Incognito (19 page)

Then the researchers changed the question slightly: If I were to offer you $100 fifty-two weeks from now, or $110 fifty-three weeks from now, which would you choose? Here people tended to switch their preference, choosing to wait the fifty-three weeks. Note that the two scenarios are identical in that waiting one extra week earns you an extra $10. So why is there a preference reversal between the two?
¹⁷

It’s because people “discount” the future, an economic term meaning that rewards closer to now are valued more highly than rewards in the distant future. Delaying gratification is difficult. And there is something very special about
right now
—which always holds the highest value. Kahneman and Tversky’s preference reversal comes about because the discounting has a particular shape: it drops off very quickly into the near future, and then flattens out a bit, as though more distant times are all about the same. That shape happens to look like the shape you would get if you combined two simpler processes: one that cares about short-term reward and one that holds concerns more distantly into the future.

That gave an idea to neuroscientists
Sam McClure,
Jonathan Cohen, and their colleagues. They reconsidered the preference-reversal problem in light of the framework of multiple competing systems in the brain. They asked volunteers to make these something-now-or-more-later economic decisions while in a brain scanner. The scientists searched for a system that cared about immediate gratification, and another that involved longer-term rationality. If the two operate independently, and fight against each other, that just might explain the data. And indeed, they found that some emotionally involved brain structures were highly activated by the choice of immediate or near-term rewards. These areas were associated with impulsive behavior, including drug addiction. In contrast, when participants opted for longer-term rewards with higher return, lateral areas of the cortex involved in higher cognition and deliberation were more active.
¹⁸
And the higher the activity in these lateral areas, the more the participant was willing to defer gratification.

Sometime between 2005 and 2006, the United States housing bubble burst. The problem was that 80 percent of recently issued mortgages were adjustable-rate. The subprime borrowers who had signed up for these loans suddenly found themselves stuck with higher payment rates and no way to refinance. Delinquencies soared. Between late 2007 and 2008, almost one million U.S. homes were foreclosed on. Mortgage-backed securities rapidly
lost most of their value. Credit around the world tightened. The economy melted.

What did this have to do with competing systems in the brain? Subprime mortgage offers were perfectly optimized to take advantage of the I-want-it-now system: buy this beautiful house now with very low payments, impress your friends and parents, live more comfortably than you thought you could. At some point the interest rate on your adjustable-rate mortgage will go up, but that’s a long way away, hidden in the mists of the future. By plugging directly into these instant-gratification circuits, the lenders were able to almost tank the American economy. As the economist
Robert Shiller noted in the wake of the subprime mortgage crisis, speculative bubbles are caused by “contagious optimism, seemingly impervious to facts, that often takes hold when prices are rising. Bubbles are primarily social phenomena; until we understand and address the psychology that fuels them, they’re going to keep forming.”
¹⁹

When you begin to look for examples of I-want-it-now deals, you’ll see them everywhere. I recently met a man who accepted $500 while he was a college student in exchange for signing his body away to a university medical school after he dies. The students who accepted the deal all received ankle tattoos that tell the hospital, decades from now, where their bodies should be delivered. It’s an easy sell for the school: $500 now feels good, while death is inconceivably distant. There is nothing wrong with donating one’s body, but this serves to illustrate the archetypical dual-process conflict, the proverbial deal with the Devil: your wishes granted now for your soul in the distant future.

These sorts of neural battles often lie behind marital infidelity. Spouses make promises in a moment of heartfelt love, but later can find themselves in a situation in which present
temptations tip their decision making the other way. In November 1995,
Bill Clinton’s brain decided that risking the future leadership of the free world was counterbalanced by the pleasure he had the opportunity to experience with the winsome Monica in the present moment.

So when we talk about a virtuous person, we do not necessarily
mean someone who is not tempted but, instead, someone who is able to
resist
that temptation. We mean someone who does not let that battle tip to the side of instant gratification. We value such people because it is easy to yield to impulses, and inordinately difficult to ignore them.
Sigmund Freud noted that arguments stemming from the intellect or from morality are weak when pitted against human passions and desires,
²⁰
which is why campaigns to “just say no” or practice abstinence will never work. It has also been proposed that this imbalance of reason and emotion may explain the tenacity of religion in societies: world religions are optimized to tap into the emotional networks, and great arguments of reason amount to little against such magnetic pull. Indeed, the Soviet attempts to squelch religion were only partially successful, and no sooner had the government collapsed than the religious ceremonies sprang richly back to life.

The observation that people are made of conflicting short- and long-term desires is not a new one. Ancient Jewish writings proposed that the body is composed of two interacting parts: a body (
guf
), which always wants things now, and a soul (
nefesh
), which maintains a longer-term view. Similarly, Germans use a fanciful expression for a person trying to delay gratification: he must overcome his
innerer schweinehund
—which translates, sometimes to the puzzlement of English speakers, as “inner pigdog.”

Your behavior—what you do in the world—is simply the end result of the battles. But the story gets better, because the different parties in the brain can learn about their interactions with one another. As a result, the situation quickly surpasses simple arm wrestling between short- and long-term desires and enters the realm of a surprisingly sophisticated process of negotiation.

In 1909,
Merkel Landis, treasurer of the Carlisle Trust Company in Pennsylvania, went on a long walk and was struck with a new
financial idea. He would start something called a Christmas club. Customers would deposit money with the bank throughout the year, and there would be a fee if they withdrew their money early. Then, at the end of the year, people could access their money just in time for holiday shopping. If the idea worked, the bank would have plenty of capital to reinvest and profit from all year. But would it work? Would people willingly give up their capital all year for little or no interest?

Landis tried it, and the concept immediately caught fire. That year, almost four hundred patrons of the bank socked away an average of $28 each—quite a bit of money in the early 1900s. Landis and the other bankers couldn’t believe their luck. Patrons
wanted
them to hold on to their money.

The popularity of
Christmas banking clubs grew quickly, and banks soon found themselves battling each other for the holiday nest egg business. Newspapers exhorted parents to enroll their children in Christmas clubs “to develop self-reliance and the saving habit.”
²¹
By the 1920s, several banks, including the Dime Saving Bank of Toledo, Ohio, and the Atlantic Country Trust Co. in Atlantic City, New Jersey, began manufacturing attractive brass Christmas club tokens to entice new customers.
²²
(The Atlantic City tokens read, “Join our Christmas Club and Have Money When You Need It Most.”)

But why did Christmas clubs catch on? If the depositors controlled their own money throughout the year, they could earn better interest or invest in emerging opportunities. Any economist would advise them to hold on to their own capital. So why would people willingly ask a bank to take away their money, especially in the face of restrictions and early withdrawal fees? The answer is obvious: people wanted someone to stop them from spending their money. They knew that if they held on to their own money, they were likely to blow it.
²³

For this same reason, people commonly use the Internal Revenue Service as an ersatz Christmas club: by claiming fewer deductions on their paychecks, they allow the IRS to keep more of their money
during the year. Then, come next April, they receive the joy of a check in the mailbox. It feels like free money—but of course it’s only your own. And the government got to earn interest on it instead of you. Nonetheless, people choose this route when they intuit that the extra money will burn a hole in their pocket during the year. They’d rather grant someone else the responsibility to protect them from impulsive decisions.

Why don’t people take control of their own behavior and enjoy the opportunities of commanding their own capital? To understand the popularity of the Christmas club and IRS phenomena, we need to step back three millennia to the king of Ithaca and a hero of the Trojan War, Ulysses.

After the war, Ulysses was on a protracted sea voyage back to his home island of Ithaca when he realized he had a rare opportunity in front of him. His ship would be passing the island of Sirenum scopuli, where the beautiful Sirens sang melodies so alluring they beggared the human mind. The problem was that sailors who heard this music steered toward the tricky maidens, and their ships were dashed into the unforgiving rocks, drowning all aboard.

So Ulysses hatched a plan. He knew that when he heard the music, he would be as unable to resist as any other mortal man, so he came up with an idea to deal with his
future self
. Not the present, rational Ulysses, but the future, crazed Ulysses. He ordered his men to lash him to the mast of the ship and tie him there securely. This way he would be unable to move when the music wafted over the bow of the ship. Then he had them fill their ears with beeswax so they could not be seduced by the voices of the Sirens—or hear his crazed commands. He made it clear to them that they should not respond to his entreaties and should not release him until the ship was well past the Sirens. He surmised that he would be screaming, yelling, cursing, trying to force the men to steer toward the mellifluous women—he knew that this future Ulysses would be in no position to make good decisions. Therefore, the Ulysses of sound mind structured things in such a way as to
prevent himself from doing something foolish when they passed the upcoming island. It was a deal struck between the present Ulysses and the future one.

This myth highlights the way in which minds can develop a meta-knowledge about how the short- and long-term parties interact. The amazing consequence is that minds can negotiate with different time points of themselves.
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So imagine the hostess pressing the chocolate cake upon you. Some parts of your brain want that glucose, while others parts care about your diet; some parts look at the short-term gain, other parts at long-term strategy. The battle tips toward your emotions and you decide to dig in. But not without a contract: you’ll eat it only if you promise to go to the gym tomorrow. Who’s negotiating with whom? Aren’t both parties in the negotiation
you
?

Freely made decisions that bind you in the future are what philosophers call a Ulysses contract.
²⁵
As a concrete example, one of the first steps in breaking an alcohol addiction is to ensure, during sober reflection, that there is no alcohol in the house. The temptation will simply be too great after a stressful workday or on a festive Saturday or a lonely Sunday.

People make Ulysses contracts all the time, and this explains the immediate and lasting success of
Merkel Landis’s Christmas club. When people handed over their capital in April, they were acting with a wary eye toward their October selves, who they knew would be tempted to blow the money on something selfish instead of deferring to their generous, gift-giving December selves.

Many arrangements have evolved to allow people to proactively bind the options of their future selves. Consider the existence of websites that help you lose weight by negotiating a business deal with your future self. Here’s how it works: you pay a deposit of $100 with the promise that you will lose ten pounds. If you succeed by the promised time, you get all the money back. If you don’t lose the weight by that time, the company keeps the money. These arrangements work on the honor system and could easily be cheated, but nonetheless these companies are profiting. Why? Because people
understand that as they come closer to the date when they can win back their money, their emotional systems will care more and more about it. They are pitting short- and long-term systems against each other.
^*

Ulysses contracts often arise in the context of medical decision making. When a person in good health signs an advance medical directive to pull the plug in the event of a coma, he is binding himself in a contract with a possible future self—even though it is arguable that the two selves (in health and in sickness) are quite different.

An interesting twist on the Ulysses contract comes about when someone else steps in to make a decision for you—and binds your present self in deference to your future self. These situations arise commonly in hospitals, when a patient, having just experienced a traumatic life change, such as losing a limb or a spouse, declares that she wants to die. She may demand, for example, that her doctors stop her dialysis or give her an overdose of morphine. Such cases typically go before
ethics boards, and the boards usually decide the same thing: don’t let the patient die, because the future patient will eventually find a way to regain her emotional footing and reclaim happiness. The ethics board here acts simply as an advocate for the rational, long-term system, recognizing that the present context allows the intellect little voice against the emotions.
²⁶
The board essentially decides that the neural congress is unfairly tilted at the moment, and that an intervention is needed to prevent a one-party takeover. Thank goodness that we can sometimes rely on the dispassion of someone else, just as Ulysses relied on his sailors to ignore his pleas. The rule of thumb is this: when
you cannot rely on your own rational systems, borrow someone else’s.
²⁷
In this case, patients borrow the rational systems of the board members. The board can more easily take responsibility for protecting the future patient, as its members do not hear the emotional Siren songs in which the patient is ensnared.