PER­SONAL AC­COUNT

The Daily Telegraph - Your Money - - FRONT PAGE - Marc Sid­well

Iden­tify with your fu­ture self – it’ll help you save enough for re­tire­ment

Writ­ing this col­umn is putting years on me. I just down­loaded a smart­phone app called AgingBooth, which promised a com­puter-en­hanced glimpse of my older self. The wrin­kles are a shock but the good news is I think grey hair is go­ing to suit me. In time, I could even develop a soft spot for the older me.

I bet­ter had, of course, be­cause if I don’t care about the older me, no one else is go­ing to pay for the nan­otech den­tures, ro­bot home help and hol­i­days on Mars he’s go­ing to want in re­tire­ment.

But as a rule we don’t have much time for our fu­ture selves. We see the older ver­sions of us as strangers we hardly know, and treat them ac­cord­ingly. It leads us to prefer small re­wards now (for me!) over much larger re­wards later (for the grey-haired stranger). This emo­tional dis­con­nect is a big rea­son why many of us don’t save enough for later life. But you can fix it.

There’s plenty of re­search to back this up. A 2009 pa­per called “Don’t stop think­ing about to­mor­row” (by Her­sh­field et al) found that those with a greater sense of fu­ture self- con­ti­nu­ity (peo­ple who iden­ti­fied with their older self rather than seeing him or her as a stranger) ac­cu­mu­lated greater fi­nan­cial as­sets over their life­times, even af­ter con­trol­ling for age and ed­u­ca­tion.

By con­trast, a 2008 study by Pronin, Olivola and Kennedy, “Do­ing Unto Fu­ture Selves As You Would Do Unto Oth­ers”, found that most peo­ple favoured their present self over strangers (as you would ex­pect) – but also treated their fu­ture self ex­actly as they would a stranger.

In­trigu­ingly, this study also sug­gested an emo­tional ex­pla­na­tion for the bias against our fu­ture selves. We feel our own lives di­rectly, from the in­side. As a re­sult, we care in­tensely for the things that will make us feel good now. But we know strangers’ needs only at a dis­tance, from the out­side. And imag­in­ing the hap­pi­ness of our fu­ture selves is al­most as hard.

This was backed up by a 2011 brain-imag­ing study by Schirmer et al. It found that when peo­ple tried to pre­dict how much they would en­joy an event in the fu­ture, as op­posed to now, most sub­jects hardly used the brain re­gions that help us imag­ine how some­thing will feel sub­jec­tively. Which sub­jects do you think made the most short-sighted fi­nan­cial de­ci­sions in a test weeks later? That’s right, the bad savers were those who were worst at imag­in­ing their fu­ture selves en­joy­ing some­thing.

This isn’t just about the years sep­a­rat­ing us from our older selves, but also ma­jor life changes. A study by Bar­tels and Rips in 2010 found that peo­ple were more re­luc­tant to save now to re­ward their fu­ture selves af­ter ma­jor life events, such as a re­li­gious con­ver­sion.

Again, the ef­fect seems to re­late to em­pa­thy: the harder it is to imag­ine our way into a later ver­sion of our­self, the less likely we are to sac­ri­fice for our fu­ture well-be­ing.

And the mes­sage is clear. You can

Vir­tual re­al­ity can help peo­ple see what their fu­ture lives will re­ally be like

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