Thoughts on Present Bias

Would you rather have $100 today, or $200 a year from now?

I recently came across the term "hyperbolic discounting" while reading The One Thing by Keller and Papasan, and decided to explore it's meaning. Essentially, it is the idea that the farther away a reward is in the future, the smaller the immediate motivation to achieve it. Eg. Spending vs Saving, Indulging vs Dieting.

They illustrate this concept with a simple example:

You are given the choice between receiving $100 today, or $200 a year from now. Keller and Papasan say that the obvious choice is $200 a year from now, if your goal was to make the most amount of money from the opportunity. But surprisingly, most people do not choose that way. Why?

The answer lies in our present bias – the tendency to favor immediate satisfaction over future rewards, even if the latter are objectively greater.

Throughout the book, Keller and Papasan emphasize that delaying gratification is common trait among highly successful people. They even cite research that children who display the ability to delay gratification early on are more likely to be successful adults later in life.

I agree that delaying gratification can boost productivity and lead to greater long-term happiness, but in this scenario, I don't think they author's tell the full story.

If I were given the choice between $100 today and $200 a year from now, I’d side with the majority and take the $100 now. But here's my reasoning: I wouldn’t simply spend the money. Instead, I’d aim to invest it and achieve a return greater than 2x within a year—a goal that feels attainable to me.

Does this choice indicate an inability to delay gratification? Or is it a pragmatic approach to seizing a present opportunity? I’d argue it’s the latter. And there could be other good reasons to take the $100 as well – urgent financial needs or opportunity to invest in a business or career.

Delaying gratification is definitely a solid strategy in a lot of areas—rewards tend to grow over time, and it helps you stay focused. But honestly, there are times when taking the immediate win makes sense too. Sometimes, that quick reward brings a little joy or takes care of something you need right now, and that’s okay. Not everyone’s goal is to maximize every opportunity. Sometimes, $100 today is exactly what someone needs to feel good. That's Starbucks money for at least a week!

In the end, whether you delay gratification for a bigger reward or go for the immediate gain, it all comes down to your unique situation. What matters most is making thoughtful, intentional decisions that align with your personal goals.