Charles Wheelan, Ph.D. The Naked Economist

In the late 1960s and early 1970s, researchers at Stanford University conducted a now-famous experiment using young children enrolled at Stanford's preschool facility. Experimenters sat the students at a table set with assorted objects that children of that age would find desirable (marshmallows, colored plastic poker chips, stick pretzels, and the like). The students were asked which of the objects they preferred.

Once that was determined, each student was offered an explicit choice that tested his or her ability to defer gratification: Get a reward now or a bigger reward later. The experimenter left the room, leaving a bell on the table in front of the student. If the student rang the bell before the experimenter returned, he or she would get a reward, albeit a less preferred one (a single marshmallow instead of two). However, if the student resisted ringing the bell until the experimenter returned (typically after 15 or 20 minutes), he or she would get something even better -- two marshmallows.

Self-Control Starts Early

The remarkable thing about the study is that a student's ability at age four to defer gratification is correlated with better outcomes much later in life, such as academic and social competence. For example, one follow-up paper found a statistically significant relationship between how long a student waited to ring the bell and -- more than a decade later -- their "ability to cope with frustration and stress in adolescence."

New York Times columnist David Brooks has cited this study and inferred that most social problems are rooted in an inability to defer gratification. He argues that for people with poor self-control "life is a parade of foolish decisions: teen pregnancy, drugs, gambling, truancy and crime." I agree. I can find no other compelling explanation for why someone would do something as utterly ridiculous as dropping out of high school, no matter how bad the school is.

But I'll see David Brooks and raise him one. I find myself asking an even bigger question: Is America as a nation losing its ability to wait for the second marshmallow? By that, I mean can we still muster the political will and personal sacrifice to make investments today that will make us richer and stronger 10, 20, or 50 years from now?

Educational Advances

I came to this question after having two experiences that were quite jarring when considered together. First, I read a chapter on the history of American education in "Handbook of the Economics of Education," a book that's only slightly less exciting than it sounds.

The chapter describes the economic impact of the two major developments that characterize American education policy over the last several centuries. First, states and communities (particularly in New England) were early to offer broad access to taxpayer-supported public education. State laws in the 18th century required towns of a certain size to support a primary school. By the beginning of the 19th century, the U.S. had the highest literacy rate in the world.

Second, the young nation was remarkably aggressive in creating public universities. In 1862, President Lincoln signed the First Morrill Act, providing 11 million acres of public land to the states to enable them to set up what are now known as the land-grant universities -- some of the preeminent research universities in the world to this day. Nearly every state joining the union after 1820 provided for a state university in its constitution.

Both of these developments (along with the later creation of high schools for the general public) help to explain America's remarkable economic performance in the 19th and 20th centuries. As a nation, we systematically set aside a lot of marshmallows so that we would become more prosperous decades, even centuries later.

Sacrificing the Future

After reading that chapter for a class I'm teaching, I had to prepare for a radio show on the economy. So I went to Barack Obama's and John McCain's Web sites to look at their economic agendas. To judge by both their plans, just about every major policy challenge can be addressed by giving some group more marshmallows now -- subsidies here, tax cuts there.

Which is nonsense. The definition of an investment, whether it's public or private, is an undertaking that requires foregoing consumption in the present in order to achieve higher consumption in the future. It's just like the marshmallows, only you get real money, or more life satisfaction, or something else worth waiting for.

I'm beginning to worry that Americans, both individually and in our collective decisions, are staring at the one marshmallow on the table for about six seconds and then stuffing it in their mouths. Not only are we sacrificing our future prosperity, in some cases we're gobbling up the marshmallows that rightfully belong to future generations.

A Bad Behavior Laundry List

Here are some of the things that strike me as worrisome:

1. Entitlements.

We've promised tons of marshmallows to the baby boomers in their retirement (and to the rest of us after that), and I have no idea where we're going to get them. If we do nothing to fix the big entitlement programs -- Medicare, Medicaid, and Social Security -- they'll essentially grow to consume all of our federal revenues in the coming decades.

It's not sustainable. Is either political candidate talking about this

2. Flat college and high school completion rates.

The economic benefits to education (and to skills in general) are huge and growing. Or, as Johnny Cochran might have said, "Those who learn will earn." For example, the wage gap between high school and college graduates is much larger than it was 30 years ago. That's a problem when our collective human capital is basically stalled. College completion rates for men are actually falling slightly.

3. America's near-zero savings rate.

We're basically spending everything that we make. (Ironically, economists used to say this wasn't much of a problem because home equity doesn't count in the official savings figures; this argument is now a fair bit weaker.)

This would appear to be a private problem; if you don't save for retirement, why should I care? But we now know from the mortgage meltdown that stupid private behavior can come back to bite us all in the rear end.

4. Chronic federal budget deficits.

This is simply the government version of the private savings problem. Most of the states are equally profligate as well. This is particularly unforgivable since the last decade has been a time of reasonable economic prosperity.

What excuse do we have for buying ourselves extra marshmallows and then leaving the bill for our kids? I think it's inexcusable that we haven't asked ourselves to pay for the Iraq War. We've asked volunteers to do the fighting, and we'll leave the bill for others, too.

5. A lack of vision for how ambitious collective endeavors can change the trajectory of our lives.

Where is our Manhattan Project? Our land-grant colleges? Instead, we get tax cuts. There are some good things about that, but we seem to have forgotten that tax cuts can't do anything that requires a major collective investment by society. Tax cuts could never have built the Interstate Highway System, one of the great public investments of all time.

Adventures in Nostalgia

I'll fully admit that this column may be a form of public policy nostalgia. Perhaps Abraham Lincoln's Web page was also full of subsidies and tax cuts, and it was only once in office that he dropped the land-grant-university bomb on an unsuspecting public (rather than, say, selling that land off to timber companies or to housing developers).

But it's worth thinking about. One of the follow-up studies using data from the Stanford marshmallow experiment begins, "To be able to delay immediate satisfaction for the sake of future consequences has long been considered an essential achievement of human development."

Can we still do that?