The older folks among you will remember this phrase from the Popeye cartoons. The character Wimpy liked hamburgers but couldn&39;t pay for them today, so he would promise to pay in the future, hence the phrase.  Of course, in his case, he couldn&39;t pay for them on Tuesday either so the phrase  came to be associated with deadbeats who wouldn&39;t ever pay.

What interests me more is the concept of the value of things over time.  Frankly, if you didn&39;t have to pay for the hamburger until Tuesday but got to enjoy it today, there is a very small but positive benefit.  That accounts for the "buy it today and make no payments until 2008" advertisements you see frequently.

In a purely rational world, the time difference in value is what you could earn on the money if you had it sooner. With money market funds earning, say, 5% today, you&39;d be indifferent between getting $100 today or $105 a year from now. 

But that&39;s not the way people act. People place a much higher value on the utility of having money today rather than on Tuesday or a year from now.  In tests, people who are offered a choice between taking $50 today or $100 a year from now, will almost universally take the money now even though they would be earning a return on investment far exceeding the market rate of return.

Conversely, people who are offered $50 in 5 years or $100 in 6 years will choose the $100 option even though this exactly the same deal. It&39;s just delayed by 5 years.

I think that there are many aspects of this phenomenon that are visible in the financial world, two of which I can see easily. First, it appears as if people would rather spend money today than save for the future. We actually have a negative savings rate in this country now.

Second, people are lured by saving money today on upfront loan costs – paying no points – even though the interest savings in the future give them a 25% return on an investment in points. I have a front row seat on this because I explain to my clients the benefit of paying a little more now and saving lots more in the future, a more rational decision. 

This interesting phenomenon even has a name, hyperbolic discounting. You can read more about it at http://en.wikipedia.org/wiki/Hyperbolic_discounting or a number of other interesting sites on the Internet.

I&39;d be interested in your feedback.