Psychological Connectedness and Intertemporal Choice

Abstract

People tend to attach less value to a good if they know a delay will occur before they obtain it. For example, people value receiving $100 tomorrow more than receiving $100 in 10 years. We explored one reason for this tendency (due to Parfit, 1984): In terms of psychological properties, such as beliefs, values, and goals, the decision maker is more closely linked to the person (his or her future self) receiving $100 tomorrow than to the person receiving $100 in 10 years. For this reason, he or she prefers his or her nearer self to have the $100 rather than his or her more remote self. Studies 1 and 2 showed that the greater the rated psychological connection between 2 parts of a participant’s life, the less he or she discounted future monetary and non-monetary benefits (e.g., good days at work) over that interval. In Studies 3-5, participants read about characters who undergo large life-changing (and connectedness weakening) events at different points in their lives and then made decisions about the timing of benefits on behalf of these characters. All 5 studies revealed a relation between perceived psychological connectedness and inter-temporal choice: Participants preferred benefits to occur before large changes in connectedness but preferred costs to occur after these changes.

Keywords: connectedness, intertemporal choice, personal identity, decision making, temporal discounting