Delay DiscountingOpen Access

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.

Study graph

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'?

Takeaway image

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.

Takeaway image

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. 

Takeaway image
Takeaway image
Delay Discounting

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.

study graph
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