The globalizability of temporal discounting

Abstract

Economic inequality is associated with preferences for smaller, immediate gains over larger, delayed ones. Such temporal discounting may feed into rising global inequality, yet it is unclear whether it is a function of choice preferences or norms, or rather the absence of sufficient resources for immediate needs. It is also not clear whether these reflect true differences in choice patterns between income groups. We tested temporal discounting and five intertemporal choice anomalies using local currencies and value standards in 61 countries (N = 13,629). Across a diverse sample, we found consistent, robust rates of choice anomalies. Lower-income groups were not significantly different, but economic inequality and broader financial circumstances were clearly correlated with population choice patterns.

Fig. 1. Spending timelines after receiving the COVID-19 relief stimulus payment.

Spending before and after receiving a 2020 CARES Act stimulus payment for lower-income (earning under US$28,001 per year), middle-income (US$28,001–US$68,000) and higher-income (above US$68,000) individuals. The baseline average (light blue line) is the amount spent 60 days prior to receiving the payment. The left plot presents proportional spending compared with a standard baseline. The right plot presents the same information but uses actual spending values. Apart from the days immediately following receipt, the base-standardized spending patterns are almost identical for all three groups. Source data

Fig. 2. Global indications of intertemporal choice.

a–f, Maps of choice preferences in aggregate and by individual anomaly indicate heterogeneity in intertemporal choice patterns. While some subtle patterns emerge, particularly stronger preferences for delayed gains in higher-income regions, choice preferences are broadly consistent across 61 countries in the sense that all anomalies appear in all locations. No location consistently presents extremes (high or low) of each anomaly. The results are based on the models specified in Supplementary Table 13. g,h, Conditional smooth effects (black) and 95% confidence intervals (light blue). Map from Natural Earth (naturalearthdata.com). Source data

Fig. 3. Baseline temporal discounting and GDP.

a–c, There is a clear trend of lower GDP being associated with higher preferences for immediate gains and later payments. However, all locations indicate some preference for immediate over delayed. Taken together, this provides support for the hypothesis that baseline temporal discounting is observed globally and that the economic environment may shape its contours. The results are based on the models specified in Supplementary Table 14. Smooth terms and 95% confidence intervals are presented in black and grey, respectively. Source data

Fig. 4. Anomalies and temporal discounting scores by country.

a,b, Proportions (solid bars are overall means) of participants that demonstrated inconsistent choice preferences (a) and the proportion of each country sample that aligned with the five anomalies of interest (b). Apart from absolute magnitude and present bias, no consistent rate was based on wealth, and all countries indicate some presence of each anomaly. c–h, Each plot presents the distribution of values ordered by mean or proportion value. Plot c presents the distribution of discounting scores for each country, including means, prediction intervals (coloured) and standard deviations (grey). Plots d–h show the proportions of participants that presented each anomaly. While the difference from lowest to highest for each is noteworthy, similar variabilities exist across all. See Supplementary Figs. 3–8 for the full values and sample sizes for each point. Source data

Fig. 5. Wealth, debt, inequality and temporal discounting.

a–f, Plots using standardized scores for temporal discounting indicate an overall trend that greater wealth and income at the individual and national levels are associated with lower overall temporal discounting, and greater economic inequality and individual debt are associated with lower overall temporal discounting. Inflation has a modest relationship with discounting, which becomes much stronger at substantially high levels of inflation. The results for each variable by score are from models specified in Supplementary Table 16. Smooth terms and 95% confidence intervals are presented in black and grey, respectively. Source data