A news item refers to a recent research study that asks how far ahead people plan. The experiment asked people to make decisions at two points. Those who made what appeared to be the best decision at the first point found that they lost out at the second point. Only those who looked ahead to the second point would make the best decision at the first point.
The study found that 36 percent of people made the wrong decision at the first point. People wanted to make the right decision; at the second point, 97 percent made the right decision. But more than half failed to look ahead to see the effect of their first decision on the second point.
What are the implications of this study for us?
- Does this suggest that we should let government do our planning for us (for example, by managing our pension funds)?
- Or does it hint that maybe government planners will also fail to look ahead at the long-term consequences of their decisions (for example, by creating a social security system that is completely unsustainable)?
- Or does it suggest that we should focus on creating institutions that don’t require people to plan ahead? (And if so, what would such a pension system look like, for example?)
Or maybe it doesn’t mean anything at all. Since I am speaking in Vancouver today, I don’t have time to think about this further at the moment. But I invite your comments.