Decision-Making: The ST-LT Test

Say you hold seeds in your hands and have to decide what to do with them: eat them or plant them. Seen another way, the decision you have to make is: consume them or invest them.

If you choose to eat your seeds, you get the immediate satisfaction of savoring them today, but you lose the possibility of having a tree in the future. If you choose to plant your seeds, you lose the satisfaction of savoring them today, but you get the possibility of a tree in the future.

The short-term-long-term test (ST-LT test) revolves around contrasting the short-term and long-term benefits and costs of the options you have to choose from.

Think Long-Term

Eating your seeds has a short-term benefit but a long-term cost (i.e. no tree), whereas planting them has a long-term benefit (i.e. the potential of a tree with more seeds) but short-term cost.

We would like to think that most people would choose to plant their seeds so that they can reap the benefits later, but in many cases, they choose to eat their seeds.

They choose the short-term benefits rather than the long-term ones. They choose immediate gratification rather than delayed gratification. And because of this, their results suffer. They choose to consume all their money rather than to invest it. They choose to consume their time rather than investing it (producing).

Too many people are thinking short-term and that’s why they make bad decisions: decisions that don’t produce the result they deeply want.

As part of your decision-making process, consider the long-term impact (i.e. benefit and cost) of your decisions. When making a decision, ask: What is the long-term value of this decision? If I choose to do this, what is the long-term value of that choice? If I choose to plant my seeds what is the long-term value of that choice?

The challenge with “long-term perspective” is this: it’s risky. There are no guarantees that you’re going to get the return you expect (i.e. that your seeds will produce trees). Also, there are no guarantees you’re going to live long enough to reap the benefits of waiting.

This simple example illustrates how the ST — LT test works. When you’re choosing “short-term”, you get “short-term benefits at the cost of “long-term” benefits. When you’re choosing “long-term”, you get “long-term benefits at the cost of “long-term” benefits.

Don’t Discard Short-Term

However, many decisions aren’t as simple as this. For example, say you have to choose between going to university or going straight into the marketplace to work (and you can’t do both at the same time). Which would you choose? Going to university is your long-term option (as in you’ll reap the benefits of your investment later) while going straight to the marketplace is your short-term option (as in the benefits are immediate). After analysis, you conclude that:

  • the long-term benefit of going to university is that you get a university degree (which may open doors for you in the future) while the cost of that option is that you have to take on debt and have to wait to gain “real world” experience;
  • the short-term benefit of going straight into the marketplace is that you make money and gain “real world” experience immediately, but the long-term cost is you get no university degree (and this may limit the job opportunities available to you in the future).

When you carefully analyze both options, you may conclude that for what you want to do in life, going straight into the marketplace is a far better option than going to university. Many have made that decision and have built very successful careers in the marketplace. Conversely, you may find that going to university is the better option. Many have chosen this path and are very successful as well. In the end, with the help of the ST-LT test, you have to choose what you feel is best for you.

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