The neuroeconomics of instant gratification

It turns out the fact we prefer 'instant gratification' is not rocket science, it's neuroscience.

Neuroeconomicists (now I'm guessing you never knew there was such a thing) have been looking at what happens in people's brains when they make seemingly economically irrational choices.

It's not so much the heart ruling the head, but the midbrain dopamine system holding precedence over the prefrontal cortex - in other words the 'emotional' brain ruling the 'rational' brain.

Part of the research, has been looking at rewards and incentives:

"In a 2004 brain-imaging experiment led by Samuel McClure of Princeton, people were asked whether they wanted a low-value Amazon gift voucher now or a higher-value voucher in two to four weeks. McClure wanted to test a specific assumption of classical economics: the idea that we apply the same calculus to the future and the present. If that were true, then the same brain regions should become active whether we are thinking about the results of economic decisions in the future or in the present."

"This isn't what McClure found. When his subjects contemplated receiving gift vouchers in the future, brain areas associated with rationality (such as the prefrontal cortex) became active. These cortical regions seemed to urge people to resist temptation and wait for the more valuable vouchers. On the other hand, when people started thinking about getting a gift voucher right away, brain areas associated with emotion -- the midbrain dopamine system, for instance -- were also turned on. By manipulating the value of vouchers in each situation, the researchers could compare the levels of activation in the different regions. They discovered that the relative amount of activity was "directly associated with subjects' choices". People whose 'emotional' brain areas were more active opted for the spoils of immediate gratification."

We also know the instant gratification rule when spending money too - we'll happily pay a bit more to have something right now rather than wait and have it slightly cheaper.

What does this mean for incentives? It is that lower cost rewards that offer instant gratification have a higher perceived value than higher cost rewards with a deferred gratification. Which means that if you can shorten the cycle from a user receiving their award and being able to spend it and get their prize, then you can actually acheive a better result for less money, providing a better Return on Investment.

At IncentiveDirect, we work hard to ensure the reward-redemption cycle is as short as possible. We're making the redemption process as simple as possible, and working with our suppliers to improve stock availability, lead times and delivery.

Only when a user receives their reward, and they can connect their prize with their performance, does motivation occur. Reducing this time gap as much as possible is the key to successful ROI of incentive activity.