The Promise of Immediate Payments Makes Our Brains Go Haywire

 Are you working for the short-term or the long-term in your business and personal life?

When Facebook was a couple of years in, some big companies wanted to buy Facebook. Nearly everyone around Mark Zuckerberg — his entire team — wanted to sell. This opportunity was the startup dream come true.

I want to complete my projects before their deadlines, and I want to hand them over to the client to get my check. This check keeps me focused on my task. But does a completed project affect my future in any way?

The short answer is: ‘yes’ — the client may refer new clients in the future, or they may use my services again. That is the reason I try to improve the quality of my services.

If I thought only about the short term, I would finish the job and start looking for a new client. In this case, the quality of my work would probably not be that great.

Most of us are thinking about the short term most of the time. We need that check for obvious reasons. We are likely to follow the proverb: a bird in the hand is worth two in the bush.

However, further research revealed that it is better to think about the long term as it can reward us richly in the future, and we are less likely to make choices that we may regret later in life.

The long term thinking requires patience — an internal feeling of calmness bordering on faith. We worry about our immediate problems so much — like how to pay our overdue bills and loans — that we ignore the future.

Whether we choose short-term over the long-term work approach, depends on our minds and our unique reward analyzing wiring.

Imagine you were a pottery maker. Would you like $100 for your handmade cup right now, or would you like to have $130 for it after 12 months?

Your answer should be $130 next year because it is more — and even if you invested your $100 somewhere, it would probably not bring a 30% ROI. But you chose $100 right now — as it felt like it was the only real choice. Our brains have a hard time imagining a distant future possibility. We discount the future.

We have our brains wired in a way that we prefer a smaller but immediate reward over a bigger but delayed — and, therefore, uncertain — reward.

It is critical to learn this difference in short term and long term thinking habits of our brains because the financial impact on our lives becomes more pronounced as time passes.

Let me give you an example: Do you know that the founders of Youtube — Chad Hurley, Steve Chen, and Jawed Karim — sold it for 1.65 Billion dollars to Google in 2006? Morgan Stanley estimated the value of YouTube at around $160 Billion in 2018.

You can see how important it is to develop a thinking that encourages working for the long term.

What if I told you that I would give you 120 dollars for your handmade cup after 12 months or 150 dollars after 18 months — and the immediate payment scenario was off the table?

If you chose $150 after 18 months, your answer is right. Interestingly, if I remove the lure of short term payment, your mind works just the way it should.

Neuro-economists are searching for the reasons behind the answers to these riddles.

If you were working for the short term, you would develop a tendency to make choices that were not consistent over time — you would make choices today that your future self would prefer not to have made.

But this is not the end of the story. If I told you that you could get $100 for your exquisite cup right now or $1000 after 12 months, you would choose $1000 after a year. If the future reward is big, our minds do not think of the choices involved in the same way. The exact higher value when your brain switches out of the short term and starts to think about the long-term rewards depends on you.

Coming back to the story of Facebook, Mark Zuckerberg was working for the long term. He decided not to sell. It tore his company apart. He was left alone, thinking he was an imposter who didn’t know how big businesses worked. Within the next year, every single person on his management team left the company. You wouldn’t have known his name if he had sold Facebook that day. The founders of Youtube sold their company, and most of us don’t remember their names.

After one tense argument, an advisor told me if I didn’t agree to sell, I would regret the decision for the rest of my life. ~ Mark Zuckerberg

Jeff Bezos has inspired most of us to think for the long term. He invested $42 million in the construction of an actual time clock that is so precise that it can tell the exact time for 10 Millenia. The reason Jeff Bezos invested this money is to emphasize the point that his entire team must think for the long term. Jeff Bezos tweeted about it on Feb 20, 2018.

The mindset for doing long term work is a bit different. It seems that these long term workers see the big picture better than others. With time, these people start charging a better price for their work. But history remembers these people as true visionaries.

Takeaway

A study suggests that we are going to change our professional work many times. For most of us, the long term is not a lifetime but a period of 10 to 15 years. We have to learn and evolve quickly, considering the speed of progress in technology and the evolution of businesses.

What we have to understand is that how we learn and behave can change our approach towards life decisions:

1. The quality of your work and your level of expertise would be higher if you were trying to work for the long term. But in the short-term, you may not learn new skills and the quality of your work may not be that good.
2. You would not be charging a high amount for your work if the short term work interested you more. However, if you worked for the long term, you would try to charge more money for your efforts.
3. In short term work, you do not spend time trying to decide what you are going to do next, and you do not base your decisions on hard facts and logic. In long term work, you are meticulous about your strategy for the future, and you make your choices on well-researched reasoning.

What you can do now is to rethink your work-mindset for the kind of decisions you are taking, or the learning approaches you are employing, to get a better insight into your own psyche. With this new knowledge, you can become better at keeping an eye when you start ignoring your future self.

Originally published on Medium.com