1 As For Me, I Am Obviously Biased Towards the Present | The Billfold

As For Me, I Am Obviously Biased Towards the Present

Theresa Kuchler is a PhD student in Economics at Stanford University. She looked at anonymized credit card data to try to parse out why people who make enough money to pay off their credit card debt quickly … don’t pay it off quickly. Her finding: PRESENT BIAS. These people are interested in the right now and not the future. One way to tell they exist? People with present bias spend more money in the week after payday. People without present bias don’t.

So uh, which are you???


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I have a $400 credit card balance that has been sitting there forever because I’m biased to the present! I just logged into Chase.com to finally just pay it off and the SYSTEM IS DOWN. Of course!

OllyOlly (#669)

I often will spend a chunk of money the week after pay day becuase I can see how far I came out ahead of my saving’s goal the previous month. SO maybe these people are just rewarding themselves for good financial behaviour!

Also my rent is due after I get my paycheck so it is impossible for that to not be my most expensive week.

I also suffer from present bias, compounded by a bad case of hyperbolic discounting.

cryptolect (#1,135)

@stuffisthings I had to google “hyperbolic discounting” because it sounds so charming. It’s not as cute as I thought it might be.

@cryptolect I also strongly prefer receiving presents to not receiving presents. Even though gift-giving is a major source of deadweight loss.

WhyHelloThere (#1,398)

I don’t have present bias. I pay off my credit card every month, and I don’t spend any more on payday than at any other time. (And if I have too much money in my bank account after payday, I shift it to a different account in which I keep my rainy-day fund.) I think I could stand to have a little bit more present bias, to be honest. I’m kind of like a money hoarder, saving it for some undefined future need that may never emerge. I think I’d be a little happier if I would actually spend a bit more money now.

kellyography (#250)

@WhyHelloThere I heard that. I am trying to get myself to spend a few hundred dollars to go on a spring break vacation and it is incredibly difficult. Maybe if I get tax money back? I think I hoard money because I know when I retire I won’t have enough to live on.

CubeRootOfPi (#1,098)

@WhyHelloThere Same here. Can’t afford to be present biased.

shannowhamo (#845)

@WhyHelloThere Hah, I don’t even know what “too much money” in my bank account means! I’m very present biased, obviously.

Megano! (#124)

I am…most definitely present bias.

ImASadGiraffe (#982)

No present bias here. I have a spreadsheet that calculates out how much money I’ll have like 6 months from now, based on current paychecks and bills I have to pay. I pay my credit card in full each month (only use it for the points).

Blondsak (#2,299)

@ImASadGiraffe I’m with you on the credit card. It is my primary source for paying for anything and everything, but I pay it off in full every month. And every few months, I save up a large enough cash-back bonus to get a reduction on my current payment!

Fig. 1 (#632)

What’s the term for the person who looks at their CC statement and goes spendy on the last week of the month just cause they’ve only racked up so much in the first three weeks, thus eliminating any virtuous saving behaviour?

I definitely spend more money right after I get paid, but I also don’t carry a credit card balance. WHO AM I???? *identity crisis*

shannowhamo (#845)

I think maybe the kind of people who come to this site are just more likely to be responsible with money so I’ll chime in to represent the other Logans of the world. OF course I spend a ton of money on pay day, I haven’t been able to afford anything before then, duh! I have tons of consumer debt and always spend up until the last cent before pay day. I’d of course prefer if I wasn’t like that and hope to improve with age (I’m at least not using the credit cards any more, which is a start) but I like to shop and buy what I want and not stress too much about it. But I love reading about how responsible every one else is, maybe it will inspire me?

nikp (#3,186)

I’m thankful for a lot of things, but mostly for the fact that I’ve always worked at places that paid weekly.

I could handle bi-monthly, in theory, but I never, ever want to have to try it.

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