In his book “Wait: The Art and Science of Delay,” Frank Partnoy talks about the Bing Nursery School experiments conducted at Stanford University, where researchers presented four-year olds with a single marshmallow and gave them a choice. They could either eat the marshmallow right away, or, if they did not eat it and could wait fifteen minutes, they would receive a second marshmallow.
According to Partnoy, when tested later in life, those who were able to delay gratification performed better on standardized tests, were less prone to impulsive behavior, had higher self-esteem, coped better with stress, were more physically fit – in short, they were more likely to become emotionally well-adjusted adults.
As Partnoy explains in his introduction, “The essence of my case is this: given the fast pace of modern life, most of us tend to react too quickly … in most situations we should take more time than we do. The longer we can wait, the better. And once we have a sense of how long a decision should take, we generally should delay the moment of decision until the last possible instant. If we have an hour, we should wait fifty-nine minutes before responding. If we have a year, we should wait 364 days.”
I’ve pondered this idea for a bit, because it doesn’t necessarily appear correct on the surface – at least when it comes to politics. Waiting has not led to better outcomes when it comes to debt-ceiling debates and fiscal cliffs … it’s only kicked problems further down the road.
On a local level, waiting didn’t lead to a better outcome regarding the Town’s airport litigation judgment. We waited four years and spent millions of dollars to ultimately achieve the same outcome we could’ve had four years earlier – without the attorneys.
However, Partnoy differentiates between waiting and procrastination.
When it comes to procrastination, Partnoy talks about discount rates.
To explain, he described the work of Economist Richard Thaler, who asked people a series of questions about money, and gave them choices as to whether they wanted a certain sum now, or a higher sum at a later date.
The example given regarded a debt of $100. Would you pay it now, or pay $115 a year from now? If you feel $100 today is the equivalent of $115 a year from now, you would have a discount rate of 15%.
Of course, that rate fluctuates depending upon the time horizon.
Partnoy: “If we are offered the choice of $50 today or $100 in a month, we might prefer to receive the $50 today. But if we are offered the choice of $50 in a year or $100 thirteen months from now, we almost certainly will choose to receive $100 thirteen months from now. The wait is a month in both instances, but our assessment of now is very different from our assessment of twelve months from now .. our preferences are not time-consistent.”
According to Partnoy, the Psychiatrist George Ainslie observed that humans use very high discount rates in the short term, meaning that when we want something today, we really want it and we don’t think much about future costs.
Think of that cute puppy at the shelter, or that cute ice rink behind the library …
It won’t surprise you to learn that researchers found people with higher discount rates are generally less successful.
And I would posit that we live in a high discount age in a high discount town.
I say this because we are so … weather dependent. Even one bad snow year can bring your typical small business owner in Mammoth Lakes to his knees. So there is quite logically a tremendous emphasis on the present. You never know when the spigot will run dry.
Meanwhile, you’ve got a corporately-owned Mountain which is under tremendous pressure to produce immediate returns for its investors.
And politicians? Their time horizon is an election cycle. Legacies are not built upon long-range planning. Outside of Eisenhower, I can’t think of a single politician who’s ever gotten credit for an investment in roads. You can’t really carve a name in asphalt.
We’re all incentivized to overemphasize the now. After all, you can blow out a knee at any time …
Which all serves as prelude to the latest news regarding the proposed BID (Business Improvement District).
Word has it that MMSA CEO Rusty Gregory, dissatisfied by efforts to expand the scope (businesses included) of the BID while concomitantly reducing the proposed retail tax rate to 1% (from 1.5%), has suggested that the BID now be split into two parts. One part focused on lodging/restaurant/retail, and a second part focused on a lift ticket/ski school tax.
Because the Mountain would be the only member of a lift ticket/ski school targeted BID, the Mountain would also have full discretion as to how that money is spent (Gregory reportedly suggests it be spent on commercial air service and transportation).
Critics point out, however, that the Mountain would also have full discretion as to how long it might choose to perpetuate the tax upon itself.
Critics also say the whole concept behind the BID was to raise money for marketing, and if the BID is split in two, a huge chunk of the revenue projected to be raised (a 2% lift ticket tax is projected to raise between $1.5 and $1.8 million annually) would now be earmarked for non-marketing items.
… Although we can debate whether a commercial air subsidy would be a marketing item or a resort investment.
The South Shore report
Given the airport litigation judgment and the squeeze it’s placed upon the Town’s financial resources, many local business owners support the BID as a way to let prospective visitors know Mammoth is still in business. That the bankruptcy hasn’t shuttered the town, or otherwise built a dome over the town to prevent snow from falling on Mammoth Mountain.
So yes, when in doubt, the answer appears to be “throw money at the problem.”
Question is, does the creation of a TBID bring us up to the level of our peers? Does chasing after our competitors in this fashion actually differentiate us?
I recently read a consultant’s report prepared for South Lake Tahoe, which has experienced a massive decline in room and sales tax revenue in recent years. Cited as a major contributing factor has been the establishment of Indian Gaming Casinos in California, which have eroded South Lake’s gaming industry.
“In the South Shore market,” reads the report by SMG, “gaming revenues have declined significantly from a high of $338 million in 2004 to $209 million in 2011.”
SMG attributes some of South Shore’s decline to a loss of a critical marketing advantage:
“Historically, South Shore has enjoyed a competitive advantage with the availability of promotional dollars with the advent of Tourism Business Improvement Districts (TBID) as a funding mechanism. That advantage has been significantly eroded as many of South Shore’s competitor destinations have multi-million dollar promotional budgets.”
The report doesn’t suggest spending even more marketing dollars as an offset. It does suggest a redesign of its core downtown area, along with new and improved amenities. In short, investment in infrastructure to improve the general product.
Mammoth’s proposed BID has been pushed in reaction to the litigation judgment. I’m not sure anyone’s terribly certain how much money it would raise, or how that money would actually be spent. On billboards? On a PR firm? To spend it all on marketing without consideration of an equal or greater investment in infrastructure seems like an exercise in marshmallow eating.
If it were up to Frank Partnoy, he’d advise us to slow the hell down and think it through more thoroughly.
He’d tell us to wait.