Present Bias

What we want now is not what we aspire to in the future

Present Bias

What we want now is not what we aspire to in the future

An online grocery shopping study suggests that as the days go down prior to delivery of an order, the % made up of essentials decreases and the % made up of desirables increases. The closer to the present moment, the less less rational we become (though only up to a point!).

Milkman, Rogers & Bazerman (2009). Ice cream soon and vegetables later: A study of online grocery purchases and order lead time.

As aspirational creatures, our intentions are clearly always good. I kid you not. We all want to spend less, save more, and choose products that we should consume, as opposed to want to consume. However, time has a curious effect on the quality of our decisions…

Research has shown that we make drastically different choices for the near-future in relation to those made for the more distant future. For instance, customers are found to spend less, the further in advance of delivery they complete their online grocery order. We also tend to buy less unhealthy ‘want’ groceries, and more ‘should’ groceries with each additional day between ordering and receiving our order, especially for order times of between 2-5 days. Putting this another way, we behave more impulsively, the sooner our decisions will take effect.

Fascinatingly though, the study found a fascinating discovery: that the proportion of healthy ‘should’ product choices actually increased the day before delivery. It’s thought this is because, at this point, we’re in a mindset of meal-planning, rather than mere pantry-stocking, so we visualise and make more real the idea of a planned meal. Research has shown that such visualisations tend to fall by the wayside as time increases, and we start to conveniently abstract the curious features of chocolate, burgers etc (Trope & Liberman, 2003).

Takeaways for Decision-Makers

  1. ‍Retailers can improve their demand forecasting by taking into account the fact that their customers may be likely to spend more in the near future than in the more distant future.
  2. ‍Retailers could encourage shoppers to order their groceries up to 5 days in advance of delivery. This will lead to healthier choices. This is also known as “future lock-in”, and can be used for all types of ‘should’ decisions beyond groceries that will end up benefiting the consumer.
  3. On the flip-side, given that customers are found to spend more and make more ‘should’ decisions as time to delivery decreases (especially at the 2-day sweet-spot), retailers could adapt the product recommendations to fit, offering naughty treats on severely-time-restricted special offer.
  4. ‍However, given that customers will order a higher percentage of want goods and a lower percentage of should goods for delivery as time goes down, there’s a great second opportunity to encourage healthier customer choices by recommending more ‘should’ products in the day prior to order completion.

Further Reading

I’ll Have the Ice Cream Soon and the Vegetables Later: A Study of Online Grocery Purchases and Order Lead Time PDF (Milkman et al, 2008)

Temporal Construal PDF (Trope & Liberman, 2003)

Libertarian Paternalism Is Not an Oxymoron PDF (Thaler & Sunstein, 2003)

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