A job with a future? Delay discounting, magnitude effects, and domain independence of utility for career decisions

Abstract

Decision-makers are often faced with inter-temporal choices in which they are required to choose between options that differ in both value of and delay to outcomes. In this study, assumptions of Discounted Utility Theory (DU) were tested within inter-temporal career choices. According to DU, the same discount rate should be applied regardless of the amount of delay and magnitude of the outcome. In addition, DU predicts that, for economic substitutes, the same discount rate should be applied to both commodities. Contrary to assumptions of DU, but consistent with a hyperbolic discounting model, graduating college students’ job choices reflected non-constant discount rates (i.e., Delay Effect) for future salary and preferred tasks. In addition, these students exhibited lower discount rates for salary and percentage of preferred tasks (i.e., Magnitude Effect). Finally, the two were not found to be economic substitutes as there was a low correlation between discount rate for salary and percentage of preferred tasks (i.e., Domain Independence). Implications for employee recruitment and human resource management are discussed.