I was working on a presentation this week and the time allocated to me was 18 minutes. It's always tough to simplify the message. I allocated some additional hours to fine-tune my message. It was not a coincidence that I wanted to write on intertemporal choices (current decisions impacting options available in future), was speaking on time and was struggling with 18 minutes. This was a personal choice. But there are choices that we make in the context of time. And how our decisions change with the context is something that we as a society don't comprehend well. People tend to ignore (or at least underweight) information about the future consequences of decisions.

Moreover, we are in the age of instant gratification. Not only are we less patient regarding the fruits of our effort, but once we have the fruit, we don't want to put it in cold storage. We want to savor it instantly. We underestimate our future wants and don't realize that deferring the pleasure might be more valuable. We feel less concerned about future pleasure and pain simply because the time lies in the future. Our concern decreases proportionally as the future gets farther.

Instant pleasure could be translated into market lingo as intra-day trading, going home richer. And deferring pleasure could be hunting down an underperforming sector, filtering out a weak component and patiently waiting for an entry. The choice between shorting SBI and getting out at one percent or holding it for 10 percent move is a case of deferred pleasure. Intertemporal choices also talk about willpower (a moral effort) to defer pleasure.

I discussed a few elements in the presentation with a friend. We talked about creative ambitions and discontent. He mentioned that he would not like to live a content life as it will inhibit him from seeking self-actualization. But then we realized that in a changed context of time, thoughts like self-actualization won't matter. Big thinkers spent more time struggling to survive the war times, they did not even think about creative ambitions.

Intertemporal choices suggest that it is this context of the time that we always forget. According to Stanley Jevons, neither animals nor people discount the future at a constant rate; most species are disproportionately sensitive to short as opposed to long time delays. Our behavior is inconsistent because we don't comprehend time. It is very difficult to impose pain on oneself, even when it is known that pain will be short-lived and the beneficial consequences prolonged. This is why becoming a conditional trader is harder than being a day trader. Or becoming a contrarian investor needs tougher training compared to just being an investor.

We live in a happy time. And if we see the cycle correctly, 2011 lows should push our happiness levels higher. But that does not mean that we should not appreciate that we are in a healthy context of time, where we could learn to defer gratification and at least weigh our decisions more for some short-term pain. Research has shown an inverse relationship between saving rates in different countries and fear of a nuclear war. Preferences reversal is also a factor of time.