Boosting and nudging: Temporal discounting in gains and losses
Supervisor
Dr Tomas Folke
Team
Paula Barea Arroyo, Sophie Bowden, James Pettem, Nicolas Say, Anna Louise Todsen, & Milica Vdović
Project outline
Time is our constant companion. The extent to which we are aware of its ubiquitous presence informs our decisions. Whether we move along with our tasks or procrastinate, exercise or indulge, and save or spend are all influenced by our perspective of time. Decisions involving trade-offs between outcomes occurring at different points in time are known as intertemporal choices. When deciding between immediate and distant rewards, people tend to value immediate rewards over greater delayed rewards, a tendency known as temporal discounting – one of the most consistent findings concerning intertemporal choices (Cheng, Shein & Chiou, 2012).
Temporal discounting impacts a wide range of decision-making behaviours (Cavagnaro et al., 2016), and frameworks explaining it has applications related to increasing savings (Ersner-Hershfield, Wimmer & Knutson, 2008; Ersner-Hershfield et al., 2009), diminishing credit card debts and loans (Meier & Sprenger, 2012; Meissner, 2016; Wells, 2007), pro-environmental behaviour (Dasgupta, 2008; Zaval, Markowitz & Weber, 2015) and health-related behaviours (Daugherty & Brase, 2010).
Since temporal discounting influences such a wide range of behaviours, interventions that impact discount rate have the potential to be transformative. Two common low-cost behavioural interventions to improve choices are nudges and boosts. Nudges steer people towards a certain choice without substantially changing the pay-off of the options, often by altering how choice-relevant information is presented (Johnson et al., 2012; Sunstein, 2014). In contrast, boosts aim to foster individual decision-making competencies, often by teaching people new decision strategies (Hertwig, 2017; Hertwig & Grüne-Yanoff, 2017). Previous research (Franklin et al., 2019) compared the two interventions in the context of risky choice. However, no such comparison has been done in the context of temporal discounting.
The present study will contribute to the existing literature by exploring whether temporal discounting rates for gains and losses are correlated within the same individuals as well as comparing the effectiveness of the two intervention types in the context of intertemporal choices. Using a multinational sample of young adults, we aim to explore the consistency of effects across countries. Results from the study will have implications for our understanding of how gains and losses are processed in intertemporal decisions and can inform decision-altering interventions to promote saving or reducing credit card debt.
References
Cheng, Y. Y., Shein, P. P., & Chiou, W. B. (2012). Escaping the impulse to immediate gratification: The prospect concept promotes a future‐oriented mindset, prompting an inclination towards delayed gratification. British Journal of Psychology, 103(1), 129-141.