Of Marshmallows and the Economy

Two MarshmallowsThere are two kinds of people, those who eat one marshmallow, and those who eat two. So says Scott Sumner, a libertarian economist, who relates the results of Walter Mischel’s psychological experiment on 4-year olds and chewy goodness to current attitudes on government entitlement programs.

Forty years ago Mischel, an American psychologist, conducted a famous experiment. He left a series of four-year-olds alone in a room with a marshmallow on the table. He told them that they could eat the marshmallow at once, or wait until he came back and get two marshmallows. Some eat the marshmallow immediately. Others try all kinds of strategies to leave the tempting treat alone.

Nothing surprising there. The astonishing part was the way that the four-year-olds’ ability to defer gratification was reflected over time in their lives. Those who waited longest scored higher in academic tests at school, were much less likely to drop out of university and earned substantially higher incomes than those who gobbled up the sweet straight away. Those who could not wait at all were far more likely, in later life, to have problems with drugs or alcohol.

Sumner goes on to explain that what bothers him is when he sees attempts to redistribute wealth from the two marshmallow eaters to the one marshmallow eaters. Being a two marshmallow guy myself, it’s certainly easy to relate to the frustration of needing to support those who lived in the moment without planning for their futures.  Sumner’s point is that it’s not fair to the two marshmallow crowd to cut their Social Security benefits because they don’t need the income.

Social Security is a good thing in that it forces the one-marshmallowers to prepare for a future they wouldn’t otherwise consider until it was too late.  It puts the burden on them, rather than having them be indigent burdens on society in their twilight years. But the two-marshmallowers who have accumulated some wealth over the decades are equally entitled to enjoy the fruits of their contributions to Social Security.  The program’s current method of allocating benefits based on lifetime earnings preserves equity between the one-marshmallowers and the two-marshmallowers. But noises are being made in Congress for changes such that accumulated wealth at retirement would decide your level of benefits, and this would unfairly punish the plan-ahead crowd.

Sumner then goes on to say, “I don’t trust the Dems—I see them as the party of one marshmallow eaters.”  It is here that I think he runs off the rails a bit.

Democrats certainly have the reputation for backing entitlements and social safety nets that keep the one-marshmallowers from economically melting in the campfire of life. But the Republicans are prone to their own brand of short-sightedness.  If the country were a chess game, the GOP would never play more than one move ahead. From issues as diverse as deregulation, pollution, education, taxes, infrastructure investment, and foreign policy the Republicans are pocketing short term gains with little to no regard for the longer term implications.

While the marshmallow analogy is instructive, it’s not at all clear there is a clean party line to draw between the two groups. If anything, the politicians of both parties are thinking far too much like one-marshmallowers.  Two-marshmallow types are capable of sacrificing now in the interest of a better future.  There are scant few policies proposed that meet that definition—fewer that are not dead-on-arrival once the news media starts spinning them to the public.  As a country, deferred gratification is not our strong suit.

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