The Marshmallow Test is one of the most famous studies in psychology: give a kid one marshmallow now, or two if they wait. It was once hailed as a predictor of success—kids who could delay gratification supposedly grew up to be smarter and more successful (and thinner!).

But what if the explanation isn’t so simple?

In this episode of Econ Nerds, we dig into the Marshmallow Test, the psychology replication crisis, and what researchers found when they added one critical variable: trust.

Turns out, Marshmallow Test kids aren’t just choosing between sugar now and sugar later—they’re reacting to how reliable adults have been in the past. If promises might not be kept, why wait for a second marshmallow that might never come?

And that brings us to the economy.

Today’s business environment is riddled with uncertainty: unpredictable tariffs, shifting regulations, and constant policy reversals. Just like those kids, businesses have to decide whether to invest and wait for future rewards—but they no longer believe the adults in charge.

Who could blame them if they eat the marshmallow?

For more detail, check out our blog (econnerds.substack.com/p/is-america-failing-the-ma…) and this post at Marginal Revolution: marginalrevolution.com/marginalrevolution/2025/03/…

You might also want to read some of the papers mentioned in the video:

Kidd, Celeste, Holly Palmeri, and Richard N. Aslin. "Rational snacking: Young children’s decision-making on the marshmallow task is moderated by beliefs about environmental reliability." Cognition 126.1 (2013): 109-114.

Angerer, S., et al. (2022). Children’s patience and school-track choices several years later: Linking experimental and field data. J. Public Econ., 208, 104631

Lamm, Bettina, et al. "Waiting for the second treat: Developing culture‐specific modes of self‐regulation." Child development 89.3 (2018): e261-e277.

Watts, T. W., Duncan, G. J., & Quan, H. (2018). Revisiting the marshmallow test: A conceptual replication investigating links between early delay of gratification and later outcomes. Psychological Science, 29(7), 1159–1177​

Duckworth, A. L., Tsukayama, E., & Kirby, T. (2013). Is it really self-control? Examining the predictive power of the delay of gratification task. Pers. Soc. Psychol. Bull., 39(7), 843–855

Castillo, M., List, J. A., Petrie, R., & Samek, A. (2021). Detecting drivers of behavior at an early age: Evidence from a longitudinal field experiment. NBER Working Paper No. 28288​

McLanahan, Sara, Laura Tach, and Daniel Schneider. "The causal effects of father absence." Annual review of sociology 39.1 (2013): 399-427.