Your predicament is a very common one. And very human. Let me paint a picture of how this is probably playing out in your brain.
First you’ve come to the realization that you need or want a new television. That seems rational enough. So you start to think about what type of TV you want. Big screen, 4K, millions of colours, WiFi-ready. You’ve done your research and homed in on just the right model. It’s a beauty, right? It’s also very easy to purchase right now. In fact, you could have it Amazon Primed to your front porch tomorrow morning.
Now your current TV seems inferior. It’s junk. Useless. A burden to bear. There’s a teeny tiny voice inside your head telling you to “wait for the sale you know is coming.” But it’s so distant and the new TV is so large. All the rationality you began your journey with has deserted you. You want that TV and you want it now!
Behavioural science suggests there are a couple of reasons we have a hard time waiting for things. The first is the way we evaluate decisions. Let’s reframe your TV decision: If I asked you which you think is more valuable, that gorgeous TV or that gorgeous TV plus something else you really want, which would you choose? Probably the latter. But your brain has trouble rationalizing that waiting for the sale means you get the TV and also some cash in your pocket to do something else. Behavioural scientists have observed that consumers often experience something called “opportunity cost neglect.” Every choice we make involves forgoing some alternative. In your case it’s choosing the TV before the sale and having less extra money later. Opportunity cost neglect makes it harder to avoid giving in to buying that TV right now.
So let’s talk about another component of your dilemma, which I think may be the source of your difficulty. The fact that the more valuable option (cheaper TV “plus something else later”) is further in the future really does make waiting more difficult. Several research studies show that people often discount the value of larger rewards in favour of smaller more immediate ones. We call this temporal or “future discounting” which is just a fancy way of saying you are biased to prefer things you can get right now. You can see how these two cognitive biases (opportunity cost neglect and future discounting) work together to make waiting for things really, really difficult.
Does this mean you should throw in the towel and just buy the TV? No. I’m going to give you a tip that may make it easier to wait. Behavioural scientists know that if we can make the extra cash in your pocket feel more concrete, you will neglect it less. Instead of thinking in terms of saving cash, imagine what you would buy with that extra money. For instance, if the sale means saving a few hundred dollars, would you use that money to pay for a trip to the vineyard with friends or to buy a new tablet? Once you have determined what you want to do with you extra cash, the next thing to do is reduce your discounting of the future. You can do this by imagining yourself in the future enjoying that new TV but also that “something else.” It will make it easier to stave off temptation and increase your capacity for willpower. This isn’t just a money trick. It also helps with things like trying to eat healthier or smoke less. Any time you are tempted to buy the TV before the sale, try to vividly imagine where you will be, how you will feel, who will be with you in the future enjoying that the new TV and also “something else.”
Tinuke Oluyomi Daniel is one of three resident Behavioural Economists working at Evree. She has a PhD in behavioural science and many years of experience using her knowledge of how our brains work to help people. Got a sticky life + money situation and don’t know where to turn? Just ask us! We’d love to help. Send your questions to [email protected]