Overcoming Short‐Termism: Mental Time Travel, Delayed Gratification and How Not to Discount the Future

Abstract

Short‐termism has been identified as a characteristic of individuals, companies, stock markets, governance structures and policies, and has been linked to inadequate saving for retirement, reduced investment returns, greater market instability and destruction of long‐term value. As a construct, short‐termism is complex and multidimensional. Accordingly, this paper draws upon current theory and research from a range of fields including behavioural economics, psychology and the cognitive sciences to uncover both explanations of the phenomenon and implications for countering an overly short‐term focus. Possible strategies for achieving the latter are discussed.