It’s not that the poor don’t think enough about money, or the busy about their time—it’s that they think about it too much. Shafir likes to cite a survey the researchers did at Boston’s South Station. They asked arriving train passengers what the starting fare is on Boston taxis. Rich travelers take more cabs than poor ones, but low-income respondents were much more likely to know what it costs to take a cab, because in thinking about the decision between taking a cab or a bus, a couple of dollars one way or another really matters. This attentiveness ensures that they have enough cash to finish the day, but all of these immediate distractions—deciding whether to buy a muffin or some other minor indulgences; comparison shopping cereal brands; calculating and recalculating expected expenses against a dwindling bank balance—threatens to leave no mental space to consider the bigger picture of managing finances for the long-term. (The time-scarce similarly expend so much effort dealing with the minutiae of getting through the day that they fail to think about making their lives less harried and more productive in the future.)And, for something more closely related to making your resolutions:
But occasional periods of self-reflection—like the days of reckoning that arrive in late December each year—provide an opportunity to think about what we want to put in the suitcase that constitutes our lives. The advice that Mullainathan and Shafir have for resolution-makers isn’t that you refrain from trying to better yourself, but rather that you lock in commitments to self-betterment that won’t require vigilance or attention in the year ahead. So while it’s on your mind, go ahead and increase the default contribution to your pension plan; buy a smaller fridge that won’t hold as much ice cream; force Outlook to block off every Friday afternoon to clean up your desk and the rest of your affairs; and use both the time and mental space that commitments like these can free up to stay on top of the workload and pressures that are already part of your daily life.
The rest of the article is worth a read too, but in making your New Year's commitments, the best advice you can get from an economist: make those commitments credible. Happy New Year!