Sustainable finance
Present Bias
Definition
Present bias is the behavioural tendency to give disproportionate weight to costs and benefits occurring now relative to those occurring later, leading to choices that systematically favour short-term gratification over long-term welfare. Formally modelled through hyperbolic or quasi-hyperbolic discounting, it produces time-inconsistent preferences: people plan to act sustainably tomorrow but repeatedly choose otherwise today.
References
Supports definition and framing.
Supports definition and framing.
Overview
How it is used
The concept is used in behavioural public policy (nudge units), energy efficiency programme design, savings and pension policy, and analysis of why information campaigns alone rarely shift behaviour.
Why it matters
Much of the sustainability challenge is a long-horizon problem confronted by short-horizon minds; present bias is among the best-evidenced psychological mechanisms behind that gap.