Q&A with Professor Philip Zimbardo on Time Perspective and Financial Health

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It may not have been previewed, commissioned or otherwise endorsed by any of our network partners.

Written By

Updated on Wednesday, July 30, 2014


MagnifyMoney and Stanford University Professor Emeritus of Psychology Philip Zimbardo joined forces to create a cross-cultural study examining how a person’s time perspective influences his or her financial decisions. This study worked as a base to understand how financial health is more intricately related to our relationship to time than our ability to do math.

We sat down with Professor Zimbardo to discuss his take on the intersection of time, psychology and money.



MM: Tell us a little more about the Time Paradox

PZ: The Time Paradox essentially focuses on the fact that the most important decisions we make are based are something inside of us, in our brain, that we are unaware of. Namely that each of us lives in a different time zone – a different time perspective orientation: past, present and future.

The paradox is, we’re making decisions big ones and small ones, and we’re unaware that our time perspective is determining our decisions.

Within the three main time perspective categories there are subcategories:

  • Past-oriented you’re either past negative or past positive.
  • Present-oriented individuals are either hedonists or fatalists.
  • Future means all your decisions are based on the probability of its consequences. There is also transcendental future, which means living life on earth in preparation for dying and a greater reward in the afterlife.

MM: What is the ideal combination of time perspectives?

PZ: It’s important to have high past positive, so you aren’t being weighed down by negative memories from your past. Then combine that with being future oriented. Future orientation is essential, because they weigh consequences. People become middle class or successful by figuring out how to be future oriented.

However, excessively future orientated people are likely to become a workaholic. You need a dash of present hedonism.

MM: Will you share your time perspectives with us?

PZ: I’m excessively future oriented, but working hard to be present hedonistic with a high past-positive. I think about the good old times rather than the bad times.

MM: What was your initial reaction to the idea of applying your time paradox research to financial health?

PZ:  I was curious, interested. I never thought about it in those ways – I don’t think much about finance, because I never had much money. Imagine, in 1960 I was a professor at a university and my salary was $6,000 a year before taxes, so I was always broke. I was always living on the margin and trying to make due.

As soon as they talked to me I realized it seemed natural. There was an internal logic between time perspective and financial decision-making.

MM: Did you find anything about the cross-cultural study surprising?

PZ: A number of things were surprising. In general, being past negative and being present fatalistic were always negative. Now it turns out that from a recent cross-cultural survey, if you’re past negative it could be beneficial in one way.

You’re once burned, you made a bad decisions, you’re not going to do that again – so you’re going to more conservative and going to take less risk financially. The problem is, you’re not going to take a risk when the risk presented to you is a good risk with a big pay off.

MM: Can you think of a time when your time perspective influenced a financial decision?

PZ: When I first got to California and was first introduced to delicious wine from Napa and Sonoma. I realized this is going to be a big industry and I would really like to invest in wine companies. Had I done that in 1970 I’d be very wealthy now.

I had mentioned this to a friend seeking economic advice and he said, “Well you should invest in this company who is buying land in the central valley of the United States and is converting apple and walnut orchards into vineyards.”

So, you invested $15,000 a year for five years and at the end of five years the vineyard would start producing grapes. The owner was the head of some airline. It looked very promising, so I invested in it and lost everything. At the end of five years he declared bankruptcy.

In retrospect, it was stupid because why would you invest in that when you could’ve invested in wineries in Napa and Sonoma that were already producing wine. So here it was taking advice of somebody who was giving bad advice. Saying you could make a bigger profit here when it wasn’t a bigger profit I wanted, it was just a profit. Had I invested, I guess it was $60,000 in 1970 in any winery in Napa, Sonoma it would’ve been worth hundreds of thousands. Instead, at the end of five years I had nothing to show.

Zimbardo’s future orientation impacted his decision because future-orientated people tend to leap blindly into financial opportunities and are susceptible to bad financial advice because they base their decisions on expectations of future scenarios.

MM: Why is money often a taboo topic?

PZ: In one sense, nobody ever wants to do anything for money. Money is a byproduct, but most people want to say I do my job because I like the job, not because I do it for the money. When you do it for the money it objectifies the work, it diminishes the work, especially in academia. Most professors would say I would work for nothing if they would pay my room and board because I do it for the love of teaching and the money is a bonus.

In academia business is almost the enemy. People who are moneylenders, money managers, and money borrowers: those are the evil people of the world. Therefore, most academics I know are really ignorant about money, about best investments, and don’t really think about wise investment or having an adviser until it’s towards retirement and they’ve lost out on a lot of potential profit.

Everybody has a strange relationship with money. It’s never clear what is enough money. For me, it’s always been I’d like to make enough money that I don’t have to think about money. I’d like to be comfortable so I don’t have to think about “can I afford this.”

When you’re poor – which my family was for my early life – every decision is about money. Can I afford it? Can I do without it? And that became a negative obsession – which as a kid I always hated.

Now for adults, it’s almost the opposite. Middle class people spending beyond their means thinking not “can I afford it?” but “can I afford not to have it?” There are social comparisons, how can your kids not have the best Adidas or the best Nike shoes or how can you not have the best Louis Vuitton purse or fancy dress.

So fortunately, I’ve never been involved in that part of it, but it was always the other thing. Every decision was never “did I like it, was it good for me?” It was always, “could I afford it?” “What do I have to sacrifice, if I buy this rather than that?” or “if I take a vacation, what do I have to give up?” [When you’re on the lower end of the socio-economic spectrum] It’s almost always a negative psychology transformation that I hated as a kid.

MM: Any final thoughts on applying your time perspective to financial health?

PZ: I’m really excited and encouraged to think that abstract knowledge I’ve been working on for many, many years can actually be used in a very productive, concrete positive way to help people make wise financial decisions. That in the long run people are happier having made the right decisions that helped them have more money in their accounts.

Find out how your time perspective influences your financial health by taking our quiz!

     Got questions? Get in touch via TwitterFacebook or email ([email protected])

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Do you have a question?