Danger of Delayed Gratification

When assessing the ethical development of an individual or a company, one of the first dimensions I explore is the capacity of the subject to delay gratification. To what degree is this person or group able to defer immediate satisfaction for the sake of a greater future reward?

I ask this because I find the conventional wisdom generally true: the greater one’s ability to delay gratification, the higher their ethical standards. Those who understand the value of the long-term, and possess the discipline to invest in it, are vastly less likely to put it at risk for a short-term gain. Likewise, those who require immediate payoffs are highly motivated towards corruption – they must take the shortcut to their vision of “success.”

As we survey the recent financial crisis, we seem to have one very large case in point: once-great companies letting go of core ethical principles to get while the getting was good. We are dismayed at their behavior and feel desperate to prevent such mistakes from happening again.

In this state of mind, it is tempting to believe that the solution is to insist that the focus be entirely upon the long-term – to align compensation and other incentives to reward only long-term gains.

But for all the wisdom of such impulses, we must also be aware that there is a dark side to long-term thinking. Specifically that delayed gratification can lead to very unrealistic expectations of reward.

Consider the following game often used to examine delayed gratification: a subject is offered an enticement in the present (food, money, laudatory blog comments…) with the assurance that the reward will be increased if the subject can wait a specified period. Researches then vary the wait times or the rewards or both, to see where the limits of our discipline lie. But generally both the reward and the time frame are made known to the subject. And thus, what is really being studied is a contractual arrangement: specified effort for specified reward.

But rarely does real life offer us such a contract. In practice, our decision to delay gratification is based not on certainty, but on expectation. We believe that if we successfully complete a long-term endeavor, we are assured of a promotion, a bonus, a raise… And, frequently, in our mind we convert “reasonable expectation” to the level of contractual obligation (of our boss, the company, the client, the universe…)

But what if the situation doesn’t unfold as we expect? What if targets required for the bonus aren’t quite met? What if it looks like the deal we’ve been working on is going to fall apart in the 11th hour? What if someone else becomes the heir apparent? What if we did everything “right” and still the expected reward doesn’t materialize?

These are moments we must examine ourselves very carefully, because studies also show that people will engage in far riskier ethical behavior to preserve a perceived possession than to gain what they do not already have. In other words, the average person is unlikely to tell a lie to acquire $100. But to keep from losing $100 they already have, research says that they will lie quickly and repeatedly.

So herein lies the risk of focusing on the long-term. If we come to believe that we are entitled to a particular reward, we consider ourselves as already possessing it. And should we then come to believe that this reward is at risk, we are tremendously more likely to engage in unethical behavior to preserve it. When corruption is considered “defensive” by the one committing it, it becomes far more palatable, even to those of otherwise high ethical standards.

To keep ourselves true to our core principles, then, it is essential to recognize that when we take the long view (and we almost always should), we are making investments not signing contracts. In any given interaction, acting with wisdom and discipline offers no certainty of reward. It is only over the, dare I say “long-term,” that such efforts prove their value.

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2 comments

  1. Viki Barie

    “making investments not signing contracts” — it seems that people gravitate towards the certainty versus the possibility, hence the default position of “owning/keeping”.

    Thanks for the insight, Kirk, and keep up the good work!

    Shalom

  2. This is pretty fascinating stuff! It resonates pretty well for me: If I see a stranger drop some money, I’d have no problem at all with pointing it out to them. However, during tax time, bending and breaking rules in my favor is a constant temptation.

    > And should we then come to believe that this reward is at risk, we are tremendously more likely to engage in unethical behavior to preserve it.

    Thinking about it and agreeing, I wonder how much Wall Street projections affect ethical behavior given your conclusions. Would an executive at a public company make better choices if there was no prediction (and subsequent expectation or psychologically constructed contract) of future profits and bonuses?

    Good stuff and lots to think about!