An Economy-Suffocating American Battle: Our Present Vs. Future Selves – By Mark Spitznagel

I’m nearly finished with Spitznagel’s book, The Dao of Capital: Austrian Investing in a Distorted World, and I highly recommend it. The time inconsistency mental model is something I think applies not just to investing and dieting (which he mentions below), but to many other areas of life as well.

In the midst of the epic dysfunction known as the 16-day government shutdown, we lost sight of the fundamental issue whose inescapable logic cuts across politics and party lines: We are feeding the rapacious appetites of our current selves (we want what we want now) at the dire and escalating cost to our future selves (whom, we assume, will somehow have the patience and resources to bear the burden). If that sounds unworkable and unsustainable, it is.

If government spending continues apace, feeding the monster known as the national debt will swallow the resources of our future selves, whether we personify that concept as ourselves at retirement or our children who will inherit an astronomical bill for our rash and compulsive spending.

We cannot expect Washington to solve these problems, because politicians are, by definition, creatures of the moment who want to please their current constituents who will re-elect them, rather than worrying about future constituents who cannot vote. It’s up to us to advocate for our future selves, both personal and progeny.

As simple and logical as this might sound, it is nigh onto impossible to do. We simply can’t help ourselves, because of our human nature and a behavioral concept—applicable to most everything in life, including my bailiwick of investing—called time inconsistency, or hyperbolic discounting. Simply stated, we discount the present now more than we expect to later—that is, we act one way now—impatient, demanding our appetites (food, drink, investment returns) be met at all costs—while deluding ourselves that, in the future, we’ll somehow be patient and better able to act rationally and take care of problems. But when later becomes now, we are just as impatient. The easiest and most universal example is dieting. We indulge now, telling ourselves we’ll diet tomorrow. The parallels to our bloated spending and ballooning debt are too obvious to mention.