Delay Discounting

We choose smaller, more immediate rewards over greater ones that we need to wait for

Would you prefer $100 now or $120 in a year? But what about $100 in 4 years or $120 in 5? Despite the same time gap, did your choices differ?

Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.

The study

Setup

36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.

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Results

All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.

np_read_2490885_000000

In detail

Key Takeaways

Embrace the power of now.

Immediate gains are valued more greatly than those far off. Similarly, far-off costs seem less painful. Amazon heighten the immediate gain by taking a hit now, for longer term business payoff. Where in your business can you capitalize upon 'the now'?

Prevent impulsive financial or health decisions by:

Reframing future rewards around time (by stating a specific date) or by surfacing the painful zero outcomes of short-term choices (Wu & He, 2012).

Goal Priming. Painting a vivid, personal, emotional picture of someone's future reality will boost their ability to make longer-term decisions now.

Dissuade from inferior choices today with a lock-in for tomorrow

This is when a choice now locks in a set of future inferior outcomes, aggregating any gains and forcing a stronger consideration of less impulsive choices. 

Delay Discounting

We choose smaller, more immediate rewards over greater ones that we need to wait for

Would you prefer $100 now or $120 in a year? But what about $100 in 4 years or $120 in 5? Despite the same time gap, did your choices differ?

Green, Fry & Myerson (1994). Discounting of delayed rewards: A life-span comparison. Psychological science.

The study

Setup

36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.

Results

All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.

Key Takeaways

Embrace the power of now.

Immediate gains are valued more greatly than those far off. Similarly, far-off costs seem less painful. Amazon heighten the immediate gain by taking a hit now, for longer term business payoff. Where in your business can you capitalize upon 'the now'?

Prevent impulsive financial or health decisions by:

Reframing future rewards around time (by stating a specific date) or by surfacing the painful zero outcomes of short-term choices (Wu & He, 2012).

Goal Priming. Painting a vivid, personal, emotional picture of someone's future reality will boost their ability to make longer-term decisions now.

Dissuade from inferior choices today with a lock-in for tomorrow

This is when a choice now locks in a set of future inferior outcomes, aggregating any gains and forcing a stronger consideration of less impulsive choices. 

Delay Discounting

We choose smaller, more immediate rewards over greater ones that we need to wait for

Would you prefer $100 now or $120 in a year? But what about $100 in 4 years or $120 in 5? Despite the same time gap, did your choices differ?

The study

Setup

36 children, young adults and adults were asked to choose between a delayed reward of $1,000 and a number of smaller ones now.

Results

All were quick to accept smaller rewards now over a larger delayed one. The longer the delay, the less perceived value the reward had, so $1,000 next week felt equal to $900 today but $1,000 in five years felt like $600 today.

np_read_2490885_000000

In detail

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Delay Discounting

is included in Box One of our physical workshop tool.
is included in Box Two of our physical workshop tool.
Box Two