The1972 Stanford Marshmallow Test has been in the news lately.  It has been 40 years since 600 preschoolers first participated in this test of deferred gratification.  The tests and the subsequent followups are important because they are relevant to the national debate about saving, home ownership and education expense.

The experiment worked like this: “The children were led into a room, empty of distractions, where a treat of their choice was placed by a chair.  The children could eat the marshmallow, the researchers said, but if they waited for fifteen minutes without giving in to the temptation, they would be rewarded with a second marshmallow.”  A third of the children held out for the second treat.

Follow-up studies have shown that there is an unexpected correlation between the results of the marshmallow test, and the success of the children many years later.  The children who could defer gratification for fifteen minutes ended up with more successful lives by almost any measure.

So self-restraint and deferred gratification are important to the success of individuals.  How about for countries?  I would say yes and so are the lenders to European countries.

The lesson also applies to saving, home ownership and education. These three, used to be symbols of middle class success.  They were what people with self-restraint who were willing to defer gratification used to earn as a reward.  Now the government is trying to give the reward to everyone.  And as a result we get the housing crisis and the coming student debt crisis. See my earlier story Degrees and Sneakers

The Marshmallow Test and it followups show the link between the cultural expectations of the people and the way government operates.  Arguing about how to lower the deficit is a fools game until we all start exercising a little self-restraint and accepting a little more deferred gratification.

Thanks to Arthur Brooks of the American Enterprise Institute for an article in the WSJ were I first heard about the Marshmallow Test.