New Study: Ability to Delay Gratification Predicts Wealth, Health & Success

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Perhaps the old saying should be revised to read, “To the patient go the spoils.”

The psychology majors of the world probably remember the classic Stanford “Marshmallow Study” from the 1960s. If your PSYC 101 is a little rusty, here’s what happened: A researcher offered a test group of four-year-olds either one marshmallow now or two marshmallows after a 20-minute wait.

About a quarter of the kids held out for the second marshmallow. But the study’s brilliance was its long-term view, appropriately enough.

Over the next few decades, researcher Walter Mischel continued collecting data on the children as they grew into adulthood. Spoiler alert: The kids who showed discipline and long-term thinking ended up scoring better on just about every measure — SAT scores, social competence, substance abuse rates, body-mass index, ability to cope with frustrating circumstances, you name it.

To this day, cynics continue to try and poke holes in the study. The sample size is too small, the kids weren’t diverse enough, maybe the kids weren’t hungry, maybe they didn’t trust that the researcher would deliver the second marshmallow. But those criticisms wither under scrutiny (for example, the researchers used adults the children knew and trusted to administer the experiment).


The Discount Rate Study

Fast-forward to a study released last month by the National Bureau of Economic Research. They surveyed older Americans (all at least 70 years old) to ask them a simple question: If you were offered $100 right now, or could wait a year for a higher amount, how much more money would it take for you to wait a year?

Put another way, what kind of return on investment would you demand to invest rather than take the money and run?

The researchers referred to the subjects’ answer, the return, as the “discount rate.” Thus, someone who answered “$10 more” ($110 total) reported a discount rate of 10%. Higher discount rates indicated less patience — that it would take a lot more money to convince the subject to wait a year.

And oh, did the answers correlate in fascinating ways.

Delayed Gratification Impacted Both Wealth & Health

Surprising no one, there was a strong correlation between subjects’ discount rates and their net worth. The lower the discount rate, the higher a respondent’s net worth.

This makes complete sense. Those who are more patient, more willing to delay gratification, tend to be those who save and invest their money.

Subjects whose discount rates were more than one standard deviation higher than average turned out to have a net worth 29% lower than average. In real dollars, that translated to having $130,000 less than their more patient counterparts.

It turns out that this simple patience test has a stronger correlation to wealth than even marriage or religion.

Perhaps even more troubling, these less patient subjects had far less healthy lifestyles. They were more likely to smoke, skip medical appointments, and drink excessively — even after adjusting for income, race, education, religion, and gender.

Age & Health

Around now, the skeptics are probably saying, “Hey, if I were 90, I’d take the money now, too. I might not be alive in a month, much less a year!”

Fair enough. And the data plays this out: Subjects who had heart conditions or past cancer experiences reported discount rates 13% higher than others. Those with dementia or Alzheimer’s answered with even higher discount rates — 35% higher.

Wondering what the average answer was? A whopping $154, or a 54% discount rate — roughly twice the return/discount rate that young and middle-aged adults answer.

Fortunately, it’s easy to adjust for factors like age when analyzing data.


Parsing the Data

Which, of course, the NBER researchers did. The results outlined above, showing the strong correlation between low discount rates, high wealth, and better health habits? That data only compares respondents of the same age.

The data acknowledged racial and educational differences as well. Researchers found that, on average, white people’s discount rates were 11% lower than non-white people’s discount rates, hinting at cultural differences in attitudes and the effects of various life circumstances.

There was also a strong correlation between discount rates and education. For every additional year of education, respondents’ discount rates dropped roughly 2%. After all, education is itself a form of investment and delayed gratification.

Real Estate Investing, Retirement Savings & Implications

Why does any of this matter? No one likes naggers, so what’s the point of telling people what they are already supposed to know?

First, the study reaffirms that patience pays — and well. When the average American savings rate is a paltry 4.8%, we as a nation could use a wake-up call to spend less and invest more.

But there is also a cautionary tale writ large in this data. With Americans living longer but collecting less money from fixed pensions, it matters that older Americans are so skeptical of the idea of investment. If every American refused to invest for anything less than a 54% return, we’d all be in trouble.

What few pensions that remain are a relic of a bygone era. Don’t count on Social Security, either; it’s scheduled to be insolvent by 2034. Americans need to take more ownership of their retirement planning than ever before, all while savings rates are down from decades past.

It’s a good thing real estate investors are so much better off than the average American, isn’t it?

What do you make of this study?

Let me know your thoughts with a comment!

About Author

G. Brian Davis

G. Brian Davis is a landlord, personal finance expert, and financial independence/retire early (FIRE) enthusiast whose mission is to help everyday people create enough rental income to cover their living expenses. Through his company at, he offers free rental tools such as a rental income calculator, free landlord software (including a free online rental application and tenant screening), and free masterclasses on rental investing and passive income. He’s been obsessed with early retirement since the early 2000s (before it was “a thing”). Besides owning dozens of properties over nearly two decades, Brian has written as a real estate and personal finance expert for publishers including Money Crashers, RETipster, Think Save Retire, 1500 Days, Lending Home, Coach Carson, and countless others.


  1. Peter Mckernan

    Hey Brian,

    This is a great article about the studies that show how little people really want to invest in their future, and invest in the current market to bring the reward home in the future. Many people want a reward now, or within a short time. I believe that is why we only have a 1% group and not a 99% group for riches.

  2. Dean Thompson

    If I was offered $100 today vs more in a year…I’d need quite a bit more than merely what banks are paying…and not because of poor financial savvy, or low IQ, or my own impatience.

    My real estate investments pay a LOT more than banks, or stocks, or CDS. If I’m earning a 30% return on every dollar I put into real estate, I’m not only gonna require that of my other “investments” (as in your example)…

    I’m also going to borrow on cars, houses, use pmt plans for my insurance bills, my kids braces, etc…and convert my 401k into a self directed IRA…and…

    In short, I’m gonna put every dime I can lay my hands on and feed it to my golden goose…not save it for a rainy day.

    And I do this not because in know very little about money…but because I know quite a lot about it.

  3. Peter S.

    I just listened to a podcast recently where they spoke with the author of the original study. He seemed to indicate that everyone is viewing the results incorrectly even though his study has been cited numerous times. I think this was on the NPR Invisibilia podcast.

  4. Social Security will not be tapped out by 2034; the Trust Fund will. The Trust Fund was established in the 1980’s to provide for the retirement benefits of the baby boomers. The first baby boomer was eligible to begin receiving benefits in 2008; the last boomer in 2028. The first boomer will be 88 in 2034. Most boomers will be dead by 2034.

    If you set up a Christmas savings account, and spend the money on Christmas presents, you cannot expect the Christmas account to still be full. That is the position of the trust fund. It was designed to be out of money by around 2034.

    Nevertheless, Social Security anticipates being able to pay a greater share of benefits after the Trust Fund is depleted. In 2002 they said depletion would occur in 2038, and then 73% of promised benefits would be paid. Here is an abbreviated chart of year-by-year projections:
    Year Depletion Percent of Benefits
    2005 2042 73%
    2008 2041 75%
    2011 2037 76%
    2016 2034 79%
    If this pace keeps up, even after the Trust Fund is depleted, Social Security will still be able to pay at least 90% of promised benefits. Removing the income gap would easily push that percentage to 100.

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