Outcome Framing in Intertemporal Choice: The DRIFT Model

41 Pages Posted: 25 Sep 2011 Last revised: 26 Sep 2016

See all articles by Daniel Read

Daniel Read

University of Warwick - Warwick Business School

Shane Frederick

affiliation not provided to SSRN

Marc Scholten

Universidade Europeia

Date Written: September 24, 2011


We describe the DRIFT model, a heuristic description of framing effects in intertemporal choice, and four experiments testing its implications. In the experiments we vary how outcomes are framed – either as total interest earned, as the rate of interest or, as is traditionally done in studies of intertemporal choice, as total amount earned. In addition, we describe the future earnings as resulting from investment, or else make no mention of its origin. People are much more patient when outcomes are described as the result of investment. For small amounts they are more patient when the returns are given in interest terms (whether as rates or as total amount earned) when amounts are small, but for large amounts, this effect is eliminated or even reversed. Consequently, the magnitude effect (less discounting for larger amounts) is attenuated for both interest frames. Most strikingly, the interest rate frame reverses the common finding of “hyperbolic” discounting (less discounting for longer delays). Composite frames, which present two different characterizations of the same outcomes, result in preferences that lie between those observed for the component frames, and in our studies show “exponential” discounting.. We suggest many major results in studies of time preference arise when frames emphasize option features – specifically differences in times and monetary amounts – that naturally produce hyperbolic discounting and the magnitude effect. Alternative framings eliminate or reverse these results, and the DRIFT model summarizes how this happens.

Suggested Citation

Read, Daniel and Frederick, Shane and Scholten, Marc, Outcome Framing in Intertemporal Choice: The DRIFT Model (September 24, 2011). Available at SSRN: https://ssrn.com/abstract=1933099 or http://dx.doi.org/10.2139/ssrn.1933099

Daniel Read (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Shane Frederick

affiliation not provided to SSRN ( email )

Marc Scholten

Universidade Europeia ( email )

Quinta do Bom Nome, Estrada da Correia 53
Lisbon, Estremadura 1500-210

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