suggest that people focus excessively on the present. it ’ s not just that they generally place higher value on getting something sooner rather than later : people seem to put a particularly high weight on current outcomes. they seem to discount the importance of what comes tomorrow, relative to today, more heavily than they do any two successive days further into the future. this is referred to in the economic jargon as “ hyperbolic discounting ” and by psychologists as “ present bias ”. it helps to explain why we often put things off right until the last minute, even if the cost of doing it is much higher by that time. it means it can be advantageous to commit to things that are good for you over the longer term – regular saving, or signing up to a gym programme – but that, when the time comes, you might be tempted to avoid. 2 and it can also explain why people borrow money, and roll over those debts, even at very high interest rates. this borrowing can take many forms, including foregoing opportunities to reduce the longer - term cost of something. in their recent book “ scarcity ”, economist sendhil mullainathan and psychologist eldar shafir give the example of rag collectors in india – people who rely on collecting discarded clothes and selling them on. it is an ardous job with very little reward. but it is, at least, a job that requires very little investment in training or equipment : the only “ capital ” a rag collector will need is a pushcart, which might sell for $ 30. yet, despite saying they ’ d very much like to own their own, nearly all these rag collectors instead rent their pushcarts, at a cost of $ 5 - $ 10 a month. they therefore spend in a matter of 3 - 6 months what it would cost to own the thing outright. this is an enormous, and self - imposed, effective rate of interest – an annual rate of somewhere between 200 and 400 per cent. 3 gathergood ( 2013 ). laibson ( 1997 ). this would cover any depreciation costs, which the owner of the cart would have to bear. but these are likely to be only a small part of the rental cost. all speeches are available online at www. bankofengland. co. uk / news / speeches mullainathan and shafir document many such examples. and they go further : they claim, supported by the result of interesting experiments, that

that mission. improved cognitive diversity helps make for better decision making. the lack of such diversity has been highlighted as one important factor in the bank and regulatory failures of 2008. 5 having a diverse range of institutions and business models brings positive benefits for financial system resiliency6 – something that you will not be surprised to hear matters a great deal to the bank of england! diversity in who we speak to in financial markets has even more direct benefits. it improves our understanding of what is driving markets, what people expect from future policy and the potential impacts of different decisions. and that is critical – because financial markets are global, complex and interconnected. a failure to understand those diverse components heightens the chances of making analytical, and hence policy, mistakes. speaking to only one subset of banks, for example, could mean policy calibrations have unintended consequences for different market participants. only looking at established financial assets risks ignoring the impact of innovation. and speaking only to contacts of similar backgrounds could mean missing different perspectives 1 / 3 bis central bankers'speeches on potential risks to consensus views. having that breadth of diverse perspectives allows us to act more quickly and decisively in a crisis too. in march last year, financial market stress caused by covid - 19 across the world led to investors looking for safe haven assets and cash. the conversations we had with market participants like you during this period were essential to building a picture of what was happening across a wide range of different markets, and assessing the steps we, and other public authorities, needed to take to maintain economic and financial stability. to take one example, the intelligence we gathered from you about the stress in the commercial paper market helped the bank and hm treasury to plan, design and launch the covid corporate funding facility in record time, and ensured it was priced appropriately. similarly, our market intelligence helped ensure that the other elements of the policy response last year were also rapid, decisive and well calibrated to the underlying risks. of course, diversity has affected our other outreach activity too. when i first started working at the bank of england in the mid - 1980s, the bank ’ s only public statements came mainly from the governor for instance at the annual mansion house speech. we have moved a long way since then, and we see outreach as core to how we operate. in an important sense this change naturally accompanied the decisive shift to the bank having clear and independent responsibility for monetary policy and the stability of the financial system. with those responsibilities went