Better Off Later: Our Preference for Improving Sequences (With George Loewenstein)

Why do we prefer experiences that appear to get better over time? Take a closer look at how improving sequences shape our everyday choices.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:10Katy Milkman?

  Every day in California, tens of thousands of people stream into the original Disneyland and instinctively make their way towards Sleeping Beauty's castle. Most of them have no idea they're following a trick Walt Disney borrowed from dog trainers. Disney called it a weenie. Hold up a sausage and a dog will follow you anywhere. His idea? Give human beings something irresistible, often the distance, and they'll be drawn to walk towards it. But the castle was never meant to be the final destination. The moment you reach that central hub, another landmark pulls your eyes towards the next big thing:

• 0:52Katy Milkman?

  the sails of a pirate ship, or the peak of the Matterhorn. An endless trail of visual breadcrumbs, carrying you deeper into this magical world. Disney's Imagineers, the designers behind the park, even incorporated this idea into waiting lines, with details like the haunted mansion's stretching room, made to build tension before you board the ride. All the details building towards a sky full of fireworks at the end of the night. In 1954, Walt Disney didn't just build a theme park. He engineered a living narrative, an experience carefully designed to ensure it feels like the best part is still ahead of you.

• 1:36Katy Milkman?

  In this episode, we look at why we're drawn to experiences that, just like Disneyland, appear to improve over time.

• 1:53Katy Milkman?

  I'm Dr. Katie Milkman, and this is Choiceology, an original podcast from Charles Schwab. It's a show about the psychology and economics behind our decisions. We bring you true and surprising stories about high-stakes choices, and then we examine how these stories connect to the latest research in behavioral science. We do it all to help you make better judgments and avoid costly mistakes.

• 2:29Speaker 01

  You had to worry every day as to what you said. It could cost you your job. It could cost you a raise. It could cost you a promotion. And that's before you start dealing with the students.

• 2:44Katy Milkman?

  Being a public school teacher in New York City in the 1950s was a demanding job. It was also an unpredictable one. Everything from your classroom assignment to your raises, to your chances for promotion, could depend on one person: your school's principal.

• 3:02Speaker 01

  The principal had almost dictatorial control over everything that happened in the school. He had control over the custodians. He had control over the administrative staff. And especially, he had control over the teachers. This is a system where, if, for whatever reason, as a teacher, you anger or offend the principal, he could really make your life miserable. Hi, my name is Gerald Poder.

• 3:30Katy Milkman?

  Gerald is a professor of history emeritus at Lawrence University and author of The Strike That Changed New York, a book about a historic walkout in 1968. But the book begins by explaining another strike that set the stage. And at the center of that strike was a young math teacher named Albert Shanker.

• 3:51Speaker 01

  Albert Shanker was a young teacher in the public schools in the 1950s. He joined the Teachers Guild. Because he was a unionist, because he wanted to improve the lot of the classroom teacher, he would say, "I have a college education and a master's degree, and I'm being treated like I'm working on an assembly line somewhere as a teacher. I want dignity." And I think that was the life of the New York City public school teacher in the 1950s.

• 4:25Katy Milkman?

  There was no standardized salary schedule teachers could count on. No formal grievance process, and very little protection from arbitrary decisions. Advancing didn't depend on your education or seniority. It often depended on staying in your principal's good graces. Teachers even had a name for that.

• 4:45Speaker 01

  They used to call it gassing, and the acronym stood for "getting the attention of supervisors." That's how you moved up in the 1950s.

• 4:56Katy Milkman?

  For teachers who were skilled negotiators, well-connected, or favored by their principal, gassing had a clear upside: immediate perks, better assignments, and personalized advancement. But because the rules were completely unwritten, the rewards for gassing, and also for failing to, were far from equal.

• 5:16Speaker 01

  For women, they were confined largely to the elementary level. So there was somewhat of a glass ceiling, because there was no established way to move up.

• 5:29Katy Milkman?

  Whether you were a woman, a teacher from an underrepresented minority group, or simply someone who didn't see eye to eye with leadership, the old system wasn't built for your advancement. But creating equal opportunities for everyone meant high-performing teachers would have to give up their ability to negotiate individual perks. It was a meaningful trade-off. It required teachers in the 1950s to first agree on what they all wanted. And consensus was hard to come by. New York's 50,000 teachers at the time belonged to more than 100 separate organizations, divided by subject, borough, and grade level.

• 6:08Speaker 01

  Up until the late 1950s, it had been impossible, for various reasons. Sometimes ideological reasons, sectarian reasons, getting all the teachers together.

• 6:18Katy Milkman?

  Instead of unified power, they were stuck in a cycle of collective begging. Dozens of separate groups lining up each year to ask the city for modest raises. But without any real legal power to negotiate, Albert Shanker would change that. He and a group of energetic young organizers gathered to build a grassroots network. In March of 1960, they successfully merged two key groups to create a new union: the United Federation of Teachers, or UFT. Their goal was simple: collective bargaining. But the veteran teachers who got involved with this new union were terrified of taking radical action.

• 7:03Speaker 01

  It's not like they disagree on political substance with Shanker. They just disagree about tactics. And the reason they disagree about tactics and collective bargaining is the existence of a law in New York State called the Condon-Wadlin Act, which says that if you go out on strike as a public employee, you are breaking the law.

• 7:26Katy Milkman?

  Under Condon-Wadlin, striking didn't mean you might be disciplined. It meant you were automatically fired. Your benefits were wiped out. Your pension: gone.

• 7:38Speaker 01

  That's it. A phone call will do it. So that's what they're afraid of.

• 7:43Katy Milkman?

  By November of 1960, just eight months after the new Union Federation of Teachers was officially formed, the Union had attracted 5,000 members, roughly 10% of the city's teachers. To many veteran Union leaders, that wasn't nearly enough to risk everything they'd worked for. But Shanker looked at the same numbers and saw something they might not have.

• 8:08Speaker 01

  What he can do is say, "Let's be realistic here. If we do organize and we do call a strike, if enough teachers go out on that strike, we don't have to get 100% of the teachers to go out. We don't even have to get 50%. We just have to get enough so that the Board of Education cannot fire all these teachers, because there's too many of them. 20 teachers go out, they can fire them. 100 go out, they can fire them. 5,000 go out? They can't fire 5,000 teachers."

• 8:45Katy Milkman?

  Shanker had a couple of political realities working in his favor, too. New York Mayor Robert Wagner had long relied on organized labor for support. And up ahead was the 1960 presidential election. With national attention about to focus on politics, Shanker saw an opportunity.

• 9:04Speaker 01

  He understands that if he schedules this strike the day before the national elections, that's the Kennedy-Nixon presidential election, let's see whether the Democratic Party, the Party of Labor, let's see if, on Election Day, 1960, they are willing to go fire a group of teachers for exercising their labor rights. Shanker, who's a very savvy guy, he understands that this is not an issue that Democratic Party leaders really, you know, really, really want to touch.

• 9:53Katy Milkman?

  On the morning of Monday, November 7, 1960, a bitter cold settled over New York City. As teachers approached their schools, each faced the same impossible choice: cross the picket line or risk losing your job? At a junior high school in Red Hook, Brooklyn, the strike appeared to be gathering momentum. Local longshoremen and merchant seamen joined 80 teachers on the picket line, while parents handed out hot coffee. Union organizers at Red Hook eagerly began to check in at nearby schools.

• 10:34Katy Milkman?

  But as they drove from building to building, their optimism faded. The sidewalks were empty. Schools were in class as usual. When they returned to Red Hook, even some of their own picketers had lost their nerve and gone inside.

• 10:51Speaker 01

  95% of the teachers crossed the picket lines.

• 10:57Katy Milkman?

  To the organizers driving the streets that morning, it must have felt like an obvious defeat. But then, reports started coming in from phone booths across the city. Because the union's members were concentrated in particular neighborhoods, a different result had unfolded.

• 11:15Speaker 01

  They had heavy representation in a number of schools that just had to close for the day. So about 100 schools had to close for the day. What they were able to do was just get enough critical mass to disrupt the system and make it impossible to fire all of them.

• 11:37Katy Milkman?

  Shanker's gamble had paid off. On the eve of one of the closest presidential elections in American history, New York City Mayor Robert Wagner refused to enforce the mass firings required under Condon Wadlin. Instead, he appointed a committee of labor leaders to mediate. Over the next year, union volunteers worked tirelessly. And in December of 1961, teachers voted 3 to 1 for the UFT to represent them. By 1962, following a second brief strike, they secured their very first collective bargaining agreement.

• 12:16Speaker 01

  You go from a situation where a principal could just point his finger at a teacher and say, "I don't like you. You have garbage duty," or something, and there's nothing you can do about it, to sitting across as a co-equal bargainer from the Board of Education. Dignity. By 1962, they had dignity.

• 12:38Katy Milkman?

  That first contract did more than give teachers a seat at the bargaining table. It replaced arbitrary whims of school principals with a standardized salary grid that tied raises strictly to seniority in education. But eliminating favoritism created a fundamental trade-off in how high performers evaluated their own worth.

• 12:59Speaker 01

  For someone who views themselves as a really high achiever, you might say, "I don't need a union to drag me down to the level of the average worker, because I'm not the average worker."

• 13:11Katy Milkman?

  In exchange for capping individual upside or giving the top performers the chance to earn higher compensation, the step system offered something revolutionary for the vast majority of teachers. A teaching job wasn't just a month-to-month survival exercise anymore.

• 13:27Speaker 01

  If you're a New York City public school teacher, after that first contract and the enhancements after that, you could say, "All right, if I'm not fired during my probationary period and just do what I'm supposed to do as a teacher, I can predict that in five years, I will be making this amount of money. And that means I will be able to buy that house. We're living in an apartment now, in Brooklyn, let's say. But in five to seven years, we will have enough for a down payment and a mortgage on a house in Long Island. And we will be able to start a family." So you'll be able to do all the things that you could do, planning-wise, for your life, not just your career, but for your life,

• 14:11Speaker 01

  that you could not do in the 1950s.

• 14:17Katy Milkman?

  For the first time in New York City, a teacher's salary had a promised upward trajectory. And that feeling, that the future was something to look forward to rather than fear, changed the profession overnight.

• 14:31Speaker 01

  The significance of that Monday cannot be understated. Basically, created the teacher-union movement in the United States. And certainly in the 1960s, all the other teacher-unionization in all these other cities, which is what happened, is a result of what happened on November 7, 1960. Most people, given the opportunity to say, "Well, this is where I started, and I got here, here, here, and here." That's a life story that is something that they can be proud of and they can project.

• 15:09Katy Milkman?

  Gerald Poder is a professor of history and Robert S. French Professor of American Studies emeritus at Lawrence University. He's the author of "The Strike That Changed New York." Over the course of his career, his work has focused on labor history, civil rights, educational policy, and urban politics. You can learn more about him and find links to his work in our show notes and at schwab.com/choicology. That cold Monday in 1960 changed the course of American education. But it also reveals a striking choice, pun intended, about how we want our lives to unfold.

• 15:52Katy Milkman?

  If a teacher like Albert Shanker only cared about maximizing earnings, he might have just pushed for a larger upfront pay raise for all union members. Instead, thousands of teachers put their careers on the line for a contract that deliberately started wages lower, climbed steadily, and reduced individual variation. And teachers aren't alone in craving that kind of trajectory of improvement. Across all kinds of decisions, from our salaries to our weekend plans, we tend to prefer options that progressively get better, if given the choice. Why is it that our minds place such a high premium on an upward trajectory? My next guest is an academic superstar,

• 16:37Katy Milkman?

  often described as a co-founder of the field of behavioral economics. Among other things, he's done seminal research revealing our preference for improving sequences of outcomes and why it is that we favor them. George Loewenstein is the Herbert A. Simon University Professor of Economics and Psychology at Carnegie Mellon University. He's also the author of the new book, "The Opposite of Happiness: How Bad Feelings Make and Break Us." And his work has transformed how we think about human decision-making and motivation. Hi, George. Thank you so much for joining me on the show.

• 17:13Speaker 02

  Hi, Katie.

• 17:15Katy Milkman?

  Today, I want to talk about some really interesting research you've done on people's preference for improving sequences of outcomes. So you wrote this paper called, "Do Workers Prefer Increasing Wage Profiles?" And I was hoping you could both explain what that work shows and talk about why it's so surprising and how it contradicts what we'd expect people to do if they were optimizers.

• 17:39Speaker 02

  Right. I wrote that paper when I was an assistant professor at the University of Chicago. And I teamed up with a guy who I was hanging out with then, Nachum Sikerman. And he's a labor economist. And we just observed that in a lot of professions where people's productivity doesn't really increase over time, like, let's say, like a security guard or something like that, or a bus driver, people get wage profiles or salary profiles that increase over time. And we thought that that was an interesting mystery because standard economics says that you should be paid your marginal product.

• 18:22Katy Milkman?

  Meaning, sort of what you're producing for the world, what it is where value is being created. Essentially, you should be compensated for that?

• 18:29Speaker 02

  Exactly. So there were some theories that attempted to explain that. For example, the firms want to retain workers, and so they kind of hold out this prize of high wages at the end of the career. But we thought that the explanation was much simpler. And we thought, based on some other work, that workers just liked things to improve over time. And we set out to address that question. We used to collect data at the Museum of Science and Industry in Chicago.

• 19:09Speaker 02

  And we went there and collected a lot of data from adult visitors. And we presented them with increasing wage profiles and decreasing wage profiles, and asked them what they would prefer. And quite a large majority said that they wanted the improving wage profiles.

• 19:31Katy Milkman?

  Meaning, as they get older, they're earning more and more money as opposed to just knowing for the rest of their lives they'll get a wage that increases with inflation, but otherwise, it's stable? But this is a puzzle for standard economics.

• 19:45Speaker 02

  Standard economics says that you should want to be paid as much as possible upfront, because you can save the money and invest it and hopefully end up with a higher earnings at all times, if you do that. We first asked people what they wanted, and then we explained to them the kind of psychological logic for why you might want an improving wage profile. And we also explained the economic logic for why people would want a declining wage profile. And we first asked them, "Which is more convincing?" And a very large majority said that they found the psychological argument more convincing, that it feels good to have things improve over time.

• 20:27Speaker 02

  And the economic logic is like the net present value would be higher if you've got more to begin with and less later. And then we asked them, do you want to change your mind about your original choice? Very few people did change their mind, but those who did change their mind tended to change in favor of wanting improving rather than declining wage profiles. We were also curious about why people wanted improving wage profiles. And we had an idea based on psychology that it feels good to get an improving wage profile because it feels like you're doing better, you're more valued, or something like that. To test that theory, we also gave them a

• 21:12Speaker 02

  scenario with rental income. We asked them to imagine that they owned a rental property and asked them whether they'd prefer to get increasing returns, increasing payments from their rental property over time, or decreasing payments. And for the rental payments, they were actually kind of rational from an economic perspective. They wanted the decreasing payments. So that told us that it really had something to do with kind of feeling good when your value is increasing over time.

• 21:44Katy Milkman?

  I love this work, but one of the things that's so interesting about it is it, in follow up work and in looking at the literature more broadly, I think you've convincingly argued that this isn't a pattern that's just about earnings and the profile of earnings we'd like over our careers. Could you talk a little bit about some of that other research showing that we also prefer improving sequences of outcomes when it comes to experiences ranging from discomfort to fine dining?

• 22:11Speaker 02

  This actually originated in my dissertation, which I wrote in 1985. And in economics, there's something called the discounted utility model. It says that we care less about the future than we do about the present. And two consequences of that are that if there's something bad, we should want to put it off as long as possible. And if there's something good, we should want to experience it as early as possible during a time period that we care more about. And I did a little survey at the Yale Library, and I asked people, suppose you were going to get a 110 volt non-lethal electric shock, how much

• 22:54Speaker 02

  would you pay to avoid it now? How much would you pay to avoid it in a week? How much would you pay to avoid it in a year? And standard economics says you should pay the most to avoid it now, but people were willing to pay the most to avoid it when it was delayed, rather than when it was immediate. What you experience while you're waiting is all important. It's always unpleasant to wait for negative things. And that's why there's a very common tendency for people to want to get them over with quickly, exactly contrary to the pattern predicted by economics. And good things are more complicated. Sometimes it is pleasurable to wait for good things. And in those cases, people like to delay

• 23:39Speaker 02

  them, something like, maybe like a wedding or a really nice meal. But it's kind of a perverse characteristic of human nature that waiting for bad things always feels bad, but waiting for good things also often feels bad. And I think it's that the misery of waiting that makes us impatient. So it's not really about how much we wait, consuming at different points in time, as the conventional economic model says, it's about how it feels to wait for things. It's a very different conception of what economists call intertemporal choice, choices involving outcomes that occur at different points in time.

• 24:24Katy Milkman?

  One finding I love is that people want to visit their favorite restaurant later, when it's part of a sequence, but earlier when they're thinking about it alone. I know you've shown a similar pattern when you think about when we like to pay for nice things. Could you describe that work?

• 24:40Speaker 02

  This is kind of the next phase of the research that I did on intertemporal choice. We asked questions like, you're going to go on vacation in six months. Would you like to pay for the vacation in the six months before you leave, or for the six months after you return? And almost everybody wanted to pay for the vacation beforehand, rather than afterwards. And so, again, like standard economics would say, pay for the vacation afterwards, but people wanted, again, the improving sequence of first paying for the vacation and then experiencing it.

• 25:20Katy Milkman?

  We've been talking a lot about this pattern where people prefer these increasing sequences, but we haven't really talked a lot about exactly why it is that we prefer. You've said, we want our lives to get better. But I know from your writing that it's more than that. We've also talked a little bit about savoring and waiting, but could you unpack all of the rich psychology behind this desire for improving sequences of outcomes?

• 25:47Speaker 02

  Absolutely. And part of it is that people like to have things to look forward to, and they don't like to experience dread. And so, the best way to not experience dread is to get the worst part over with quickly. And the best way to experience kind of savoring of good things is to delay them. That's part of what's going on. But that would apply to individual outcomes, and isn't specific to sequences. With sequences, people tend to adapt to early things and then experience later things as changes from what they first experience. And if

• 26:29Speaker 02

  with this improving sequence, you get a series of positive changes or gains. But when things are getting worse, you adapt to the early bad things, and then you have to adapt again to things getting even worse, and adapt again to things getting worse. So it's like experiencing a series of losses. I think a big reason that people like improving sequences is as simple as people like to experience a series of gains, rather than a series of losses. This preference for improving sequences poses a very serious challenge to conventional economics, because it looks like something called negative time preference.

• 27:11Speaker 02

  It looks like people care more about the future than they do about the present. They look like they are patient, like not only patient, but they want to have the best at the end. And so, it turns out that patience and impatience aren't really so much an individual difference phenomenon as a matter of what the situation is and what the choice alternatives are.

• 27:40Katy Milkman?

  Yeah, that's so interesting, that the same person can look impatient in one choice and patient in another. George, what advice do you have for listeners, now that we know more about this preference for improving sequences and the tension around waiting for things? If you're planning a vacation, maybe save the best for last, save the most exciting, most fabulous dinner, or put that at the end of the trip rather than starting with it? Those kinds of pieces of advice feel like we might be able to offer them to listeners? Do you agree with that?

• 28:12Speaker 02

  I do agree with that. And actually, there's another effect. It's called the recency effect, that we tend to remember the last thing that happened. And that's another good reason for putting good things at the end. And if you're organizing an academic conference, put at least some of the best talks that you expect to be the best at the end of the conference, because those are the ones that people will best remember.

• 28:41Katy Milkman?

  I love that. George, I really enjoyed this conversation. I'm so grateful that you took the time to share these insights.

• 28:48Speaker 02

  I'm very grateful to you for inviting me. It was a great pleasure.

• 28:54Katy Milkman?

  George Lowenstein is the Herbert A. Simon University Professor of Economics and Psychology at Carnegie Mellon University, and a co-founder of the field of behavioral economics. He's also the author of the fabulous new book, The Opposite of Happiness: How Bad Feelings Make and Break Us. You can find links to the book and his research in the show notes and at schwab.com/choy sology.

• 29:20Katy Milkman?

  If today's episode got you thinking about the comfort of having something positive to look forward to, check out What Are the Keys to Lowering Financial Stress?, an episode of Schwab's Financial Decoder podcast. It explores why financial peace of mind isn't just about how much money you have, but about having a clear plan and feeling confident in where you're headed. You can find it at schwab.com/financialdecoder, or in your favorite podcast app.

• 29:48Katy Milkman?

  Right after we recorded this conversation, I took my family to Disneyland for two days and found myself thinking about George's research constantly. We'd agreed to schedule one fancy dinner and spend one late night in the park that would end with fireworks. I learned enough from George to put both on night two. I wanted the trip to feel like it was building towards something, the same way Walt Disney built his whole park to keep your eyes on a horizon that's always a little further off. So we saved the best for last. Ending on a high note was a true delight. A key takeaway I hope you'll remember from this episode is the value you can create by understanding people's preference for

• 30:30Katy Milkman?

  improving sequences. You can deliberately design experiences to improve over time. And that single principle can be applied almost everywhere. How you structure your workday tasks, or your chores list, or how you curate a playlist or your vacation. The shape of an experience matters.

• 30:52Katy Milkman?

  But where I try to ignore this craving for improvement is in thinking about money. If you're making decisions about income, try to tune out the craving for a rising trajectory, because the math tells a different story. A higher salary today with a stable future, invested, beats a low salary with the promise of a raise down the line. But don't be surprised if others feel differently and crave those upward sloping rewards. The desire for things to get better is universal.

• 31:39Katy Milkman?

  That's all for this episode of Choiceology, an original podcast from Charles Schwab. I'll leave you with a couple of quick ways to keep your trajectory moving upward. Check out my book, How to Change, or subscribe to my Substack newsletter, Milkman Delivers. And if you enjoyed this episode, leave us a rating on Spotify or a review on Apple Podcasts. It helps other curious minds find the show. I'm Dr. Katie Milkman. Thanks for listening.

• 32:20Speaker 03

  For important disclosures, see the show notes or visit schwab.com/choy sology.