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Trick 5: Attack Your Discount Rate Directly
People often ask me whether it’s possible to just attack your
discount rate directly. After all, if that’s the real problem, why
not just make it lower? Well, our individual discount rates are
functions of how we view the world, the future, our goals, our
abilities, our sense of time, and much more. Our discount rate
is a refl ection of our deepest personality traits. So, all in all, it’s
a hard thing to change. However, all is not lost because there is
something we can do.
On the whole, our discount rates refl ect our feelings but
often don’t refl ect reality. I might choose to smoke cigarettes
and eat that cake because I really discount/devalue the future.
After all, I could get hit by a bus next month, so to heck with
it, carpe diem. Or I just feel invincible, which also completely
skews my discount rate and sense of the future. But the reality
is that I’m not likely to get hit by a bus, nor am I likely to be
invincible. It’s a lot more likely that I’ll get some really painful
disease and suffer for a long time; heart attacks and lung cancer
aren’t fun diseases. The trouble is that we do a lot of “black-
and-white thinking,” and it very rarely corresponds with reality.
So here’s what you can do: benchmark yourself. Go out and
fi nd people similar to yourself; get a decent-sized pool of com-
parisons and track their ups and downs, behaviors, outcomes,
goals, successes, failures, and so on. (If you’re thinking that
social media like Facebook and Twitter are good for this, you’re
right.) You basically need a pool of comparison data points to
get a better sense of what the future really looks like. And,
as you watch these folks, start adjusting your discount rate. If
none of them got hit by a bus, then maybe you’ll learn some-
thing about the statistical likelihood of that happening. If two