Why we must keep memories alive
Time is money, it is often said, but it is also distance. By bridging these distances, we can make better life decisions
In one of the most memorable scenes from the sitcom Father Ted, the main character and his younger and somewhat dim colleague, Father Dougal, are on holiday in a tiny caravan, on a rainy, deserted campsite. Dougal has discovered a box with plastic model farm animals, which he has placed on the table.
Ted holds up two of the toy cows, addressing Dougal very slowly, “OK, one last time… these are small, but the ones out there are far away.” The puzzled look on Dougal’s face suggests the message has not quite penetrated. Ted repeats, gesturing with the plastic cows, “Small…”, and then looks out of the window, “…far away…”. Dougal’ s face betrays the huge effort he is making to understand, but eventually he shakes his head in defeat, upon which Ted throws the toys back on the table, muttering, “Ah, forget it!”.
It is hard not to laugh at clueless Father Dougal’s inability to realize that far-away cows are, in fact, large, and only look small because of the distance, and indeed feel a bit smug. But substitute time for distance, and perhaps we are not all that smart either.
Small in the future
One of the first practical problems the (then fledgling) field of behavioural economics tackled, now nearly 25 years ago, was the fact that many of us fail to set aside enough money for a comfortable retirement. One of the reasons is that time and money right now look quite different compared to some point in the future.
Discounting money over time in itself makes perfect sense. Most of us prefer £50 (or $50, €50 or whatever the rough equivalent is in your everyday currency) today over £50 next year. Even if there was no uncertainty involved and we would be guaranteed to receive the amount, getting it now means we can invest it, and end up with more than £50 in a year’s time.
But it’s not that simple. If we could choose between receiving £50 in a year’s time, and £60 in thirteen months’ time, most of us would see an extra £10 well worth an additional month’s wait: a gain of 20% in just one month corresponds with an annual…