Booth prof: patience not only a virtue, but also an investment

A new study shows that waiting enables better financial decisions.

By Natalie Friedberg

Why put off until tomorrow what you can do today? According to a recent study co-conducted by the University of Chicago Booth School of Business, when it comes to decision-making, there may be a very good reason.

Professor Ayelet Fishbach, along with Professor Xianchi Dai from the Chinese University of Hong Kong’s Business School, set out to prove that the process of waiting, while frustrating, actually improves patience and leads to stronger financial decisions.

According to Fishbach, who teaches behavioral science and marketing at Booth, the explanation for this behavior is that a process of self-learning happens while we wait.

“[What] we learn as we are waiting for some products is that we value these products. Otherwise we would not be waiting,” she said.

To test this, the researchers set up three types of online lotteries across the United States, China, and Hong Kong. In the first group, participants were asked to choose between receiving a $50 prize in three days or a $55 prize in 23 days. The second group was asked to choose between receiving a $50 prize in 30 days or a $55 prize in 50 days.

In the first group, only 31 percent of participants chose the larger prize. In the second group, which had longer waiting periods, that number rose to 56 percent.

The third group was given the same choice as the second group, but with a catch. After being presented with their options, these participants had to wait 27 days before being allowed to make their final decision. In this lottery, a whopping 86 percent of participants chose to wait for the larger prize.

Similar experiments were done using different rewards, such as Godiva chocolate truffles and flash drives, and their results showed similar patterns.

What accounts for this behavior, Fishbach said, is a subconscious process of self-learning and observation. A person realizes that the outcome for which he or she is waiting has value, and therefore he or she is more inclined to wait longer for it. The result of this process is increased patience.

According to Fishbach, our knowledge of what we value, like, and dislike emerges from subconscious mental processes, which occur constantly. These processes determine information about us, such as our favorite color. The time we spend waiting is time spent observing ourselves.

“We learn about ourselves the same way we learn about others—through observation,” Fishbach said.