Social Discounting: Preference Reversals and Links with Temporal Discounting

Abstract

The purpose of this study is twofold. First, we test the hypothesis that the preference reversal occurs in social discounting. Second, we investigate the relationship between social discounting and temporal discounting. In the conducted experiments, participants made hypothetical choices between a smaller monetary reward for a less socially distant beneficiary and a larger monetary reward for a more socially distant beneficiary (social discounting procedure), and between a smaller immediate monetary reward and a larger delayed monetary reward (temporal discounting procedure). The obtained results show that the rate of social discounting decreases as one moves beneficiaries towards more distant positions on the social distance scale, hence the preference reversal in social discounting has been observed. Further, the significant positive correlation between the rates of social and temporal discounting is reported, but only for women.