Social Discounting Research Articles

Putting a premium on altruism: A social discounting experiment with South African university students.

This paper reports on a social discounting experiment conducted with university students in South Africa. In line with other social discounting task experiments, participants identify target individuals at different degrees of intimacy in their social network and then make 10 choices involving sums of money for themselves or their targets. For an altruism premium to exist, senders’ donations to recipients should be positive, statistically and economically significant, and independent of relationship closeness. We hypothesize that in addition to the altruism premium for kin documented in the literature, there may be other premia for family in general and for partners and friends. We find that, apart from the “kinship” premium, there is a sizeable “intimacy” premium, which together translates into a substantial “family” premium. The study also finds a “friendship premium”, as is documented in various experiments. The closeness of relationships among family and kin, especially close kin, has a significant and large effect on altruism. The results also attest to the importance of the extended family in regards to the “kinship” premium on altruism. These various premiums on altruism emphasise the importance of the supportive role of various social systems. Nevertheless, altruism within families and among close kin might also be enhanced by building more cohesive and stronger families using developmental social welfare programmes.

Incentivising the Social Discounting Task: A Laboratory Experiment

AbstractIncentivising the social discounting task impacts the measurement of altruism in a student population. Incentivised subjects are more altruistic at close social distances, especially subjects who are less altruistic, thus providing evidence of reciprocal altruism. There is also some evidence of hypothetical bias among more altruistically inclined subjects. Making payments real also influences the subject's choice of recipient. Paid subjects select more geographically distant, but psychologically closer subjects, because of prospects for increased anonymity and enforced reciprocity, respectively. Further research is required to verify the robustness of these results, in the laboratory and especially in the field.

Be careful what you calibrate for: Social discounting in general equilibrium

Concerns about intergenerational equity have led to an influential practice of setting social utility discount rates based on ethical considerations rather than to match household behavior, particularly in climate change economics (e.g., Stern, 2006). This paper formalizes the broader policy implications of this approach in general equilibrium by characterizing jointly optimal environmental and fiscal policies in a climate-economy model with differential planner-household discounting. First, I show that decentralizing the optimal allocation requires not only high carbon prices but also fundamental changes to tax policy: If the government discounts the future less than households, implementing the optimal allocation requires an effective capital income subsidy (a negative intertemporal wedge), and, in a setting with distortionary taxation, an effective labor-consumption tax wedge that is decreasing over time. Second, if the government cannot subsidize capital income, the constrained-optimal carbon tax may be up to 50% below the present value of marginal damages (the social cost of carbon) due to the general equilibrium effects of climate policy on household savings. Third, given the choice to optimize either carbon, capital, or labor income taxes, the socially discounting planner's welfare ranking is ambiguous over a standard range of parameters. Overall, in general equilibrium, a policy-maker's choice to adopt differential social discounting may thus overturn conventional recommendations for both environmental and fiscal policy.

Choosing the Social Discount Rate for Australia

AbstractThis article argues that in cost–benefit analysis government should adopt the opportunity cost of capital as represented by the alternative project rate of return as the social discount rate rather than the private or social time discount rate or a weighted cost of funds rate that reflects estimated proportions of investment and consumption foregone. The appropriate metric for the alternative project rate of return is average market return allowing for non‐diversifiable risk but not for diversifiable project risk. The article concludes that the appropriate social discount rate for Australia, for all sectors and states and territories, is approximately 6.5 per cent.

사회적할인율의 인하조정이 재정지출에 미치는 영향에 대한 연구

사회적할인율의 인하조정이 재정지출에 미치는 영향에 대한 연구

Dissociable roles of glucocorticoid and noradrenergic activation on social discounting

People often exhibit prosocial tendencies towards close kin and friends, but generosity decreases as a function of increasing social distance between donor and recipient, a phenomenon called social discounting. Evidence suggests that acute stress affects prosocial behaviour in general and social discounting in particular. We tested the causal role of the important stress neuromodulators cortisol (CORT) and noradrenaline (NA) in this effect by considering two competing hypotheses. On the one hand, it is possible that CORT and NA act in concert to increase generosity towards socially close others by reducing the aversiveness of the cost component in costly altruism and enhancing the emotional salience of vicarious reward. Alternatively, it is equally plausible that CORT and NA exert dissociable, opposing effects on prosocial behaviour based on prior findings implicating CORT in social affiliation, and NA in aggressive and antagonistic tendencies. We pharmacologically manipulated CORT and NA levels in a sample of men (N = 150) and found that isolated hydrocortisone administration promoted prosocial tendencies towards close others, reflected in an altered social discount function, but this effect was offset by concurrent noradrenergic activation brought about by simultaneous yohimbine administration. These results provide inceptive evidence for causal, opposing roles of these two important stress neuromodulators on prosocial behaviour, and give rise to the possibility that, depending on the neuroendocrine response profile, stress neuromodulator action can foster both tend-and-befriend and fight-or-flight tendencies at the same time.

Dynamical networks of influence in small group discussions.

In many domains of life, business and management, numerous problems are addressed by small groups of individuals engaged in face-to-face discussions. While research in social psychology has a long history of studying the determinants of small group performances, the internal dynamics that govern a group discussion are not yet well understood. Here, we rely on computational methods based on network analyses and opinion dynamics to describe how individuals influence each other during a group discussion. We consider the situation in which a small group of three individuals engages in a discussion to solve an estimation task. We propose a model describing how group members gradually influence each other and revise their judgments over the course of the discussion. The main component of the model is an influence network—a weighted, directed graph that determines the extent to which individuals influence each other during the discussion. In simulations, we first study the optimal structure of the influence network that yields the best group performances. Then, we implement a social learning process by which individuals adapt to the past performance of their peers, thereby affecting the structure of the influence network in the long run. We explore the mechanisms underlying the emergence of efficient or maladaptive networks and show that the influence network can converge towards the optimal one, but only when individuals exhibit a social discounting bias by downgrading the relative performances of their peers. Finally, we find a late-speaker effect, whereby individuals who speak later in the discussion are perceived more positively in the long run and are thus more influential. The numerous predictions of the model can serve as a basis for future experiments, and this work opens research on small group discussion to computational social sciences.

Social Discounting and Intergenerational Pareto

The most critical issue in evaluating policies and projects that affect generations of individuals is the choice of social discount rate. This paper shows that there exist social discount rates such that the planner can simultaneously be (i) an exponential discounting expected utility maximizer; (ii) intergenerationally Pareto—that is, if all individuals from all generations prefer one policy/project to another, the planner agrees; and (iii) strongly non‐dictatorial—that is, no individual from any generation is ignored. Moreover, to satisfy (i)–(iii), if the time horizon is long enough, it is generically sufficient and necessary for social discounting to be more patient than the most patient individual's long‐run discounting, independent of the social risk attitude.

Discounting, reward and punishment sensitivity and decision-making by midwives

Event Abstract Back to Event Discounting, reward and punishment sensitivity and decision-making by midwives Shahna A. Mailey1*, Steve Provost1 and Elaine Jefford2 1 Department of Psychological Science, School of Health and Human Sciences, Southern Cross University, Australia 2 School of Health and Human Sciences, Southern Cross University, Australia Aim: Discounting refers to the effect in which a delay or increased risk has on an individual’s preference for immediate reward. Differences in rates of discounting have been related to several problem behaviours involving impulsivity and risk-taking, such as drug use. However, little is known about whether these factors influence behaviour in other more every-day contexts. One such context is the childbirth environment, where midwives are faced with intricate and difficult decisions in a rapidly changing environment. Method: Participants were 59 female midwives recruited through the Australian College of Midwives. They completed a survey which consisted of the Behavioural Inhibition and Behavioural Activation Scale (BIS/BAS), delay, probability and social discounting tasks, and three clinical childbirth scenarios for which they were asked to judge the quality of clinical reasoning and midwifery practice described. Results: Delay, probability and discounting functions were obtained, and area under the curve was calculated. None of these tasks correlated with the judgements of clinical reasoning or midwifery practice. However, there was a correlation between the BAS and judgements of midwifery practice and clinical reasoning for a number of scenarios, and between the BIS and judgements of midwifery practice in one instance. Social discounting related to years of experience (r = .39). Conclusions: Midwives’ judgements of the quality of decision-making and practice are influenced by their sensitivity to reward and possibly by their sensitivity to punishment, but not to levels of impulsivity and sensitivity to risk as measured by discounting tasks. Changes in social discounting with years of experience may be related to the development of “professional distance” between midwives and their patients, and although it may not impact decision-making, it may influence other aspects of midwives' relationship with mothers. Keywords: Midwives, decision-making, risk, impulsivity, discounting Conference: 15th Annual Psychology Honours Research Conference , Coffs Harbour, Australia, 4 Oct - 5 Oct, 2018. Presentation Type: Research Topic: Abstract for 15th Annual Psychology Honours Research Conference Citation: Mailey SA, Provost S and Jefford E (2019). Discounting, reward and punishment sensitivity and decision-making by midwives. Front. Psychol. Conference Abstract: 15th Annual Psychology Honours Research Conference . doi: 10.3389/conf.fpsyg.2018.74.00023 Copyright: The abstracts in this collection have not been subject to any Frontiers peer review or checks, and are not endorsed by Frontiers. They are made available through the Frontiers publishing platform as a service to conference organizers and presenters. The copyright in the individual abstracts is owned by the author of each abstract or his/her employer unless otherwise stated. Each abstract, as well as the collection of abstracts, are published under a Creative Commons CC-BY 4.0 (attribution) licence (https://creativecommons.org/licenses/by/4.0/) and may thus be reproduced, translated, adapted and be the subject of derivative works provided the authors and Frontiers are attributed. For Frontiers’ terms and conditions please see https://www.frontiersin.org/legal/terms-and-conditions. Received: 18 Sep 2018; Published Online: 27 Sep 2019. * Correspondence: Miss. Shahna A Mailey, Department of Psychological Science, School of Health and Human Sciences, Southern Cross University, Coffs Harbour, Australia, s.mailey.11@student.scu.edu.au Login Required This action requires you to be registered with Frontiers and logged in. To register or login click here. Abstract Info Abstract The Authors in Frontiers Shahna A Mailey Steve Provost Elaine Jefford Google Shahna A Mailey Steve Provost Elaine Jefford Google Scholar Shahna A Mailey Steve Provost Elaine Jefford PubMed Shahna A Mailey Steve Provost Elaine Jefford Related Article in Frontiers Google Scholar PubMed Abstract Close Back to top Javascript is disabled. Please enable Javascript in your browser settings in order to see all the content on this page.

The Social Rate of Time Preference and the Social Discount Rate

This paper explains the conceptual basis for the social rate of time preference (STP) and why it is the appropriate method of choosing the social discount rate (SDR), compared to the most prominent alternative method: the social opportunity cost of capital (SOC). We recommend that for intragenerational projects in the United States, a rate of 3.5 percent is appropriate. For long-term intergenerational effects, we recommend using declining rates. Obtaining the SDR is intrinsically a normative exercise in a second-best world. Policymakers should maximize a social welfare function that equals the present value of current and future utility from per capita consumption. In the presence of economic growth, there will be greater future consumption possibilities. Given the assumption of diminishing marginal utility of income, the consumption of a wealthier, future society should be discounted. Displaced private investment should be accounted for by first multiplying by the shadow price of capital, but this will not generally be necessary as most government interventions mainly affect consumption. Systematic risk should be handled by conversion of expected net benefits into certainty equivalents before discounting at the risk-free SDR, but empirically this effect is typically too small to matter. Among governments there is increased adoption of both the STP method and the use of time-declining rates. Even governments using other approaches are lowering their rates, and most OECD countries now apply rates in the 3 to 5.5 percent range.

The Determinants of Discounting in Intergenerational Decision-Making

We investigate discounting behavior in situations where both intertemporal and social discounting occur simultaneously. Situations of intergenerational conflicts are characterized by both time delay and social distance and can be interpreted either as a combination of current donations with delegated investments for others or of current investments for one’s own and future donations to others. Due to well-known self-control problems with respect to investments for one’s own, the second interpretation implies overall higher discounting in intergenerational decision problems than the first one. We show experimentally that this second interpretation seems to prevail for intergenerational decision-making in practice, which is a hint at a corresponding significant effect of self-control problems. This problem can be mitigated by adequate framing supporting the first view of intergenerational decision problems described above. Our findings are relevant for policy makers and researchers alike.

Ethical Aspects of Intertemporal Discounting and the Social Discount Rate

The paper examines the ethical aspects of discounting during the preparation of intertemporal decisions, and the influence of this on the cost-benefit analysis of community investments. It focuses on the economic philosophy and ethical considerations that underlie discounting as a daily financial activity. The author attempts to resolve the apparent logical contradiction between the cardinal and discounted utilitarian ethical approaches. By analysing the preconditions related to the definition of the values of the parameters included in the Ramsey formula, it is presented that neither the social discount rate applied in the case of intertemporal investments nor the current practice of establishing the market discount rate used for investments representing a potential burden on the environment is suitable for the assessment of the long-term community investments and private investments burdening the environment.

SOCIAL DISCOUNT RATE: ASSESSMENT METHODOLOGY

The purpose of the paper is to investigate the assessment methods of social discount rate, to determine its calculation algorithm and to substantiate applied aspects relatively implementation of one or another method during cash flow discounting in social projects. Methodology. The research used such methods as follows: method of comparative analysis was used to find out advantages and limitations of chosen assessment methodologies of the social discount rate; synthesis and generalization methods were used during investigation of the gathered experience concerning application of assessment methodology of social discount rate; logical method was used to substantiate made assumptions; formalization method was used to determine assessment parameters of social discount rate. Results. To achieve the target goal, the following tasks were solved: theoretical studies on the assessment of social discount rate were systemized and the most adapted method for a practical implementation was determined; available pragmatic approaches to the determination of the parameters of social discount rate were investigated and the algorithm of its estimation is substantiated; evaluation of research results were tried out. Practical implications. The article substantiates the necessity of application of social discount rate in the evaluation process of investment projects of the public sector. The theoretical approaches to the choice of the social discount rate were studied. The assessment methods developed and adapted for application in the world practice for discounting public projects were considered. The arguments concerning the expediency of application of the social rate of time preferences for the evaluation of public projects are considered. Different approaches to the determination of the social rate of time preferences are analysed. Value/originality. As a result of the research, parameters of the social rate of time preferences were determined. The application algorithm of the assessment methodology of the social rate of time preferences for public project discounting is indicated. The approbation of the assessment methodology of the social discount rate for discounting projects of the public sector in Ukraine was carried out.

The Appropriate Measure of the Social Discount Rate and Its Role in the Analysis of Policies with Long-Run Consequences

The appropriate measure of the social discount rate is the social opportunity cost of borrowed funds (a weighted average of the rates of return on displaced investment, postponed consumption, and incremental foreign funding), which ensures that a proposed policy produces a potential Pareto improvement. The approach yields a discount rate in the order of 7 percent per annum for the United States using national income accounts data, with no evidence of any secular decline in the rate over the past half century. Using a lower discount rate equal to the social rate of time preference requires either (1) abandoning a basic tenet of benefit-cost analysis that worthy projects must improve allocative efficiency, or (2) assuming that the government must balance the budget each period (no debt financing at the margin), debt reduction is not an option, and the marginal tax instrument is a nondistortionary tax that impacts only consumption. Neither option seems reasonable.

Assessing individual differences in discounting: Construction and initial validation of the Discounting Inventory

The purpose of the project was to develop the Discounting Inventory (DI), a measure of individual differences in delay, probability, effort, and social discounting, all related to behavioral impulsivity. Over 400 items relating to four types of discounting were generated. Next, a study followed by a series of psychometric analyses of data obtained from a group of 2843 individuals was conducted. Principal Component Analysis yielded a four-factor structure of data, reflecting the four types of discounting. The results of Confirmatory Factor Analysis showed good fit of the four-factor model to data. Through several iterations of retaining and deleting items on the basis of their component loadings, item intercorrelations, and contribution to coefficient alphas, the total number of items was reduced to 48. The final 48-item version of the inventory has satisfactory psychometric characteristics, including Cronbach’s alpha and test–retest stability. In addition, significant correlations were observed between the DI and traditional discounting instruments, suggesting that the DI measures a construct similar to the behavioral discounting process. The development of the tool was based on the assumption that discounting is a personality trait. However, the present data suggest that discounting may reflect more a state than trait function.

Psychopathy and low communion: An overlooked and underappreciated core feature.

Psychopathy is a personality disorder that is robustly linked to interpersonal difficulties, delinquency, aggression, and general antisocial conduct. Previous research has explored a number of potential deficits underlying these behaviors including reduced fear, impaired emotional responding, and poor response modulation. Drawing from extant personality work that has demonstrated the importance of interpersonal antagonism as a core feature of psychopathy, the present project examines low communion as a potential core feature of the disorder in a novel manner-using a social discounting lab task. This possibility was examined in 195 undergraduate students (49% male) via a multimethod approach. In addition to a measure of psychopathy, participants completed a novel social discounting laboratory task designed to measure communion. Participants also completed self-report measures of communion and related constructs including the NEO Personality Inventory-Revised, Multidimensional Personality Questionnaire, and Interpersonal Adjective Scales. Results indicate that psychopathic individuals are lower in their level of communion and value social relationships less. Dysfunctions in communion should be studied more specifically in psychopathy as it may be a core feature of the disorder. (PsycINFO Database Record

Neural congruence between intertemporal and interpersonal self-control: Evidence from delay and social discounting

Behavioral studies using delay and social discounting as indices of self-control and altruism, respectively, have revealed functional similarities between farsighted and social decisions. However, neural evidence for this functional link is lacking. Twenty-five young adults completed a delay and social discounting task during fMRI scanning. A spatiotemporal partial least squares analysis revealed that both forms of discounting were well characterized by a pattern of brain activity in areas comprising frontoparietal control, default, and mesolimbic reward networks. Both forms of discounting appear to draw on common neurocognitive mechanisms, regardless of whether choices involve intertemporal or interpersonal outcomes. We also observed neural profiles differentiating between high and low discounters. High discounters were well characterized by increased medial temporal lobe and limbic activity. In contrast, low discount rates were associated with activity in the medial prefrontal cortex and right temporoparietal junction. This pattern may reflect biological mechanisms underlying behavioral heterogeneity in discount rates.

A Note on Retrospective Social Discount Rates

In benefit-cost analysis, we accept that a future dollar is worth something less than a dollar today. However, we do not have a clear method to apply social discounting in retrospective benefit-cost analysis. In this note, we will first develop the case for using historical borrowing as the basis for a social discount rate (SDR) in retrospective benefit-cost analysis. Second, we will present a method for calculating the SDR using historical borrowing. Third, we will show an implementation of the method in the R programming language. Fourth, we will give proposed values for the SDR for the years from 1997 through 2016. Finally, we will discuss the implications of using this method and SDR on analyses.

Even the Representative Agent Must Die: Using Demographics to Inform Long-Term Social Discount Rates

We develop a demographically-based approach for estimating the utility discount rate (UDR) portion of the Ramsey rule. We show how age-specific mortality rates and life expectancies imply a natural UDR for individuals at each age in a population, and these can be aggregated into a population-level social UDR. We then provide empirical estimates for nearly all countries and for the world as a whole. A striking part of the analysis is how the estimated UDRs fall within the range of those currently employed in the macroeconomics and climate change literatures. We use our results to derive heterogenous social discount rates across countries and explore the consequences for an integrated assessment model of climate change. We find that introducing regional heterogeneity of UDRs into the RICE model has little impact on the business-as-usual trajectory of global emissions. It does, however, change the trajectory of optimal emissions, the corresponding optimal carbon tax, and the distribution of emission reductions across countries.

Reflections—Looking Back at Social Discounting Policy: The Influence of Papers, Presentations, Political Preconditions, and Personalities

Over the past 15 years, government guidelines on social discounting for benefit–cost analysis have been updated in many different countries. These updates appear to reflect the influence of important academic contributions recommending the use of a declining term structure of discount rates. Using qualitative evidence from the United Kingdom, United States, France, and The Netherlands, this article shows that the influence of this academic supply side would not have been possible without the policy demand side and the presence of institutional or charismatic policy brokers acting as policy market makers. We argue that the market analogy is a useful framework for academics seeking to influence policy with their research.