Short-Term vs. Long-Term Greed

Put a marshmallow in front of a 3-year-old, and what happens? He stuffs his face.

But what if you tell the kid that, if he waits a few minutes, he can have two marshmallows? Two!

That's where things get tricky.

In the 1960s and 1970s, Dr. Walter Mischel, a researcher at Stanford University, did this exact experiment. Here's how it went, more or less: He put a single marshmallow in front of a bunch of kids; they were told that they could either eat it right then; or, if they waited about 15 minutes, they could have two marshmallows. Some kids waited; other kids barely waited for the instructions to be finished before they downed the one marshmallow.

Don't do it, kid. (Source)

Years and years later, Dr. Mischel checked up on the kids who'd completed the experiment. And get this: he found that the kids who were able to wait did better…at everything. They were more likely to be healthier, have higher SAT scores, and get more education. All that for a stinkin' marshmallow?

People have put up some fuss about the results, but what this experiment was testing was delayed gratification: the ability to wait (delay) for something good (gratification). It's the difference between short-term greed (I want the marshmallow now!) and long-term greed (I'll wait, so I can have more marshmallows later!).

Some people act like the eat-the-marshmallow-now 3-year-olds—but with their money. They spend everything right now and don't have enough later on. Instead of saving and investing so that their money becomes even more money, they buy what they want when they want it. And we're guessing that just like the kids who ate the marshmallow right away, these people won't be quite as successful in life.

The takeaway? Don't eat the marshmallow.

At least not every time.