This study is a (very) oldie, but an important goodie. And you’ve probably heard about it. In the late 1960s/early 1970s, Walter Mischel of Stanford University did a series of experiments with preschool children. The children were given a marshmallow (or a pretzel or a cookie). If they waited to eat the marshmallow for an unspecified amount of time (until the experimenter returned), the child would be given two marshmallows. At any point, the child could ring the bell on the table to have the experimenter return, but then they would only get the one marshmallow.

An adorable video done in 2009 showed kids performing a similar experiment:

Initial findings showed that kids that were able to distract themselves waited longer. Mischel then followed these same kids for thirty years. Ten years later, the kids who waited for that second marshmallow were described by their parents (albeit not a great source) as “significantly more competent.” Fifteen years later, those kids were better able to handle frustrating situations and performed better on the SATs. At thirty years, they had lower BMIs (this one is counter-intuitive a bit since they loved those marshmallows!).

This amazing and simple experiment has always bothered me. I would have rung the bell almost instantly, popped that one marshmallow into my mouth, and moved right on with my day. There was opportunity cost involved. I could be doing something OTHER than sitting in that room. The study is a look at self-control. If you can’t wait for the second marshmallow, you have no self-control. You’re indulgent and give up long term rewards for the immediate ones. This study has been correlated to people spending money now because the future benefit of that money (the power of compounding) is too hard to grasp (I’ll talk about some financial temporal discounting in later posts). But a lack of self-control is not why I would have eaten that marshmallow. The future benefit of having two marshmallows seems silly. I would probably have walked right out of that room immediately even if it meant having no marshmallows at all. I need to be DOING something. Moving on. In financial terms, I wait for the second marshmallow. The difference is: I don’t have sit around waiting for my money to compound. It happens in the background. I do something else. In some ways, I’m working to overcome this nature of mine. I probably need to spend more time assessing the pros and cons before jumping to a conclusion, or stuffing that marshmallow in my mouth. And I’ve certainly lost my cool in a few frustrating situations. But my BMI is just fine thank-you-very-much! (Mr. T would have diligently waited for that second marshmallow. I’m sure of it.) In other ways, I’m embracing this characteristic. I don’t wait around for things to happen.

I ring that bell, walk out of that room, and go FIND myself a second marshmallow to eat.

This diatribe justifying my marshmallow eating and lack of waiting ability is exactly what Mischel and others were studying. The willpower studies that emerged from the marshmallow study describe a “hot” system based on impulse, emotions, and passions (taking the marshmallow) and a “cool” system that is more flexible, collected, and contemplative (obviously waiting for the second marshmallow). Several factors determine which system is dominate at any given time: emotional factors, stress, environmental factors, pharmacological factors, etc. Based on this, a 1999 follow up study presented three strategies to control the systems and gain willpower. We will discuss all three in the context of both the study as well as personal finance:

  • Ignore the stimulus – When the marshmallow was right in front of the kid’s eyes, they hardly waited at all. When the rewards were out of sight, 75% of the kids were able to wait the full fifteen minutes for the second marshmallow. Money is tough. It’s so much easier to buy that thing right now. Don’t. The equivalent of this tactic would be to stop going to stores to browse. Stop your email subscriptions to all those “deal” websites. If you ignore the stimulus, you’ll be able to save that money.
  • Distract yourself – When kids were given toys or something else to do, they waited a lot longer. They were also able to wait longer if they thought about something else, like pretzels, when they were waiting for a marshmallow. This is a great tactic for buying stuff. That marshmallow (or dress, or book, or name-your-weakness) is right in front of you and looks so good right now. But think about that other dress that’s not here right now. Think how beautiful that one is. It has a better neckline and the zipper looks sturdier (can you tell I don’t shop for dresses all that often?). If you can think about a different item, you’ll want the one in front of you a lot less. When I was pregnant with Florin, stuffed French toast at a local restaurant was my favorite thing ever. I only actually purchased it twice while pregnant, but I thought about it a whole lot more than that. It cost $11.99. Because I thought about it so much, every money decision became units of stuffed French toast. Well, I could buy that shampoo, but that’s half an order of stuffed French toast! That backpack is awesome, but I could order TWO stuffed French toasts! It worked really well.
  • Turn the object into “just a picture” – When realistic pictures of marshmallows were shown to the kids rather than the actual marshmallows, they were able to wait significantly longer. The actual tactile item in front of them produced a “go” response, but turning the object into just a picture of the possibilities turned off that immediate need. This one is a bit trickier for shopping. While the obvious parallel would be to not go into stores to “browse,” online shopping has become a trigger-happy territory of impulse purchasing despite the ability to feel the actual item. The study talks about how when you’re asked to not think about something, you automatically think about it. A lot of diets, they argue, are foiled by the constant attention to the foods someone can and cannot eat. Because they are focusing so much on food, they think a lot about it begin to crave it because that’s what’s on their mind. Fill your money thoughts with beneficial money thoughts rather than consumeristic ones. Don’t think about all the things you could buy, but think about all the possibilities you could open up with the money saved. Stop browsing shopping sites and start reading more blogs about saving more money. (We’re happy to help you with this one!)

What would you have done as a kid? Would you have waited for that second marshmallow? Are you different now than you were then?