â€œWell, the devil made me do it the first time, the second time I done it on my own.â€
â€“Billy Joe Shaver
It discussed a group of 4 year-old nursery school students who were part of a study done at Stanford University in the late 1960â€™s.
The children were given the opportunity to eat a marshmallow. Ones who ate it immediately only received one marshmallow. The ones who waited for an undetermined time, (up to fifteen minutes) would receive a second marshmallow.
Most of the children couldnâ€™t wait. Most grabbed and ate the first marshmallow immediately.
The psychologist tracked the participants over the next forty years. The children who waited for the second marshmallow went on to live productive, and in many cases, outstanding lives.
Those who immediately grabbed a marshmallow didnâ€™t do as well.
Walter Mischel, the Stanford psychology professor who did the study, got serious about tracking the students in 1981. He studied every trait he could think of.
The students who couldnâ€™t wait were more prone to adult behavior problems and inability to deal with stress.
When they got to college age, the nursery school students who waited 15 minutes averaged SAT scores 215 points higher than those who could only wait 30 seconds.
Mischel seems to have discovered the Rosetta Stone of why some people become wealthy and others do not.
Dr. Thomas Stanley has done extensive research into why some people become millionaires. His book, The Millionaire Next Door, was a huge best seller.
Stanley noted that education and intelligence did not automatically predict wealth. He said that small business owners, without advanced degrees, were more likely to be millionaires than were doctors or lawyers.
Iâ€™ve been in the financial services business all of my adult life and it has always amazed me how some well-educated people make such stupid mistakes with their money.
Now I understand. The doctors and lawyers were the people who couldnâ€™t wait for the marshmallow.
The Stanford scientists are studying genetics and are trying to learn if some regions of the brain assist in delaying gratification. The study gives credence to the idea that people who â€œcanâ€™t help themselvesâ€ really canâ€™t help themselves. Something in their DNA makes it harder for some people to delay getting a reward.
Itâ€™s not about discipline as much as it is about heredity. Knowing that, we need to help those who are prone to marshmallow grabbing by giving them fewer chances to fail.
Right now, we have a financial system that has played to peopleâ€™s weaknesses, rather than their strengths.
We have allowed people who are prone to instant gratification to have as much credit as they could get their hands on. College students were given credit cards and free t-shirts. People who didnâ€™t want to save for a down payment were given sub-prime mortgages. Payday lenders popped up to prey upon the poorest of the poor, who couldnâ€™t wait for their paychecks. Everyone and everything, (including dogs, cats, and dead people), have been issued credit cards.
We stopped giving workers defined-benefit pensions and let them â€œpick their own investmentsâ€ in 401(k) plans.
The economy is a mess. That mess can be traced to people on Wall Street and Main Street who wanted the second marshmallow but didnâ€™t want to wait for it.
Now that we are starting to understand the problem, it is easier to find solutions. We need systems that encourage people and businesses to work toward long-term rewards.
Our leaders need to realize that a large segment of society is going to screw-up their finances if we let them.
We canâ€™t let what has happened, happen again.
The devil, their environment or genetics caused people to make mistakes the first time.
It is our job to make sure they canâ€™t do it a second time.
Don McNay, who lives in Richmond, Ky., is an award-winning financial columnist for Huffington Post Contributor. You can learn more about him at www.donmcnay.com.