Would you prefer $120 today or $154 in one year? Your answer may depend on how powerful you feel, according to research in Psychological Science, a journal of the Association for Psychological Science.
Many people tend to forego the larger reward and opt for the $120 now, a phenomenon known as temporal discounting. But research conducted by Priyanka Joshi and Nathanael Fast of the University of Southern California Marshall School of Business suggests that people who feel powerful are more likely to wait for the bigger reward, in part because they feel a stronger connection with their future selves.
In the first of four experiments, the researchers randomly assigned participants to be a team manager (high-power role) or a team worker (low-power role) in a group activity. Afterwards, the participants were asked to make a series of choices between receiving $120 now or increasing amounts of money ($137, $154, $171, $189, $206, $223, and $240) in one year.
On average, low-power team workers were only willing to take the future reward if it was at least $88 more than the immediate one. High-power team managers, on the other hand, were willing to wait for future rewards that were only $52 more than the immediate one.
Joshi and Fast speculated that power holders may be willing to wait for the larger rewards because they feel more connected with their future selves, a consequence of experiencing less uncertainty about their futures along with an increased tendency to see the big picture.
In line with their hypothesis, the second experiment showed that the relationship between power and reduced temporal discounting could be explained, at least in part, by participants’ connectedness to their future selves.
A third study showed that powerful people also show this pattern with non-monetary rewards.
In the final study, Joshi and Fast took their research outside the laboratory, asking dozens of people about how powerful they feel in their everyday jobs and how much money they have socked away. After accounting for various factors including total income and socioeconomic status, the researchers found that people who felt more powerful at work and who felt more connected with their future selves had amassed greater lifetime savings.
While powerful people may feel more connected with their future selves and are therefore more likely to save money, they also tend to be overconfident decision-makers.
“It is important to foster awareness of all of power’s effects,” the researchers conclude, “otherwise, the power holder may make overly risky — albeit well-intentioned — decisions on behalf of their future self.”