The Economics of Small Choices: Lessons from the Power of Compounding 

By Richard Sebaggala (PhD)

 

 

The year’s end has a way of slowing us down. Christmas offers a pause, the New Year kindles expectations. In the space between reflection and anticipation, certain lessons become clearer than they do during the rush of ordinary days.

One such lesson comes from a simple thought experiment.

Imagine you are offered two options. You can take three million dollars in cash today, or you can take one cent that doubles in value every day for thirty-one days. Most people would take the three million without hesitation. It feels sensible, immediate, and certain.

Yet, that instinct exposes something important about how we think.

The mathematics behind the one-cent proposition is straightforward. On day one, you have $0.01. On day two, it becomes $0.02. On day three, $0.04. Each day, the amount is multiplied by two. In simple terms, the value on any given day is the starting amount multiplied by two raised to the number of days passed.

After ten days, the total is only $5.12. After twenty days, it is approximately $5,243. Even by day twenty-nine, the amount is roughly $2.7 million—still below the three million offered at the start. It is only in the final two days that the growth becomes dramatic, reaching more than ten million dollars by day thirty-one.

 

Nothing magical happens on the last day. The same rule applies throughout; what changes is scale. This is the nature of compounding.

This principle extends far beyond finance.

Over the years, I have consistently encouraged people to engage with new tools, especially artificial intelligence, long before it became mainstream. The message was always the same: do not wait to master everything, start using it in small ways. Read with it. Write with it. Use it to think more clearly, not to avoid thinking.

Many people were hesitant. Some dismissed it. A few quietly experimented.

Today, the difference is obvious. Those who started early, even imperfectly, are now confident and adaptive. They did not become experts overnight; they accumulated familiarity. Daily exposure replaced fear with understanding. Small, repeated application led to real transformation. Those who waited for the "perfect moment" are now trying to catch up, wondering how the gap became so wide.

That is how compounding works in real life. For a long time, progress looks unimpressive. At times, it looks like nothing is happening at all. The temptation to stop is strongest just before momentum becomes tangible.

This logic applies directly to postgraduate students, though it is rarely framed in these terms. For instance, many PhD students perceive progress as episodic: a breakthrough chapter, a long writing retreat, or a sudden moment of clarity. When these do not materialize, frustration sets in and confidence begins to erode. In practice, most PhDs are achieved through accumulation rather than intermittent intensity. Reading a small number of papers consistently, writing a few hundred words regularly, refining one argument at a time, or cleaning data in small batches may feel insignificant on any given day. Over months and years, these efforts compound into a coherent thesis.

 

The same logic applies to marriage, though we rarely describe it this way. Many people think marital happiness stems from big moments: grand gestures, expensive trips, or dramatic apologies. These matter, but they do not sustain a relationship. What sustains a marriage is a series of small, repeated actions: listening carefully, speaking kindly when tired, praying together (even briefly), addressing misunderstandings early, and expressing appreciation when it feels unnecessary.

Neglect, too, compounds. Small, dismissive comments; unresolved resentment; emotional withdrawal. Each seems minor in isolation. Over time, they accumulate. Most marriages do not collapse suddenly; they move gradually in one direction or the other.

As 2026 approaches, the temptation will be to strive for dramatic change. Many New Year resolutions fail not because they are misguided, but because they are too large and disconnected from daily practice. Compounding does not require intensity; it requires consistency.

The real question is not what major breakthrough you want next year. It is what small action you are willing to repeat every day, even when it feels insignificant. One page read; one honest conversation; one deliberate effort to improve your workflow; one act of patience; one choice to show care.

Like the one cent, these actions do not look impressive at the beginning. But life, like mathematics, respects accumulation.

Christmas reminds us that the greatest change entered the world quietly. The New Year invites us to live differently—not dramatically, but deliberately. If you commit to the logic of compounding in your work, your learning, your faith, and your relationships, you may not feel successful in January. But by December 2026, you will understand why small beginnings truly matter.