Embrace the Past and Future

Go on to YouTube and type in “Marshmallow Experiment”.  Ask yourself whether, if you had been the kid offered the choice of a marshmallow now, or two later, you would have been able to resist temptation long enough to win the bigger prize.

The now-famous Stanford Marshmallow Experiment was first carried out by Walter Mischel in the late-1960s.  In a follow-up paper published in 1990, it was found that infants who could “delay gratification” – by not eating the single marshmallow offered them and instead waiting for the promised two – went on to achieve better school results, and later investigation found that they were also less likely to be overweight and have addictions.

The fact that few kids can resist the marshmallow for long is not surprising, because it seems that we are hard-wired to emphasise the immediate and relatable over things that have happened in the past, or (as in the case of the Marshmallow Experiment), things that may happen in the future.

Underestimating the past – recency bias

Watching the news unfold in Paris in November 2015, it would have been easy to think the world was in collapse.  Indiscriminate acts of terrorism, like the ones that killed 130 people in the French capital that night, tell us, unequivocally, that the modern world is a less predictable, more dangerous place, than the one we grew up in.

However, the facts refute this.  When it comes to terrorism, the worst time to live was the 1980s, when you were around four times more likely to die because of a terrorist attack than you are today.  And when you take out data from Iraq, Afghanistan and the disputed territories in the Kashmir, which account for around a third of all terror deaths at the moment, the situation looks even better.

Our brains, though, tend to give more credence to the things it can recall more easily.  We are much more likely to remember the Sydney hostage crisis of 2014 than the Sydney Hilton bombing of 1978, even though the human cost was similar.  This tendency is known as the availability heuristic, a mental short-cut that prioritises the information that is more available in our recollections.

As punters, being aware of this cognitive bias, and taking steps to counter it, is crucial.  When Harold Varner III stepped-out at the Australian Open Golf in 2016, he was a largely unfancied $34.00, despite having narrowly lost in the same tournament a year earlier in a play-off with Nathan Holman.  A series of indifferent results since had dissuaded the market away from Varner III, even though there is robust statistical evidence to demonstrate that course form trumps recent form when it comes to golf.

Similarly, when Fields of Omagh won the Cox Plate in 2006, the nine-year-old was a hardly-backed $19.00-shot, despite repeatedly running well in the race in previous years, and despite winning a Group 1 only seven months before.  The market, it seemed, largely discounted his chances of victory after a couple of lacklustre efforts in the run-up to the big race.  In this case, bettors would have done well to heed the English horse racing adage that “form is temporary, but class is permanent.”

These two examples demonstrate that, when punting, it is important to silence the part of your brain that is impressing on your consciousness the image of a hooked tee-shot in a recent tournament, or a horse buried at the back of the pack last-time-out (or hostages holding an ISIS flag up to a café window…), and instead take a longer, and more objective view of the thing you are trying to assess.

Underestimating the future – hyperbolic discounting

And when you’ve overcome your brain’s tendency to ignore the distant past in favour of the more recent, you then need to deal with its desire to eat the marshmallow that is in front of it, rather than waiting for the two that have been promised.

In various studies carried out by economists and psychologists, most subjects have tended to favour taking a reward now – say $100 – rather than waiting a year and receiving $180.  These types of decisions are, in most cases, irrational, and are referred to as hyperbolic discounting: our tendency to over-estimate the value of the present reward whilst under-estimating the value of a future one.

This perhaps explains why, in bookies around the country, the average punter walks in and tries to find the next thing they can bet on, rather than wanting to find the right thing.

Interestingly, follow-up studies on hyperbolic discounting, like those conducted by Petry and Casarella, show that people with a history of alcohol, substance and gambling addictions are much more likely to overvalue the immediate, and do so more intensely.  This should tell us, loudly and clearly, that profitable punters will do the opposite.

Process and data provide the solution

Cognitive biases are hard – if not impossible – to overcome.  They most likely explain a large part of our evolutionary success as a species.  If you hear a roar, it’s best to run, even if the last time you heard it, it turned out to be nothing.  And if you stumble across a meal, it’s best to eat it there and then, rather than waiting in hope for a promised feast.

We are no longer nomadic persistent-hunters on the African Savannahs, though, and many of our cognitive biases are unhelpful to us in the modern world – especially if we want to make a profit from punting.

One way to counteract our natural tendencies is to have a routine or process that you follow whenever you place a bet, and preferably one that is based on data.  There is plenty of advice elsewhere on this site about how to compile your own ratings for various sports, and how to convert those ratings in to a tissue price, and it is in the process of doing this that you can tame your ancestors’ handed-down desire to focus on the immediate.

About The Author – Jack Houghton 

As a passionate sports’ fan and punter, Jack has written about sports and betting for over a decade, winning the Martin Wills Award for racing journalism in 2002 and writing Winning on Betfair for Dummies, first published in 2006 and now in its second edition, having sold over 35,000 copies in two languages.

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