Are you Discounting your Life?


Discounting is a cognitive effect that means we often make our decisions without fully realising the value of those choices.

Discounting is not just something we think about when we go shopping, it’s also a cognitive bias that can have a huge effect on your life.

One of my habits, before I buy something is to say ‘if I was to buy this now what discount would you give me’. doing this I’m using the discounting effect against the salesman, who then has to decide how much a potential sale is worth today versus a possible sale in a few days time. My sale being a guaranteed sale now, whilst the sale in the future is not guaranteed. The salesman has to decide how much that guaranteed sale is worth and that is the discount I would be offered.

Another way of looking at this is if someone asked would you rather have £90 today of £100 in a month, most of us would take the £90 today, but what if we were offered £90 now or £300 in six months instead, most people would wait the 6 months instead?

The internal mental arguments we use when we make these decisions is also a psychological process called discounting.

Discounting is a strange thing mentally we are programmed to prefer extra to cheaper, would you go for a 33% discount in price or 33% extra free? most about 3/4 of us if we were offered this deal would instantly go for the 33% extra free. A mathematician would tell you thought that the 33% extra deal is actually the worst deal because a 33% discount in price is actually the same as 50% extra. The problem is psychologically discounting makes us blind to the numbers and in real life blind to the facts.

In life, the Discounting Bias can unfortunately mean for some of us that instant gratification is chosen over long term happiness, often we also avoid the discomfort of doing something essential today even if the consequences are really uncomfortable in the future and this is because that pain is so far away in the future we discount how much it’s going to hurt us.

Just like the salesman who may give you a discount if you buy something now, a reward in the future can feel less valuable than getting a lesser reward now. Discounting means we often fail to make the right decisions today because the future seems just too far away.

The example I see every day is smoking, smoking gives people instant reward today but may reduce their life expectancy by an average of 10 years, this doesn’t concern most teenagers but it becomes of utmost concern to the 65 year old life long smoker who’s gasping for breath, hasn’t a hope of seeing his grandchildren grow up, and can measure his life in months. Discounting reduces the importance of major decisions until it’s often too late.

Add to this other things people discount in life, perhaps your sweet tooth will give you diabetes, that’s another 5 years you can discount, and it’s not just physical issues, a longitudinal Canadian in 2017 study showed that a 25-year-old man diagnosed with depression could be expected to live on average another 39 years, compared to another man of the same age without depression who would be expected to live on average another 51 years instead.

The discounts we take multiply and add up, our parents will tell you this because they are no longer blinded by the discounting phenomena because they are living with the decisions they have made earlier in their lives. You really should listen to their advice because they base their advice after they have fully realised the value of the choices that they had made when they were young.

So would you rather make those changes in your life today, next week, next month or perhaps next year, I’m sure you’re thinking that’s not too long away, perhaps you’ll get round to making them in a few years time, you’re could also be saying that you’re just not ready yet. I’d say it’s about time you better ask yourself when is too late really too late?

The average 40-year-old man will on average live to 79 that’s 39 years left, retiring at 65 gives you only another 14 to play with, how many of these years are you willing to discount by the decisions you are making now? Discounting can be a life and death decision when it comes to health.

It’s time to stop discounting what you really need to do, so don’t discount the life you really could have.

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