Delayed Gratification Study: It Also Predicts Credit Scores

on December 02 2011 4:07 PM

The Stanford marshmallow delayed gratification test is one of the most influential behavior studies in modern history.

Conducted by Stanford psychologist Walter Mischel in 1972, it has proven to be a solid predicator of success in life and is used by elite preschools to screen their young candidates.

Mischel's experiment measured if children could sacrifice eating a marshmallow immediately in order to receive two marshmallows 15 minutes later. 

Years later, those who resisted the temptation (and received two marshmallows) went on to perform better in on their SAT tests.

In their adult life, those who quickly yielded to temptation in the test have a significantly higher body-mass index and are more likely to have had problems with drugs, reported the New Yorker.

Now, a new study has shown that the ability to delay gratification for adults can also predict credit scores, arguably a metric of financial success in the United States.

Professors Stephan Meier of Columbia University and Charles Sprenger of Stanford University recruited 437 low-to-moderate income people in Boston for an experiment.

Each was asked whether he prefers smaller, more immediate rewards versus larger, more distant awards.  The professors found that those who opted for the larger, more distant awards also happened to have better credit scores.

If [individuals] don't pay off their debt, they will have short-term benefits - any cash on hand is available for something else - but the costs/problems come much later, when a landlord, mortgage lender, or someone else sees their bad credit report, said Meier.

At the time they conducted the study, Meier and Sprenger were working for the Federal Reserve in Boston.  To better understand the subprime mortgage crisis, the Fed was probing the psychological factors that explain how people make those decisions to default or not.

Meier and Sprenger's study will appear in an upcoming issue of Psychological Science.

More News from IBT MEDIA