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The Marshmallow Test
I stumbled across this little experiment, and I know it's trying to tell me an important truth about our economy or Wall Street or bailouts or something. I just can't seem to put it into words, so I need your help. Look, there's a prize involved.
Watch highlights of the experiment below and tell me what it says to you about our "adult" economy. I'll choose my favorite explanation and send the winner a prize. And no, it's not a marshmallow (unless that's what you want).
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Thanks for the video! It clearly demonstrates that grow-up's actions are stemmed from childhood behaviors.
As in school, all test results can be plotted in a bell curve. One spectrum: Immediate gratification w/o reward (0%). The other spectrum: Delayed gratification w/ maximal reward (100%). Most people are 'nibblers' w/ variable reward (5-95%).
Outside factors will also influence how each person react: When was their last meal/dessert/marshmallow? Desire for delayed gratification (how important is the reward)? Current asset (Maybe he has a bag of marshmallow waiting at home?)
In each case, the result will be factored by: Individual personality (Patience?), Hunger level (Last meal), and Current asset?
There is no way any way can predict actions of millions of people. Market forces must prevail. Otherwise we will become a socialized and governed by dictator or governing few.
Thanks
Larry
<b><i>Clearly</i></b> this experiment is a metaphor for Alan Greenspan's admission to the idea that the markets cannot self-regulate. Just as children need to be instructed by adults what is best for them, adults need the steady and trustworthy counsel of governmental intervention to strike the balance between growth and stability.
This is what I would have said, had I not read yours first. Although, the implication is that adults can and do regulate/educate children. And in my past life as a school teacher, I can tell you that most children come from homes where both parents work, or divorced homes where the parent works. Ergo, the responsibility of parenthood seems to be gradually lessening. Furthermore, these unguided children, of the 'me' generation, and beyond (like my generation, of generation X), are now the 'adults' in charge of the markets, and led to what Greenspan missed. That the markets rather grab the short term gain, then the long term gain, even when that gain so much higher, and the short term gain will destroy the business, and 'laugh, drink, and be merry' (today) prevails.
An answer that was offered to me has to do with middle management, where they need to show the numbers each quarter, or someone else takes their place. They are not afforded the luxury of long term planning that the CEOs have, unless, of course, you have a CEO who needs to impress the share holders with great economic gains, otherwise, the shareholders will leave and devalue the stock, which is in itself short sighted, for when a better product, and more returns come from this sort of planning, the demand for shares will return. And this thereby leads to the sometimes myopic view of a CEO.
Bottom line, most people act like children, and grab what they can, when they can. Selfish behavior reigns, and why shouldn't it in a country that touts, "if it feels good, do it". The anxiety of waiting is too much for most, for they never learned patience in childhood, and don't know how to say NO to themselves.
<i>The anxiety of waiting is too much for most, for they never learned patience in childhood, and don’t know how to say NO to themselves.</i><p>
That may be true, but this experiment doesn't prove anything. It's just a "paltry" marshmallow. And any cute little redhead knows that marshmallows are meant to be eaten not invested. She was merely taking her profit.<p> Holding some opportunities in low regard often ends up being important for one's ability to successfully negotiate. As Herb Cohen says: "I care a lot...<br> ...but not that much."<br> Holding out for the second marshmallow ("bird in the bush") could leave you with nothing, a breach of ethics (nibbling), an unacceptable cost (anxiety, obsessing, being a spectacle unawares and wasted time). <p>
The children this experiment leads us to believe are smart and virtuous were all speculators and prone to influence too! What if the scientist were running a Ponzi scheme? I'm not so quick to judge every person who dives in as merely having a lack of self-control. The video camera can't see inside their heads and even a PET scan or an MRI is severely limited.<p>
"Facts tend to survive based on how interesting they are, rather than whether or not they are true" - ?<p>
"impetuosity and audacity often achieve what ordinary means fail to attain." - Niccolo Machiavelli, The Historical, Political, and Diplomatic Writings, vol. 2 (The Prince, Discourses on the First Ten Books of Titus Livius, Thoughts of a Statesman) [1513]<p>
"The market can stay irrational longer than you can stay solvent." - John Maynard Keynes<p>
2 Kings 7:8<br>
And when these lepers came to the uttermost part of the camp, they went into one tent, and did eat and drink, and carried thence silver, and gold, and raiment, and went and hid it; and came again, and entered into another tent, and carried thence also, and went and hid it.<p>
Proverbs 16:9<br>
A man's heart deviseth his way: but the LORD directeth his steps.
i think the experiment is pitting instant gratification against saving for the future. i think it would have been more interesting to see how the kids who saved would react if the lady handing out the marshmellows tried a bailout program for red- haired girl saying she was too important to lose the second marshmellow.
Watching these cute kids sit in their chairs and struggle so hard to resist temptation tells me that there may yet be hope for our instant gratification, consumption-obsessed economy... and it also suggests that marshmallows make fantastic baby sitters. Who knew?
The kids have faith that if they wait and are patient, they will be rewarded. Similarly, when investing we have faith that over the long term, our investments will grow and multiply. However, the children undergo severe (for their age) emotional stress by having the marshmallow placed directly in front of them as they undergo the experiment, causing some of them to lose their focus to satisfy short-term happiness at the expense of guaranteed long-term gains.
This translates over to adults as well. I'll admit I have my stock portfolio posted on my iGoogle, causing me to "check-in" with my stocks every time I go to search. This is probably a poor choice because it causes me to second-guess my long term strategy each time I see a new gyration in the market. Sometimes the temptation to tinker is too great, causing me to make an investment decision that I later regret.
If the marshmallow had been placed in a box, most likely the children would have had an easier time waiting for their reward to double. Perhaps I should step back and remove my stock portfolio from my daily routine. I have chosen the right long-term strategy for me, and now I need to have the patience and resolve to let it work for me.
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