is too difficult in the present will somehow be easier in the future. That our time now is more valuable than some undefined future time.

Here lies the rationalization for procrastination. We might tell ourselves, "I can't mow the lawn right now; it's a beautiful Saturday. I should enjoy it." Yet the following Saturday comes and it is no less beautiful than the last.

For Spitznagel and the Austrians, this concept is core to investing as well. A person that forgoes present consumption to invest their savings displays a low time preference and is on the right path. The chronically low savings rate in America is yet another example of a culture with a high time preference.

The ultimate application, however, is not temporal. One of the promises of Christianity is based on an application of time preference. That forgoing certain pleasures now (on Earth) will lead to outsized rewards in the future (Heaven).

Being able to endure a negative current stage for a positive future stage is at the core of the human experience. From marshmallows to Heaven.

Thanks for reading. If you enjoyed this newsletter, consider sharing it. If this newsletter was forwarded to you, consider subscribing.

Copy this link to share: https://www.readjohnstreet.com/subscribe

A commonplace book is a personal collection of quotes, observations, ideas, and other bits of information that an individual finds interesting or inspiring. It is one of the most tried and true methods for learning & compiling information. Famously, Leonardo da Vinci, Marcus Aurelius, and Thomas Jefferson all carried a commonplace book.

This newsletter shares the notes from my own commonplace book and will add highlights to yours.