Sunday, May 22, 2011

"Dopamine Makes People Go For Quick Rewards"

Via FuturePundit,

"increased levels of dopamine – a chemical in the brain involved in mediating reward, motivation, and learning through reinforcement, – make us more likely to opt for instant gratification, rather than waiting for a more beneficial reward."
In other words, higher time preference. And there is a close relationship between time preference and IQ.

This has been demonstrated in studies like the Stanford Marshmallow Experiment, which was intended to determine when the control of deferred gratification develops in children. However, two follow-up studies showed that "preschool children who delayed gratification longer in the self-imposed delay paradigm, were described more than 10 years later by their parents as adolescents who were significantly more competent", and that the ability to delay gratification was correlated with higher SAT scores.

Another good study is Warner and Pleeter (2001), which
"used the results from a unique, high-stakes event to estimate the link between cognitive skill and time preference: The downsizing of the U.S. military at the end of the Cold War. At that time, the military offered over some enlisted personnel a choice between a lump-sum payment and an annuity; the typical lump-sum offer was $25,000, so this was a genuine high-stakes choice. The break-even discount rate was typically close to 18%. Their sample contained over 65,000 enlisted personnel, and they used a wealth of personal characteristics as regressors to estimate the determinants of the personal discount rate."
They found that
"The top two 'Mental Groups' had statistically significantly lower discount rates: Mental Group I, whose scores were 1.5 to 2.3 standard deviations above the mean, had a discount rate 1.6% lower than Mental Group IV. Mental Group II, 0.5 to 1.5 standard deviations above the mean, had a discount rate 0.6% lower than Mental Group IV. Both were significant at the 5% level."
Actual evidence of a correlation with discount rates!

2 comments:

Jmperry said...

It would be interesting to see a study that separates intelligence from time preference and determines how much each discretely contributes to life success. My guess is that once intelligence has reached a certain point -- probably the point at which most kinds of skilled work can be done -- time preference becomes much more helpful for success than incremental IQ.

CP said...

Yes.

I guess it's difficult because some people don't believe in intelligence OR time preference:
http://econlog.econlib.org/archives/2005/03/the_myth_of_tim.html