The Side-Effects of Economic Success: Backtracking our steps in order to get a glimpse of the road ahead

The willingness to pay a premium for immediate versus future rewards is a familiar concept. economists call it hyperbolic discounting. However, less
attention is given to how the opposite also applies. that is, our willingness to accept disproportionately higher risks and costs if there is a time lag for paying them.

For instance smoking and sun-tanning: imagine if consequences such as cancer materialise instantaneously instead of with a delay. engaging in any of these activities recklessly would probably be
as uncommon as seeing anyone taking their chances of running across a heavily- trafficked highway.

our inability to correctly price the long-term costs and consequences of our decisions is reflected in every level of society, irrespective of a person’s background or social context.

this blind spot is so all-encompassing that a government borrowing for pensions, while knowing it will be unable to repay this, is not dissimilar to the self- imposed denial of an individual massively overspending on their credit cards.
i see economics as the extension of sociology and psychology. it is the scorecard of the aggregated incentives that a group acts upon. the story which economics reveals cannot be understood if separated from either of these two.

if the global economic crisis is behavioural at root, can we find better solutions if we treat the problems from a social perspective? i see an obstacle in doing so in that freedom, democracy and capitalism are used interchangeably to justify self-sabotaging behaviours.

yes, the world’s population is better off than in previous times in terms of health and daily conveniences. But our entrepreneurial spirit, innovation and market efficiencies have, in a sense, succeeded too well.

Demand has been driven too far for our own best interests when we are lured into sacrificing our future well-being for fleeting luxuries.

Democracy and capitalism are largely to thank for increased welfare and decreased conflicts through the spread of free enterprise and trade. yet, this relies on power structures remaining stable, and it is often overlooked that this stability hinges on the mechanism of self-oppressing spending patterns of the majority of citizens. that is, people voluntarily sacrifice opportunities for long-term benefits and chances of self- improvement in exchange for satisfying momentary urges. a good demonstration of this can be seen each morning in cities around the world when minimum-wage workers wait in line to pay five dollars for coffee in paper cups.

Consumerist ideals have become fundamental drivers and conditions that shape human existence. it is unreasonable to expect that this trend can be reversed. we need to recognise that what unites most of us now is instant gratification, the currency that people can be incentivised with most effectively.
solving the economic problems we face on a global scale requires that we design policies aligned with this reality. that is, figuring out how to apply a mix of short- term incentives that results in the daily behaviours and decisions of citizens to simply act less self-destructively.

I do not suppose that there is any silver bullet for this. in the past, social norms and religion filled the function of promoting virtues of delayed gratification and resisting temptation; however, in 2013, both social protocol and faith are declining. to keep pace with changing values and lifestyle demands, an updated understanding and approach of the motivating triggers that influence our impulses will be required. A rough mental image and outline of our future selves, along with the sacrifices and efforts needed, is probably a good starting point to not abandon our destiny to the mercy of our whims.