Effect of a brief intervention on respondents’ subjective perception of time and discount rates

Abstract

Time discounting is a fundamental characteristic of human decision-making. In general, the literature finds that individuals with lower discount rates are more likely to exhibit healthy behaviors such as saving for the future, exercising, acquiring more education and making other decisions that have long-term benefits. Recent evidence suggests there may be at least two pathways by which individual’s underlying behavioral discount rate may be realized: non-linearities in the intertemporal utility function (standard discounting behavior) and non-linearities in the perception of time. We conducted an experiment on Amazon Mechanical Turk (N = 1000) to evaluate whether discount rates could be modified through an educational intervention. In the experiment, the treatment group had to calculate rates of return for a six-month period for a series of investment vehicles with varying rates of returns including a savings account, a bank certificate of deposit, government bond, mutual fund, and mutual sector fund. The results indicate that even one week after treatment, the intervention group’s discount rates were significantly lower than the control group’s discount rates. This has important implications for the possibility of designing interventions to lower individual discount rates.