Time is Money: Arithmetic Discounting Outperforms Hyperbolic and Exponential Discounting

Doyle, John R.; Chen, Catherine Huirong

doi:10.2139/ssrn.1609594

Cited by 5 publications

(5 citation statements)

References 29 publications

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“…7 With respect to Equation 3, how are we to establish the value of the delay cost rate y? One strategy would be to use a task to assess the cost rate y independently from delay discounting, and then check whether that estimate is sufficient to 6 At present there is no evidence to support the hypothesis that the delay-utility equation is best represented by Equation 3, or by any other formula, for that matter (but see Killeen, 2009, and the discussion of "arithmetic discounting" in Doyle & Chen, 2010). Indeed, such lack of evidence is exactly the problem we must remedy.…”

Section: Theoretical Implications For Intertemporal Choicementioning

confidence: 99%

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The Costs of Delay: Waiting Versus Postponing in Intertemporal Choice

Paglieri

2013

J Exper Analysis Behavior

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Intertemporal choices are typically regarded as indicative of delay discounting. In this view, the degree of behavioral propensity to wait for a reward is attributed to an underlying process of reward devaluation as a function of delay. However, this widespread interpretation overlooks the role that the costs of delay might have in determining intertemporal choices. In this paper I review evidence of a marked discrepancy in intertemporal behavior across different tasks, and argue that the differential costs of delay can account for this anomaly better than alternative explanations. In particular, I characterize two types of delay, waiting versus postponing, examine how they impact behavioral choices across delay discounting tasks, what methodological challenges they present for new experimental paradigms, and what theoretical implications they have for our understanding of intertemporal choice.

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Section: Theoretical Implications For Intertemporal Choicementioning

confidence: 99%

“…At present there is no evidence to support the hypothesis that the delay‐utility equation is best represented by Equation , or by any other formula, for that matter (but see Killeen, , and the discussion of “arithmetic discounting” in Doyle & Chen, ). Indeed, such lack of evidence is exactly the problem we must remedy.…”

mentioning

confidence: 98%

The Costs of Delay: Waiting Versus Postponing in Intertemporal Choice

Paglieri

2013

J Exper Analysis Behavior

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“…Verze dotazníku mezičasových voleb s 33 otázkami poskytne výsledky srovnatelné se studií provedenou na vzorku 64 vysokoškolských studentů ekonomického doktorského programu; tj. druhý extrém ve finančních mezičasových preferencích [Doyle a Chen, 2010]. Zjistíme, zda se preference vysokoškoláků a závislých liší od rozhodování romské a české skupiny a všech respondentů jako nezaměstnaných osob s nižším vzděláním.…”

Section: Dotazníkový Sběr Datunclassified

“…První z nich je opět [Kirby, Petry a Bickel, 1999] pro osoby závislé na návykových látkách a nezávislé, druhou a třetí studií je [Doyle a Chen, 2010] pro vysokoškoláky a pro vysoce finančně gramotné respondenty. Všechny studie využívají k měření časových preferencí stejný postup.…”

Section: Konzistence čAsových Preferencíunclassified

“…Pro následující analýzu byly vytvořeny dvě alternativy výsledků -jednak počítáme se všemi respondenty (23 Čechy a 27 Romy) a jednak bereme v úvahu jen ty respondenty, pro něž byla hodnota funkce U min <50. Tato podmínka byla přijata z důvodu porovnatelnosti s výsledky studie [Doyle a Chen, 2010], jež z dalších analýz vyloučila ty respondenty, kteří tuto podmínku nesplnili. K diskvalifikaci se přistoupilo z toho důvodu, aby výsledky pojímaly pouze ty subjekty, pro něž se model přiblížil jejich individuálnímu chování v dostatečné míře.…”

Section: Konzistence čAsových Preferencíunclassified

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The Impulsiveness of the Roma Minority, the Czech Majority and the Psychological, Demographic, and Socioeconomic Correlations

Houdek¹,

Rybáková²

2017

AOP

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The Impulsiveness of the Roma Minority, the Czech Majority and the Psychological, Demographic, and Socioeconomic Correlations The article examines the differences in individual discount rates among the Roma ethnic group (Gypsies) and the Czech ethnic group. Low income, low education, and currently unemployed participants (Roma N=27, Czechs N=23) were subjected to pilot experiments based on in-depth questionnaires. In addition to impulsivity (delay-discount rates), the correlation with cognitive aptitude, risk attitudes, and various socioeconomic and demographic characteristics were analysed. Even though the Roma group was characterised by lower cognitive abilities, education, and financial literacy, our results indicate that participants from both groups appear to be equally impatient, with discount rates close to the values of individuals dependent on addictive substances (according to the results of some earlier foreign studies). Nevertheless, the Roma ethnic group is better characterised by inconsistent discounting compared to the Czechs who behave more consistently. However, these results are not robust to alternative estimation characteristics. We also found a positive effect of financial literacy on savings in the Roma sample. The conclusion discusses the influence of the environmental context on impulsivity and reviews the limitations of the study.Keywords: impulsiveness, Roma, Czech Republic, poverty, cognition, discounting, time preference, financial literacy, self-control, savings JEL Classification: J15, J22, I32 ÚvodObyvatelé Mostu s přilehlým chanovským okrskem obývaným výlučně Romy se často setkávají s následující situací. V den výplaty sociálních dávek se na parkovištích mosteckých hypermarketů objeví vozy taxislužby, které přivezou obyvatele Chanova na nákup a čekají, až jejich klienti nakoupí, aby je pak zase odvezli do jejich domovů. V době před výplatou sociálních dávek však romské domácnosti univerzálně nemají žádné finanční prostředky a zadlužují se u lichvářů při extrémně vysokých úrokových sazbách. Stejně časté jsou situace, kdy je obyvatel Chanova zaměstnán, na pracoviště se však nedostaví či jej záhy opouští. Důvodem ukončení pracovního poměru je získání jednodenní pracovní

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New designs for research in delay discounting

2011

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The two most influential models in delay discounting research have been the exponential (E) and hyperbolic (H) models. We develop a new methodology to design binary choice questions such that exponential and hyperbolic discount rates can be purposefully manipulated to make their rate parameters orthogonal (Pearson’s R = 0), negatively correlated (R = –1), positively correlated (R = +1), or to hold one rate constant while allowing the other to vary. Then we extend the method to similarly contrast different versions of the hyperboloid model. The arithmetic discounting model (A), which is based on differences between present and future rewards rather than their ratios, may easily be made orthogonal to any other pair of models. Our procedure makes it possible to design choice stimuli that precisely vary the relationship between different discount rates. However, the additional control over the correlation between different discount rate parameters may require the researcher to either restrict the range that those rate parameters can take, or to expand the range of times the participant must wait for future rewards.

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Time is Money: Arithmetic Discounting Outperforms Hyperbolic and Exponential Discounting

Cited by 5 publications

References 29 publications

The Costs of Delay: Waiting Versus Postponing in Intertemporal Choice

The Costs of Delay: Waiting Versus Postponing in Intertemporal Choice

The Impulsiveness of the Roma Minority, the Czech Majority and the Psychological, Demographic, and Socioeconomic Correlations

New designs for research in delay discounting

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