Wednesday, February 10

The Invention of Lying and discount rates

I recently rented The Invention of Lying. I was pleasantly surprised: the scriptwriter must have been an economist at heart because the comedy was loaded with undertones of incentives and game theory.

Spoiler alert: I'm going to give away details of the movie now, so stop reading if you don't want to know the plot.

The premise of the movie is a society where people cannot lie, except for one man named Mark (played by Ricky Gervais). He ends up creating religion when he tells people there is an afterlife (presided over by a Man in the Sky), where people live for eternity in a mansion with all the people they love. Since the idea of lying is foreign to everyone in the society, Mark gets taken at his word.

Mark's motivations for telling people about an afterlife were altruistic; he did it to comfort his mother on her deathbed, but word about the afterlife leaked out to the public. Despite Mark's best intentions, his insistence on an afterlife causes as many problems as it solves.

Many people have taken on the religious aspects of the movie, but only a couple other blogs (Marginal Revolution and Incentives Matter) have touched on the game theory/economic aspects of the movie. There is one scene near the end of the movie that really grabbed my attention because of the economic and religious commentary behind it.

Mark and his buddies are hanging out by a swimming pool, drinking beer and looking depressed. "Are you happier at least — since The Man in the Sky?" Mark asks.

"Yeah, definitely," his friend Frank (played by Jonah Hill) replies.

"Are you still lonely? Have you found someone yet?" Mark continues.

"Uh, no. I kind of gave up on that," Frank says.

"Why?"

"Well, because I was thinking that if I get eternal happiness when I die, that will be really great. Because it's eternal, you know, so you can't really beat that. So I'm just really happy that that's going to happen, so until then I think I'm just going to stick with the alcohol and my little apartment and just kind of hang out by myself and drink and watch TV," Frank explains.

"That doesn't sound like a happy life. That sounds like a long, miserable one," says a dejected Mark.

"Well no, it won't be that long because the more I drink, the faster I'll die, and I'm just waiting for that mansion," Frank insists.

"Brilliant," Mark replies sarcastically.

I think the reason I liked this exchange so much is because it seems to go completely against economic theory. We tend to think that people discount the future — they live in the moment while somewhat dismissing the effects it will have in the long run. We see this behaviour in everything from smoking to saving for retirement.

But rather than live in the now, the drunk friend with the small apartment seems to be focussed only on the very distant future — on the afterlife and his mansion. He is doing the reverse of what we'd expect — he's heavily discounting the present.

I wonder why we don't see this behaviour in real life. Clearly, religion does cause some people to heavily discount the present in favour of the afterlife (suicide bombers, for example), but these examples are a rare exception, not the rule. If anything, I think a lot of religious people care very much about the present and their quality of life on Earth.

Perhaps the rules that Mark created for his "religion" created these perverse incentives. His entrance-to-the-afterlife condition was that people only do two or fewer "really bad things" during their lifetime (murder or assault, for example). There is no condition that people must lead fulfilled, purposeful lives when they are alive, which perhaps runs counter to the "rules" most religions have.

Another possible explanation is that perhaps in real life, people have doubts about an afterlife, and the uncertainty causes them to not discount the present as much as The Invention of Lying would suggest.

Or perhaps people who believe in an afterlife do indeed discount the present somewhat, but that their discount rate is much smaller than Frank's such that it isn't obvious what's happening. In other words, people who believe in an afterlife may not worry as much about their needs in the present as in the future, but still care about their present needs than Frank does, because Frank is weird and has very extreme preferences.

Does anyone else have thoughts about why we don't see people discounting the present, contrary to what we see in the movie?