Present Bias

Laibson's quasi-hyperbolic discounting model (1997) formalised the pattern: people apply a sharp extra discount to anything that is not immediate, which makes preferences inconsistent over time. O'Donoghue and Rabin (1999) showed how this produces procrastination even among people who are fully aware of their own tendency.

Saving is a textbook present-cost, future-benefit decision. The cost is felt now and precisely; the benefit is abstract and later. Under present bias, that trade loses by default, which is why 'I'll start next month' is the most common saving plan in existence.

Pre-commitment — deciding now for a future self who cannot easily reverse it. Save More Tomorrow used this by committing future pay raises. Automatic scheduled transfers use it too: the decision is made once, in advance, and no future moment of sacrifice is required.

The second counter is to shrink the immediate cost until the bias has almost nothing to act on. A contribution sized to be unnoticeable is not really competing with present consumption at all.

Both counters are built in: the amount is deliberately negligible, and the schedule is set once rather than reconsidered daily.

• Immediate costs are over-weighted relative to future gains.
• Awareness alone does not fix procrastination.
• Pre-commitment and automation are the effective countermeasures.
• Shrinking the present cost removes the bias's leverage.

• Laibson, D. — Golden Eggs and Hyperbolic Discounting (1997)
• O'Donoghue, T. & Rabin, M. — Doing It Now or Later (1999)