Thinking and Deciding

486 DECISIONS ABOUT THE FUTURE
mere consistent underweighing of our future utility (just as we might underweigh
the utility of others). They may instead result from a basic impulsiveness that we
should — for our own future good — learn to control.
Decreasing discount rates are found even for public policy decisions that affect
others. The declining discount rate may thus result from the way we perceive future
time itself, as well as from some sort of impulsiveness. Like the Value function in
prospect theory, we may tend to ignore those differences that are farther away from
where we are now. Cropper, Aydede, and Portney (1992) did a telephone survey in
which they asked such questions as, “Without new programs, 100 people will die this
year from pollution and 200 people will die 50 years from now. The government has
to choose between two programs that cost the same, but there is only enough money
for one. Program A will save 100 lives now. Program B will save 200 lives 50
years from now. Which program would you choose?” The number of lives saved in
the future was varied randomly, and the researchers inferred discount rates from the
choices. The median discount rates were 16.8% (per year) for 5 years in the future,
7.4% for 25 years, 4.8% for 50 years, and 3.8% for 100 years, a steady decrease.
Note that the discount rate continued to decline even after 50 years, a time when few
of the respondents would still be alive.
The results showing that people have unusually high discount rates in some situations
may be related to these results concerning changing discount rates. The high
discount rates may be found when people think about the short term.
Other factors
Other factors affect the subjective discount rate. The discount rate is higher when
rewards are smaller, and the discount rate for losses is lower than that for gains.
These results are not well understood, but the are pretty clearly not the result of
experimental artifact. The loss-gain effect may have something to do with wanting
to get bad things over with so that we don’t have to dread them (see p. 492).
Discounting may also have something to do with expectation. Chapman (1996)
asked subjects to rate their preferences for sequences that described how their health
or monetary income could change over their entire lifetime. Total income and average
lifetime health quality were held constant. Most subjects preferred to make
more money as they got older, and they preferred to have better health when they
were young. This result was not found for shorter intervals of a few years, and subjects
said that the lifetime pattern was what they expected.
Individuals differ in their tendency to prefer small but immediate rewards to
larger delayed rewards, and these differences (at least those in young adolescents)
seem to be related to concern with the future and the tendency to imagine it as something
real and concrete (Klineberg, 1968). Children who tend to choose the larger
delayed reward grow up to be more academically and socially competent in adolescence,
and better able to cope with frustration and stress (Mischel, Shoda, and Peake,
1988; Shoda, Mischel, and Peake, 1990). Heroin addicts, too, prefer smaller, shorter
monetary rewards in laboratory experiments (Kirby, Petry, and Bickel, 1999): Possi-