shorttermism

Shorttermism refers to the tendency to prioritize short-term results over longer-term outcomes in decision making across business, finance, public policy, and philanthropy. It is discussed in relation to incentives and time horizons that favor immediate gains, visible metrics, or quarterly or annual cycles.

In business, shorttermism is often linked to emphasis on quarterly earnings, cost-cutting, and stock buybacks, potentially at the expense of long-term investment in research and development, human capital, and capital maintenance. In public policy, election cycles and annual budgets can produce near-term priorities that overlook longer-run consequences such as infrastructure quality and environmental sustainability.

Critics argue that shorttermism can undermine resilience, innovation, and sustainability by undervaluing long-run costs and benefits, such as climate risk, capital depreciation, and workforce development. Some proponents contend that focusing on near-term performance supports accountability and efficient resource allocation. Measuring horizon preferences is difficult, as time horizons and discount rates vary across stakeholders and contexts.

Policy and governance reforms are often proposed to mitigate shorttermism. These include strengthening corporate governance with longer-term pay and tenure, enhancing disclosure of long-term risks, encouraging patient capital from pension funds and foundations, and developing frameworks for long-run investment and sustainability metrics. The concepts of long-termism and sustainable finance seek to balance horizons rather than oppose immediate needs.

Overall, the term reflects ongoing debates about how institutions reward time horizons, and how decisions today affect future outcomes. Researchers and policymakers continue to examine its prevalence and impacts across sectors.