[tremendulo]

Small reward now or larger reward later? In real life we might think: why can't I just have both?

Yet it frequently is a matter of 'either or' since the smaller reward robs me of the mental resources required to create or bring about the larger reward. For example if I party now I won't get the new job later on because I won't have the energy to learn the relevant skills.

[baddox]

It’s usually pretty clear why you can’t have both: because resources can’t be used more than once (like money), or recharge at a certain rate (like mental energy).

I think the bigger issue is that future payoffs are inherently riskier. Spending a resource now for some utility now (like buying a movie ticket at the cinema) carries a much lower risk than even the safest 5-year investment.

I think that risk is the primary cause of time discounting, although there are others. Certain goods may have inherently less utility if you buy them later (an obvious example being a medical treatment for an ailment you have now).

What is interesting to me is why different people have different time preferences, other than obvious variables like age, wealth, education, etc. Is just a personality trait like any other? I’m also curious what people think about their own time preferences. Do people wish their discount functions were different? Obviously I sometimes regret decisions like staying up late, where I knew full well I was “screwing over my future self,” and I obviously can’t yet know how I’ll think about my long term low-discount actions, like saving money for retirement.

[torstenvl]

There's some evidence of a genomic component to future discounting. There's a section on it in Robert Sapolsky's excellent book, Behave: The Biology of Humans at Our Best and Worst.

[baddox]

I’d be surprised if there wasn’t some genetic component, just like presumably every preference or personality trait.

I wonder what the sweet spot is, in the context of human biological and cultural evolution. You can obviously go too far in either direction.

[mjfl]

You can have both. Invest 10% of your salary each month in a retirement fund, eat out with the rest, net costs like rent. You'll retire a millionaire. You just need to size the rewards correctly.

[EGreg]

I never understood this... if there was some investment strategy that beat inflation, then if everyone used it, inflation would catch up to it.

So if you invest 10% of your salary all you're doing is saving 10% adjusted for inflation, assuming your investment vehicle doesn't do worse than inflation. And then when you retire you just live off that.

There is no free lunch. In Capitalism, millions of people are in a rat race to survive and eat.

[WalterBright]

> if there was some investment strategy that beat inflation,

There is, stocks average 7% returns after inflation.

> then if everyone used it, inflation would catch up to it.

Inflation is caused by the government printing money faster than the economy grows, not investments.

[EGreg]

It can be caused by both.

Inflation is a result of a large number of people being able to pay higher prices for the same goods.

[WalterBright]

The act of spending does not create money.

[EGreg]

That is not relevant to what we were talking about.

[tremendulo]

Yes it is possible to have your cake and eat it! Provided of course that you don't dine out too unhealthily and die before retirement age.

[dwaltrip]

You are missing the point. We frequently make tradeoffs in life. Many times this involves a small sacrifice now for a more sizeable gain in the future.

[EGreg]

I remember finding out that the Lorem Ipsum Dolor text is actually a scrambled version of https://en.m.wikipedia.org/wiki/De_finibus_bonorum_et_maloru... that speaks about this very thing!

Goes well with the other post tonight on HN about the stoics.

[pfisch]

Retiring a millionaire is not winning. Retiring with less than a million is losing.

Just do some back of the envelope math and it is very clear that you will have big problems with less than that.

[thesmallestcat]

That's a sad way to think about life. Back of the envelope math says I can be pretty happy with way less than that, different standards and all I suppose.

[pfisch]

Do you live in america? Do you plan to live 15-20 years past retirement? You are already at 50k/year with a million dollars, which is an amount of money that is ok in the present if you are young, but with inflation it will be a lot less.

Are you aware of how much elderly healthcare and care in general costs?

The average cost of a private room in a elderly care facility in the present is about 90k/year.

My standards are about not dying because I can't afford to pay for my prescriptions.

[kurthr]

I hope you have kids, and they (continue to) like you.

I don't know what the inflation rate is between now and 65 years old... and I hope to live for 20 years after that. Assuming you're 50, that's 35 years of inflation which is right about a halving in value at 2%. So you're going to end your life with $25k/yr current equivalent and hope that SS and Medicare carry you through. Good luck.