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Understand ‘Hyperbolic Discounting’ To Hack Your Way Into Making Better Decisions!

Posted: May 7, 2021

While juggling multiple roles, don’t forget you are important too.  Make yourself a priority because no one else will with #KhayaalRakhna

Hyperbolic discounting? What’s that? If you’re that person who keeps postponing good habits “for tomorrow”, you’ll appreciate this hack to help break the pattern. 

Consider this: It’s 10 pm. You are scrolling through your social media feeds and come across a post that inspires you to fit into your old clothes again, the ones you had put away after your weight gain. ‘It’s time to get healthy and fit’, you think. Fully motivated to reach your goal, you set up the alarm for 6 am.

“Tomorrow is the day I start my workout, eat healthy and get back on track. Yes! I will do it. But wait, let me first look up for that healthy meal plan on Google before I sleep….”

It’s 12 pm. And you have no clue how the last 2 hours whizzed by – visiting websites, scrolling through the various feeds and responding to different notifications. You finally manage to sleep knowing you won’t be starting this from tomorrow for sure.

6 am, and the alarm goes off. You reach for it, and with a sense of urgency, hit the snooze button. ‘Let me just catch a few more winks before I start my day…’

It’s 8 am already and now you need to rush through your day and before you know it, it’s 10 pm and you find yourself at the same spot, again.

How many of us find ourselves caught in this cycle of planning-and-not-executing, knowing that we are capable of turning our life around and yet somehow are making choices that keep us stuck in this rut?

Imperfect present, perfect futures

Consider our perfect plans – for fat loss, for finishing off that important assignment well before time, for saving money for our future, for achieving goals that would make our life more meaningful. We are excellent when it comes to predicting the choices our ‘future self’ will make in order to accomplish our goals.

Somehow the future is where the magic happens – promises are kept, goals are reached with determination, and we always have self-control and act in our best interest. But somehow it’s the ‘present self’ who messes up. The present is where we end up making choices that might not be in our best interest.

· We choose to browse the internet, or spend time mindlessly chatting, instead of working out or finishing off the important task we had planned to do.
· We end up choosing to eat that cake or nachos instead of fruit or a salad.
· We choose to impulsively spend that extra money on something irrelevant, when we had decided earlier that we would stick to our budget.

Why does our “Present Choice” differ so much from our “Future Choice”?

Enter, The Hyperbolic Discounting Model

Hyperbolic Discounting, according to Behavioural Economists, is the concept, wherein in the present, we are biased towards choosing an immediate reward (even if it is of a lesser value), than a delayed reward (even if it is of a greater value). In the present, instant gratification wins over delayed gratification. But when we project this choice onto the future, our perspective changes. We become less impulsive and more rational. We do not ‘discount’ or ‘relatively devalue’ a reward based on the time.

In the future, we prefer a reward of greater value over a reward of lesser value, even if it means waiting for it.

This preference that we have towards immediate gratification had an evolutionary advantage. Our ancestors had to look out for ways to survive each day. They would have hunted and eaten a smaller animal immediately, rather than wait in anticipation for a larger animal later. They simply couldn’t afford to take that risk. 

Going for immediate reward served our ancestors’ purpose back then. In today’s age though, it only leads to procrastination, over-indulgence, impulsive financial commitments or addictive behaviours.

How hyperbolic discounting affects our choices everyday

Our choices between ‘working out or watching Netflix’, ‘eating a healthy snack or junk food’ , ‘browsing social media or finishing an important task’ etc all are influenced by the Hyperbolic Discounting bias. In the present, we would be inclined to avoid the pain or discomfort (working out / eating a healthy snack / finishing the assignment) and choose that option which gives us immediate pleasure (watching Netflix / eating junk / browsing social media feeds).

Companies use this thinking model to attract customers and convince them to make the choice of investing in various products and services. Have you ever got excited over the tags “Flash sale”, “Limited offer only”, “Flat 50% off”? These create a sense of urgency in us to invest in the reward right away or risk losing out. The mantra of “buy now, pay later” used by all credit card, banks and other product / service companies, prey upon our urge to splurge then and pay later, even if we end up spending more in the long run.

Hack this model to halt future excesses

Hyperbolic discounting model makes us view present and future differently. It all comes down to that crucial point in time when we have to decide between two choices and their rewards: short term reward – long term pain, a temptation / urge based choice, which would give us temporary reward, but one we might regret choosing in long term. Or, short term pain – long term reward, an intention / goal based choice, which might cause temporary discomfort, but make us feel good about it in the long term.


Our understanding of Hyperbolic Discounting model helps us to identify and label the two choices we have on a regular basis, before taking the decision of acting on any one of them. Our awareness of how our present choice is inclined towards short term rewards should inspire us to find ways to use it to achieve our long term goal.

We need to roll up our sleeves, hack into this default thinking pattern, and work on our decision making skills to improve our self-control, motivation and determination, leading us to work on our goals and improving the quality of our lives.

Image by Gerd Altmann from Pixabay 

First published here.

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A single parent, a software engineer, a content writer, a fitness trainer, a yoga practitioner,

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