Time Discounting and Economic Decision-Making Among the Elderly

Huffman, David; Maurer, Raimond; Mitchell, Olivia S.

doi:10.2139/ssrn.2884182

Cited by 7 publications

(9 citation statements)

References 33 publications

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“…The implied discount rate predicted for the unhealthier individual with a life expectancy of 70.1 years (instead of 75.5) is shown by dashed (red) lines in Figure 6. Unhealthier individuals, controlling for age, are predicted to discount the future more heavily, in line with the evidence provided in Huffman et al (2016).…”

Section: 2supporting

confidence: 74%

“…Focussing on elderly individuals between ages 70 and 85, Huffman et al (2016) observe an increasing discount rate with age. Read and Read (2004) consider individuals from a larger range of ages between 19 and 89 and find the lowest discount rate for individuals of middle age, and thus, a u-shaped age-pattern of discounting.…”

Section: Uncertain Death and U-shaped Discountingmentioning

confidence: 92%

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Hyperbolic discounting can be good for your health

Strulik

Trimborn

2018

Journal of Economic Psychology

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It has been argued that hyperbolic discounting of future gains and losses leads to time-inconsistent behavior and thereby, in the context of health economics, not enough investment in health and too much indulgence of unhealthy consumption. Here, we challenge this view. We set up a life-cycle model of human aging and longevity in which individuals discount the future hyperbolically and make time-consistent decisions. This allows us to disentangle the role of discounting from the time consistency issue. We show that hyperbolically discounting individuals, under a reasonable normalization, invest more in their health than they would if they had a constant rate of time preference. Using a calibrated life-cycle model of human aging, we predict that the average U.S. American lives about 4 years longer with hyperbolic discounting than he would if he had applied a constant discount rate. The reason is that, under hyperbolic discounting, experiences in old age receive a relatively high weight in life time utility. In an extension we show that the introduction of health-dependent survival probability motivates an increasing discount rate for the elderly and, in the aggregate, a u-shaped pattern of the discount rate with respect to age.

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Section: 2supporting

confidence: 74%

Section: Uncertain Death and U-shaped Discountingmentioning

confidence: 92%

Hyperbolic discounting can be good for your health

Strulik

Trimborn

2018

Journal of Economic Psychology

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“…These results suggest that the activities of the immune system may play an important role in shaping decision-making preferences, offering important new insights to research on temporal focus [1][2][3][4][5][6] , risk-sensitive foraging theory [25][26][27][28] , and the growing body of research demonstrating that the internal, physiological condition of the body plays an important role in modulating decision-making and behaviour [13][14]33 . Moreover, by potentially identifying a novel biological contributor to decision patterns that are known to promote myriad social and health problems [4][5][6][7][8] , the present results suggest exciting new possibilities for treatment and interventions aimed at improving personal and societal outcomes by targeting inflammation.…”

Section: Discussionmentioning

confidence: 86%

“…The ability to delay gratification plays a critical role in determining a number of important life outcomes, such as educational attainment 1 , accumulation of wealth 2 , social functioning 3 , and health 4 . Lacking this ability therefore represents a major risk factor for many undesirable outcomes.…”

Section: Introductionmentioning

confidence: 99%

Inflammation Predicts Decision-Making Characterized by Impulsivity, Present Focus, and an Inability to Delay Gratification

Lab¹

2018

Preprint

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Here, we propose a novel theoretical model linking present-focused decision-making to the activities of the immune system. We tested our model by examining the relationship between inflammatory activity – in vivo and in vitro – and decision-making characterized by impulsivity, present focus, and an inability to delay gratification. Results support our model, revealing that inflammation predicts these outcomes even after controlling for factors that may contribute to a spurious linkage between them. Moreover, subsequent analyses revealed that our model was a better fit for the data than alternative models using present-focused decision-making and its health-harming behavioural sequelae (e.g., smoking, risky sexual behaviour) to predict inflammation, lending support for the proposed directionality of this relationship. Together, these results suggest that inflammation may contribute to decision-making patterns that can result in undesirable personal and societal outcomes.

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“…Prodigals focus on satisfying immediate wants, even if doing so will be less advantageous or even harmful to their future selves. Contemporary psychologists study this phenomenon under the heading of 'future discounting' (see, for example, Huffman et al, 2016). Human beings tend to value present rewards over potential future rewards; we value the future at a discounted rate as compared to the present.…”

Section: Debt Fails To Generate Wealth For Debtorsmentioning

confidence: 99%

Transforming usury into finance: Financialization and the ethics of debt

Walsh

2018

Finance soc.

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This article examines the conceptual transformation of what was once considered usury into finance. To counter traditional arguments that usury was exploitative and unnatural, early modern theorists reconceptualized debt as a form of investment for both borrowers and lenders. Today, this ethical justification of debt as an investment underlies the rhetoric of finance and financialization. Close examination of the realities of contemporary financialized debt, however, reveal that much of this rhetoric is misleading and false. While the rhetoric of finance is unrelentingly oriented toward the future, the lived reality of debt is one of being constrained and haunted by the past. Relatedly, this rhetoric exhorts borrowing for investment, while finance has actually had the opposite effect of making consumer debt a necessity for the majority of Americans. Taken together, these realities of debt today contradict the rhetoric of finance as investment and undermine the ethical framework on which it depends.

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Time Discounting and Economic Decision-Making Among the Elderly

Cited by 7 publications

References 33 publications

Hyperbolic discounting can be good for your health

Hyperbolic discounting can be good for your health

Inflammation Predicts Decision-Making Characterized by Impulsivity, Present Focus, and an Inability to Delay Gratification

Transforming usury into finance: Financialization and the ethics of debt

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