On Financial Discipline, Generational Poverty, and Marshmallows

What’s your methodology for eating a bowl of Lucky Charms? And in a related question: how’s your financial discipline?


Do you peck the marshmallows out first, like a marshmallow-loving chicken? Or do you eat around them, creating a cereal-free pleasure palace of marshmallows, swimming together decadently in their milk? Or do you dig in holistically, indiscriminately, with marshmallows and cereal intermingling freely, devil-may-care, eating whatever ends up on your spoon?

The answer could reveal a whole lot about your life, your personality, and the health of your personal finances. We know this thanks to a fascinating series of studies conducted on children eating marshmallows.

The original experiment

In 1960, two psychologists were studying the concept of delayed gratification. They took kindergarten-aged children and placed them in a room without any distractions. The researchers sat the children down at a table and placed a big pillowy marshmallow in front of them. They were told that they could eat the marshmallow whenever they liked. However! If they waited for fifteen minutes without eating it, they could have two marshmallows. Then the researchers left each child alone.

Of the six hundred children who took part in the first study, most children tried to wait, but only a third of them actually succeeded.

The test has since been repeated many times, and you can watch videos of it. They’re pretty funny. Some children horf the marshmallow so quickly it’s already stuffed into their mouths before the researchers can fully exit the room. Many try to wait it out. They stare at the marshmallow, smell the marshmallow, stroke the marshmallow… they nibble at the corners, perhaps hoping a tiny piece will go unnoticed. Their little faces look like Goya paintings, eyes like black caves haunted by the ghosts of starvation.

I loled.

What happened next

What’s really interesting is what came after. Follow-up studies demonstrated that those same children who successfully waited for the second marshmallow had correlating greater competencies in adolescence, including higher SAT scores and healthier BMIs.

Brain scans of the same participants in adulthood showed biological differences. Those with the ability to delay had a more active prefrontal cortex, and those without had a more active ventral striatum.

Unsurprisingly, the prefrontal cortex governs impulse control and complex planning. The ventral striatum governs reward-driven decision making, and is thought to play a critical role in addiction.

A second experiment, with a big plot twist

So mystery solved, right? Some people are just born with more financial discipline?

It’s an easy conclusion to come to, and it fits neatly into our cultural narrative of why rich people are rich. They’re hardworking! They’re smart! They have self-control, vision, and perseverance!

But that isn’t it.

A 2012 variation at the University of Rochester repeated the experiment, but altered it in a key way. Children were divided into two groups. Group A was given a reason to think the researchers were trustworthy by having them fulfill a promise before the experiment began. Meanwhile, Group B was given the opposite: the researchers broke a promise to the children before testing them.

Group A waited four times longer than Group B for their second marshmallow.

Group B, basically.

Were we wrong about everything???

This calls the entire finding of “self-control” into question by positing that the children who don’t wait are making an adaptive response to an unstable and untrustworthy environment. Rather than “failing” to wait for a larger reward later because they lack self-control, they are choosing the reward they can have now because they have reason to believe it’s the best and most reliable option.

Is it possible that the children who “failed” in the initial study came from homes with greater instability? If so, this experiment becomes another puzzle piece in explaining the potential of poverty to be generational.

“I promise that you are safe. This is the last time we have to move. I promise you get to stay in this school. I’ll be there for your game. I promise you will get what you want for your birthday. I promise no one will ever hurt you again.” These are the kinds of promises everyone makes, explicitly or implicitly, to their children. But the stability and flexibility that comes with wealth makes them much, much easier to fulfill.

In doing so, wealthy people may be raising more patient and trusting children, giving them access to greater systemic rewards. In that light, the experiment has much less to do with financial discipline than generational poverty.

Eating the marshmallow

I believe these two experiments have so much to teach us about personal finance.

For starters, you should understand that if you’ve experienced failures from important systems throughout your life, you will likely have a harder time exhibiting patience and diligence in financial matters. Your big, beautiful brain has collected all the data on these failures and fed them to its rewards center, driving you to seek the closest obtainable solution rather than the best obtainable solution. This is a really important thing to know about yourself.

Me? I’m definitely in the opposite category. Give me five minutes with a bowl of Lucky Charms and you will see me working with the precision of a jeweler to extract the cereal. I have never, ever had a problem waiting for the more rewarding experience.

I could say it’s due to my personality, but it’s also at least somewhat due to the fact that the systems I rely upon have failed me only rarely. It’s on me to recognize my privilege in this situation and do whatever I can to increase the stability and equality of those systems. This is why I support the implementation of universal pre-K education in America despite not having children myself, even if it means I pay a slightly higher tax rate for it. It’s a system that will create smarter, more trusting, more patient fellow citizens.

It has to be taught

Further, a strong sense of financial discipline isn’t something you’re born with. It can develop (or fail to develop) based on your experiences. If you struggle with impulse purchasing or long-term planning, you can rewire your brain by building your level of trust through positive experiences. Set a modest savings goal for yourself, and decide on a reward for yourself when you achieve it. Repeat, repeat, repeat. Eventually, the act of saving will become so closely linked to the anticipation of a reward that saving itself will start to feel rewarding.

If your instinct is to eat all of the marshmallows first, start with three pieces of cereal first. Then follow with a soft, sugary chaser. Once you do three, try doing five. Create opportunities to teach your brain that the reward comes after the temporary pain of self-denial. It will taste all the sweeter.

Self-control, baby.

3 thoughts to “On Financial Discipline, Generational Poverty, and Marshmallows”

  1. Wow. Wow. And wow. I LOVED this. I think my mind just blew up a little bit. I knew about the original Stanford marshmallow study but not the subsequent Rochester study…which as you indicate may be more telling to real-world situations. I grew up in a middle-class household, headed by an underemployed alcoholic father. Promises and money were two things I couldn’t count on. So, while I pride myself that my intellect helped propel me in life, I
    would have been the kid to eat that freakin’ marshmallow and be pissed about it. That’s how I viewed money nearly my whole life. It sat there, taunting me. Stupid, fucking marshmallow. The anger and shame of not having self-control was thick. But as you suggested, I tried something different. I’m still trying something different–and it’s magically delicious.

  2. Whoa.

    This explains so much, not only about finances but about our culture. My mind is blown.

    Like LITB, I knew about the original experiment but not the follow on. And while I think self control still has a lot to do with it, looking at my life compared to others – I can see why the findings might be accurate. The implications are enormous.

    PS – really happy to see that LITB already saw this. My first instinct was to point her towards this post!

  3. It’s been so long since I ate lucky charms that I legitimately don’t remember how I actually eat it XD That being said, I can attest to the idea that home stability greatly impacts both your trust and your financial saviness. But I think it’s more complicated than that, too; consider the types of parents you had in terms of skills and lessons imparted, not just their stability.

    For instance, I’m more financially savvy than my husband despite us having relatively similar levels of intellect, scores in school (and on our SATS and ACTS), etc. The key difference? My mother, despite how abusive she was, taught me several basic survival skills as a kid growing up: Budgeting, Saving, Logic and Critical Reasoning, and how to make choices (a much under-taught skill that’s actually pretty important).

    My Husband’s mother? Didn’t do any of that. So while I entered the adult world equipped to handle my basic survival- including my finances- he didn’t… As a result, he very much takes the instant gratification approach whereas I’m a bit more willing to wait a bit while I save for it- a key reason I’m in charge of the entirety of the finances in our household.

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