High Time Preference vs. Low Time Preference
What is the definition of success?
This sounds like a simple question, but I promise there is an important lesson here.
Success is “the accomplishment of an aim or purpose.”
You can choose which aim or purpose you wish to pursue.
But regardless of what you choose to pursue, one thing remains true:
To be successful in any endeavour, you need to sacrifice in the short-term to achieve reward in the long-term.
You need to have low time preference.
Looking into 2024 and beyond, we live in a modern world that incentivizes the opposite. Modern life pushes us toward high time preference.
And so understanding time preference (and how to lower it) is going to be more critical than ever before.
Let’s dive in.
What is Time Preference?
Time preference is both an economic concept, and a psychological concept.
In psychology, it is more commonly referred to as delayed / immediate gratification.
Time preference boils down to a simple choice: immediate gratification versus delayed gratification.
📈 High Time Preference: Opting for instant pleasure or reward (immediate gratification)
📉 Low Time Preference: Sacrificing short term pleasure for long term reward (delayed gratification)
Why Does Time Preference Matter?
All successful individuals exhibit a common trait: Low Time Preference.
They’re willing to make short-term sacrifices for the promise of substantial long-term rewards.
Think about visionaries like Elon Musk, Bill Gates, Jeff Bezos, and Steve Jobs. They all made huge sacrifices in the short-term for long-term success.
Bezos puts it perfectly in this interview with Jay Leno back in 1999.
“We’re investing in the future.”
Each of these entrepreneurs toiled in obscurity for years, often decades, before becoming successful and achieving their goals.
It shouldn’t be a surprise that they have extremely low time preference.
But I’m here to make an argument that it is more important now than ever before.
Why Low Time Preference is Crucial in 2024
In our modern world, there’s a subtle but powerful push towards high time preference.
We are constantly being incentivized to want things faster. And the younger generations are hit the hardest.
What is the root cause, you might ask?
Look no further than the money in your wallet.
Governments worldwide operate on a fiat monetary system—where currency holds value based on decree rather than inherent worth.
Central banks target a 2% inflation rate. This encourages spending over saving. Because if you save your money, it loses 2% of its value each year, on average.
To put it simply: inflation encourages us to spend our money sooner than we naturally would.
This is why no one saves money anymore, and everyone invests their money in assets.
In effect, this nudges us toward prioritizing short term pleasure over long term gain.
Now, let’s take this nudge to the extreme.
What would we expect to see in a society that values high time preference over everything else?
👉 A surge in drug addiction.
👉 Sports betting and gambling on the rise.
👉 Young adults and teenagers addicted to video games.
👉 Pop culture and media saturated with explicit content.
👉 A societal obsession with materialism, consumerism and fast fashion.
👉 Frequent misallocation of resources (e.g. WeWork, FTX, Tiger Global, and so on)
👉 An entire generation struggling with financial insecurity, stuck in debt, and with little to no savings.
Does any of this sound familiar?
Money is a tool for storing and exchanging our time and energy—it thrives on trust.
Inflation erodes that trust at a rate of 2% per year, and society suffers for it.
Taking Charge of Your Financial Future
So how do you avoid the natural gravity of high time preference?
🧠 Learn about how inflation and the fiat monetary system work.
🧠 Share your knowledge with your friends and loved ones.
🧠 Protect yourself from inflation by investing in assets.
🧠 Take ownership of your financial destiny.
🧠 Think as long term as possible.
The fiat monetary system nudges us towards short-sightedness. Toward high time preference.
It’s up to us to defy that pull.
Or, perhaps there is a new monetary system that nudges us toward investing into the future, just like Bezos did…
Quotes On Delayed Gratification
And don’t take my word for it. These are not new ideas.
“Our culture tells us to want sex, pleasure, and instant gratification. Every hit song raves about it. Consumerism tells us that we need it now.” – Michael J. Heil
“The ability to discipline yourself to delay gratification in the short term in order to enjoy greater rewards in the long term is the indispensable prerequisite for success.”
– Brian Tracy
“Messages of instant gratification leads to a corrupt society.” – Sunday Adelaja
Or, one of my favorite stories of all time, Will Smith on building a brick wall for 1.5 years:
“You don’t try to build a wall. You don’t say ‘I’m going to build the biggest, baddest, greatest wall that’s ever been built.’ You don’t start there. You say ‘I’m going to lay this brick as perfectly as a brick can be laid’ (…) and you do that every single day, and soon you have a wall.”
– Will Smith
Wealth Potion Growth Update
Couple fun updates this week.
I met some new friends at a recent Seoul Bitcoin meetup, and came to check out their co-working space as it’s close by for me, and it’s free to the public.
I think I’ll be coming here quite often!
Here’s the audience growth update:
I set aggressive goals for May on purpose. My plan was to do my “hard launch” to my personal social networks this month.
Until now, I’ve effectively been building Wealth Potion in stealth. I haven’t announced it to my friends, family, or professional network.
I’m realizing that part of this was due to pressure I was putting on myself to get going, and to move faster.
But speaking with some new friends at the Seoul Startup Hub, as well as mentors, their advice was to slow down.
I’ve been building Wealth Potion full-time for less than 3 months. The Founder / CEO of the last startup I was at took 2 years off before going all-in on his startup.
His startup was most recently valued at $500 million USD.
His advice to me (paraphrased):
“However long you were planning to take a break, double it. Be patient. Your startup will hopefully be the thing you spend the next 10 years on. Don’t rush this process.”
He also recommended that I set a goal to speak to 100 people to get feedback before launching. And to ask for brutally honest feedback.
Friends and family have no incentive to rip apart your idea, so if you want real feedback, you need to give them permission to be fully honest with you.
Then, it’ll be time to build in public 💪
Until next week.
To your prosperity, Wealth Potion
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