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Earth Institute Research Projects

Temporal Discounting of Social Goals

Lead PI: Professor David H. Krantz , Elke Weber

Unit Affiliation: Center for Research on Environmental Decisions (CRED)

September 2008 - August 2012
Inactive
Global
Project Type: Research

DESCRIPTION: Researchers aim to advance the theory of decision making in social contexts and to develop methods for assessing temporal discounting factors, which will lead to better analysis of public policy costs and benefits.

Delayed benefits are usually valued less than immediate ones, for several reasons. Such a reduction in value can be viewed as the result of applying a temporal discount factor. There have been many studies of the observed discounting of future receipts of money. For example, if a decision maker judges that $100, to be received in 2 years, is equal in value to $70 right now, the observed discount rate for this decision is about 30% for 2 years (or about 16% per year). However, people also pursue goals other than money, including good health, safety, leisure, belonging, status, well being of others, and a stable and attractive environment. Such non-monetary goals may also be valued less if their achievement is delayed, so the concept of a temporal discount factor can be extended to these other goals. Different discount factors may apply for different goal categories, and this, in turn, would affect how people make tradeoffs among goals attained at different points in time. For example, if a decision maker judges an environmental improvement 2 years hence to be almost as valuable as the same improvement achieved now, the discount rate might be only 3% per year for the environmental goal even though it is 16% per year for a monetary gain of $100. A person who is unwilling to give up $100 now, for immediate attainment of the environmental goal, might be willing to make a binding commitment to give up $100 with a delay of one year (worth only $84), in order to achieve the same environmental goal with a delay of 1 year. Thus, it is important to know how human temporal discounting varies across goal categories in order to analyze the long-term benefits of public policies relating to health, safety, and environment.

Our previous research showed the importance of affiliation and social goals (such as status or adherence to group norms) for decisions concerning environmental goals. Our new research will determine the best ways of measuring temporal discount factors for different goal categories, and will then quantitatively compare discount rates for a variety of economic, social and environmental goals. We focus both on typical responses and on individual and cultural variation. The research will advance the theory of decision making in social and group contexts (temporal discounting of social goals has not previously been considered), will develop methods for assessing temporal discount factors, and will lead to better analysis of public policy costs and benefits. For example, we will assess discount rates for some costs and benefits of measures to prevent global warming, using a diverse national sample, to inform policy on this critical issue. A field study will test applicability of our findings in an international population and will provide data on effective means of encouraging energy conservation.

OUTCOMES: 2008-2012: Outcomes include assessing the best methods of measuring temporal discounting factors for different social goals; quantitatively comparing discount rates for a variety of economic, social and environmental goals; testing applicability of findings in an international population; and providing insights on effective means of encouraging energy conservation.

SPONSOR:

National Science Foundation (NSF)

FUNDED AMOUNT:

$644,000

COLUMBIA UNIVERSITY COLLABORATORS:

Columbia Business School

WEBSITE:

https://www.nsf.gov/awardsearch/showAward?AWD_ID=0820496&HistoricalAwards=false

PUBLICATIONS:

Hardisty, D. J. & Weber, E. U.. "Discounting Future Green: Money vs the Environment.," Journal of Experimental Psychology: General, v.138, 2009, p. 329.

Hardisty, D. J., Appelt, K. C., & Weber, E. U.. "I want it now: Why discount rates for losses show reverse magnitude effects," (working paper), 2011.

Appelt, K. C., Hardisty, D. J., & Weber, E. U.. "Asymmetric Discounting of Gains and Losses: A Query Theory Account," Journal of Risk and Uncertainty, v.43, 2011, p. 107.

Hardisty, D. J., Orlove, B., Krantz, D. H., Small, A., & Milch, K.. "About time: An integrative approach to effective environmental policy," Global Environmental Change: Human and Policy Dimensions, v.22, 2012, p. 684.

KEYWORDS

social goals climate and society public policy costs discounting cognitive biases public policy benefits

THEMES

Modeling and Adapting to Future Climate