The Worldwide Prevalence of Temporal Discounting
Post by Megan McCullough
The takeaway
Consistent patterns of temporal discounting were observed in a diverse sample that included participants from 61 countries.
What's the science?
Temporal discounting is a cognitive bias in humans that describes the tendency to choose rewards that will occur immediately rather than rewards that will occur in the future. Previous studies that have examined temporal discounting globally, have found an association between temporal discounting and income inequality – those with lower incomes tend to prefer smaller, immediate gains over larger ones that would occur in the future. Although these studies found consistent results throughout different populations, they have used narrow measurements that have only examined immediate gains compared to future gains. This week in Nature Human Behavior, Ruggeri and colleagues aimed to investigate patterns of temporal discounting around the world using multiple measures of intertemporal choice anomalies (decisions in the short-term that affect the long-term that are not expected).
How did they do it?
The authors designed an assessment to administer to individuals from 61 countries that measured multiple facets of intertemporal choice anomalies including absolute magnitude, gain-loss asymmetry, delay-speedup asymmetry, and present bias. The authors’ assessment included scenarios in which the participants made decisions regarding receiving rewards now or in the future. Local currencies and value standards were used for each country. The participants then answered questions regarding their financial circumstances.
What did they find?
Overall, the authors found that increased wealth and income at individual and national levels are associated with lower temporal discounting. The data showed a trend that individuals living in countries with a lower gross domestic product (GDP) tended to prefer immediate gains and later payments compared to individuals living in countries with higher GDPs. However, all countries, independent of the economic environment, exhibited some temporal discounting. Temporal discounting also became more common at high levels of inflation. The authors also found higher within-country differences in temporal discounting rates compared to between-country differences, which shows that temporal discounting is a globalizable occurrence.
What's the impact?
This study found that temporal discounting, and the common anomalies associated with it, are present globally. The authors also found consistent patterns of intertemporal choices across the 61 countries examined. This research has policy implications as it demonstrates the effects of economic inequality and inflation on decision-making.