Present Bias: Why We Choose Now Over Later
We plan to save, exercise, and eat well — starting tomorrow. Economists have a name for that.
By Iris Penhaligon | Oct 23, 2026 | 5 min
Offered £100 today or £110 in a week, many people take the £100. Offered £100 in a year or £110 in a year and a week, most wait the extra week. The trade-off is identical, but our choices flip.
This inconsistency is called present bias, and it shapes everything from pension saving to gym memberships.
I What economists mean
Standard economic models assume people discount the future at a steady rate. Behavioural economists found that people instead put extra weight on the immediate present. Anything happening now feels disproportionately important compared with anything later, even a short time later.
II Where it shows up
- — Under-saving for retirement despite intending to save more
- — Buy-now-pay-later and high-interest credit for small purchases
- — Gym memberships bought in January and rarely used
- — Procrastinating on tasks with delayed rewards
III Commitment devices
Because people know they will be tempted later, they sometimes choose to tie their own hands. Automatic transfers into savings on payday, retirement plans that are hard to withdraw from early, and deadlines with penalties all use this idea.
IV Save More Tomorrow
One well-known programme asked employees to commit in advance to increasing their pension contributions each time they got a pay rise. Because the cost was in the future and never reduced take-home pay, participation was high and savings rates rose substantially.
V Using it on yourself
Make the good choice the automatic one, and make the tempting choice slightly harder. Small frictions — deleting a saved card, unsubscribing from sale emails — work with present bias instead of fighting it.
This is general educational information about economics, not financial, investment, or tax advice. Consult a qualified, licensed professional before making financial decisions.
Further reading
- 1. The Anchoring Effect: Why the First Number Sticks
- 2. The Endowment Effect: Why We Overvalue What We Own
- 3. Loss Aversion: Why Losing Hurts More Than Winning Feels Good