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Cited by 51Decision-Making and Behavioral EconomicsFinancial Literacy, Pension, Retirement AnalysisExperimental Behavioral Economics Studies

Normative arguments from experts and peers reduce delay discounting

Open access
Senecal, Nicole, Wang, Teresa, Thompson, Elizabeth, Kable, Joseph W.·2012·Judgment and Decision Making
DOI 10.1017/s1930297500006306PMC PMC3626281
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Abstract

When making decisions that involve tradeoffs between the quality and timing of desirable outcomes, people consistently discount the value of future outcomes. A puzzling finding regarding such decisions is the extremely high rate at which people discount future monetary outcomes. Most economists would argue that decision-makers should turn down only rates of return that are lower than those available to them elsewhere. Yet the vast majority of studies find discount rates that are significantly higher than market interest rates (Frederick et al., 2002). Here we ask whether a lack of knowledge about the normative strategy can explain high discount rates. In an initial experiment, nearly half of subjects did not spontaneously cite elements of the normative strategy when asked how people should make intertemporal monetary decisions. In two follow-up experiments, after subjects read a “financial guide” detailing the normative strategy, discount rates declined by up to 85%, but were still higher than market interest rates. This decline persisted, though attenuated, for at least one month. In a final experiment, peer-generated advice influenced discount rates in a similar manner to “expert” advice, and arguments focusing on normative considerations were at least as effective as others. These studies show that part of the explanation for high discount rates is a lack of knowledge regarding the normative strategy, and they quantify how much discount rates are reduced in response to normative arguments. Given the high level of discounting that remains, however, there are other contributing factors to high discount rates that remain to be quantified.

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  • The choice set used to measure discount rates was widely adopted and designed to capture a broad range of discount rates.

    “We used a widely adopted choice set designed to capture a broad range of discount rates31–37.”

    From Temporal discounting predicts procrastination in the real world (2024) · cites this paper as [32]

    The Experiment 1 Methods (section 2.1.2; page unavailable) describe a 51-choice task with varied amounts and delays from 1 to 180 days; section 2.1 also explains that the choices were used to estimate discount rates. This supports using a choice set that samples varied choices, but our copy does not establish that this particular set was widely adopted or expressly designed to capture a broad range of discount rates. (LLM, conf=0.78)

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Research works printed but not linked: 4

  1. Baron J 1988, 1994, 2000, 2008 Thinking and Deciding Cambridge University Press
  2. Kelley PG 2010 Conducting usable privacy & security studies with Amazon’s Mechanical Turk Symposium on Usable Privacy and Security (SOUPS)
  3. Kim BK 2010 Understanding anticipatory time perception in consumers’ time-related decisions (unpublished doctoral dissertation) Marketing, University of Pennsylvania Philadelphia, PA
  4. Mandell L Klein LS 2009 The impact of financial literacy education on subsequent financial behavior Journal of Financial Counseling and Planning 206 15 24

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Authors
Senecal, N., Wang, T., Thompson, E., & Kable, J. W.
Affiliations
University of Pennsylvania (US)
Corresponding author
  • Senecal, Nicole
  • Kable, Joseph W.
ORCID
Venue
Judgment and Decision Making
Publisher
Cambridge University Press (CUP)
Published
2012-09
Volume
7
Issue
5
Pages
568-589
ISSN
1930-2975 (ISSN-L)
DOI
10.1017/s1930297500006306
PMC
PMC3626281
OpenAlex
W4313429375
Cited by
51
References
60
Citations by year
2026: 1 · 2025: 1 · 2024: 6 · 2023: 6 · 2022: 1 · 2021: 6 · 2020: 3 · 2019: 2 · 2018: 5 · 2017: 3 · 2016: 5 · 2015: 5 · 2014: 1 · 2013: 5
FWCI
2.74
Type
journal article
Language
en
Open access
Licence
www.cambridge.org/core/terms (unspecified, 3774 d)
Locations
  • Judgment and Decision Making (publishedVersion)
  • PubMed (publishedVersion)
  • Europe PMC (PubMed Central) (acceptedVersion)
  • PubMed Central (acceptedVersion)
  • ScholarlyCommons (University of Pennsylvania) (submittedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • DOAJ (DOAJ: Directory of Open Access Journals) (submittedVersion)
  • PubMed
Funders
  • National Institutes of Health (5t32mh017168-34)
  • National Institute on Drug Abuse (R01DA029149)
Topics
  • Social Sciences › Decision Sciences › General Decision Sciences › Decision-Making and Behavioral Economics
  • Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
  • Social Sciences › Safety Research › Experimental Behavioral Economics Studies
Keywords
delay discounting, normative strategies, intertemporal choice, financial decision-making, expert advice, peer advice, financial guidance, normative arguments, market interest rates

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