Am I just completely insane? Why didn't I pay my ticket on time? I could have saved at least 15 bucks. Well, as it turns out, I always did (and still do) intend to pay it sooner rather than later. But getting an envelope, writing a check and sending the thing out was (and is) kind of annoying process to me. Every day I would say, "I'll do it tomorrow."
This is what is called time (or dynamic) inconsistency. The basic idea is that one's current self and one's future self (say tomorrow, or next month) have differing ideas on what actions should be taken (present or future). This is more than a theoretical construct: its a pretty big deal in health economics. An example (taken from the above linked wikipedia page):
Each day smokers face a dynamic inconsistency: their best plan is to enjoy smoking today, but to quit tomorrow in order to get health benefits. However, the next day, the plan is the same; enjoy smoking today and quit tomorrow. This goes on, and they never give up, even though they plan to, hence the inconsistency.
You can easily see how this behavior is important in understanding other health behaviors, such as dieting and other weight loss efforts or perhaps even going to the doctor to get some anomaly checked.
If time inconsistency is a strong barrier to self-motivated health efforts, how does one get around this? Yale economist Dean Karlan and law professor Ian Ayres think they have an answer. The two have recently started a company called StickK. Here is the basic idea:
The company will have a Web site offering individuals hoping to reach a goal — anything from sticking to a diet to learning to ride a unicycle — legally binding contracts where they will pay a set dollar amount to charity if they fail in their endeavor.
The author of the book "The Undercover Economist," Tim Harford, is testing out StickK's methodology. He has paid a $1,000 so-called contract bond to the company, and has promised to donate 10% of this deposit to charity if he fails to complete 200 push-ups and 200 sit-ups every week.
"When I signed up to do this, I thought to myself, the contract bond isn't going to matter at all; what's relevant is that I've made the psychological commitment to do these press-ups and sit-ups," he said. "I was completely wrong. There's absolutely no way I would have done these press-ups and sit-ups for the past six weeks had it not been for the commitment bond."I'm really curious to see a) how many people choose to enter binding contracts and b) how effective these are for the average consumer.
In the meantime, I think I'll pay my parking ticket...tomorrow.