Later Is the Most Expensive Word in Money

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In the early 2000s, two economists got hold of three years of attendance data from a chain of health clubs. More than seven thousand members, every visit logged. What they found became one of the most quietly damning studies in behavioral economics.

The members who picked the unlimited monthly plan, around $70 a month, went to the gym about 4.3 times a month. Do the arithmetic and each visit cost them more than $17. The same clubs sold a 10-visit pass for $10 a visit. The monthly members could have paid less per workout by buying the cheaper option, and on average they left about $600 on the table over the life of the membership.

They were not bad at math. They were optimists about a person who didn't exist yet: the future version of themselves who would show up four times a week. That person never came. (DellaVigna and Malmendier, Paying Not to Go to the Gym, 2006.)

I think about that study a lot, because the same gap shows up all over our money, and there it costs a great deal more than a gym membership.

The idea: we live in the present tense

Standard economics long assumed people weigh the future in a steady, consistent way. A dollar next year is worth a little less than a dollar today, a dollar in two years a little less than that, all at a smooth and predictable rate.

Real people don't run on that math. We discount the future on a curve that falls off a cliff right at the word "now." Offer someone $100 today or $110 next week, and plenty of them grab the $100. Offer the same person $100 in a year or $110 in a year and a week, and almost everyone waits the extra week. Same seven days. Same extra ten dollars. The only thing that changed is whether "now" was on the table.

Economists call this present bias, and David Laibson gave it its modern mathematical form in a 1997 paper with a wonderful title, Golden Eggs and Hyperbolic Discounting. Today gets a thumb on the scale. Every tomorrow gets treated about the same as the day after it. The cost of a hard decision lands now, in full color, while the payoff sits in a hazy future we can barely feel.

The science: the people who know, and the people who don't

A couple of years later, Ted O'Donoghue and Matthew Rabin sharpened the picture in a paper called Doing It Now or Later. Their key move was to split procrastinators into two kinds.

The naive ones don't know they have the bias. They genuinely believe they'll handle it next week, the same way the gym members genuinely believed they'd show up. So next week never arrives, because next week they simply make the same hopeful forecast again.

The aware ones know they have the bias. And that awareness, the research found, is most of the battle. Once you accept that your future self will dodge the unpleasant task, you stop leaning on willpower and start building something that doesn't need it.

"The problem was never that people don't care about their future. It's that they keep mispredicting how a future version of themselves will act."

The real world: the 401(k) that runs you

Nowhere is this easier to see than retirement saving, and the numbers are blunt. In 2001, Brigitte Madrian and Dennis Shea studied a company that flipped one switch. Instead of asking new hires to sign up for the 401(k), it enrolled them automatically and let them opt out. Nothing else about the plan changed. Participation more than doubled. And then most people just stopped. Roughly three-quarters of the auto-enrolled employees stayed put at whatever default contribution rate the company happened to choose, and most never touched the default investment either. The paper is called The Power of Suggestion. Inertia turned out to be stronger than almost anyone's stated intentions.

Don't fight it — use it

Here is the part I find genuinely hopeful. The same force that quietly works against you can be flipped around to work for you.

In 2004, Richard Thaler and Shlomo Benartzi tried something clever. Instead of asking people to save more now, which hurts now, they asked them to commit to saving more later, out of raises they had not yet received. They called it Save More Tomorrow. Workers agreed in advance to send a slice of each future pay raise into their retirement account, so their take-home pay never actually fell. The results were not subtle. Average saving rates among the people who joined climbed from 3.5% to 13.6% over about three and a half years, and most of them stuck with it. They did not become more disciplined people. The plan simply removed the moment where a present self could look at a smaller paycheck and say no.

This is the practical heart of behavioral finance. The most reliable fix for present bias is not another lecture about the importance of the future. It's a single decision, made once, that locks in the good behavior so your future self can't quietly back out. Economists call these commitment devices. You already know them by feel: the automatic transfer on payday, the retirement account you can't easily raid, the appointment on the calendar that happens because it's on the calendar.

The idea earned Thaler a Nobel Prize in 2017. And in 2022, Congress wrote it into law. Under the SECURE 2.0 Act, most new workplace retirement plans now enroll workers automatically and nudge their savings rate up a notch each year on their own. The default does the saving.

The takeaway

None of this means you're lazy or undisciplined. It means "later" is a forecast, and the forecast is almost always wrong, because it's made by someone optimistic on behalf of someone who won't feel like it when the moment comes.

So stop negotiating with your future self. The move that actually beats present bias is to decide once and automate it, today, while you're already thinking about it. Turn on the automatic transfer and the auto-escalation. Put the rollover or the rebalance on the calendar with a real date, not "soon." A small thing you actually do will beat a large thing you only intend to do, every single time.

The gym members didn't lack good intentions. They lacked a system that didn't depend on them. You can build the one they never did.