Social Discounting Research Articles

Social discounting in a symmetric giving and taking frame: An artifactual field experiment with young South African adults.

In the dictator game, the evidence that giving is equivalent to taking is mixed. The purpose of this study was to investigate framing effects (giving/taking) on social-discounting rates among young African adults from an informal settlement in South Africa. Employing a within-participant design, these young adults completed a series of incentivized dictator games with an isomorphically equivalent giving and taking frame at each of eight social distances. Altruism was measured by the social-discounting rate, and framing effects were assessed using generalized linear regression. The study provides empirical evidence that prosocial behavior among young South African adults is subject to framing because exponential, hyperbolic, and q-exponential social-discounting rates in all instances were lower in the taking than in the giving frame. This difference may be the result of greater "egalitarianism" and "selflessness" elicited by the taking frame, which likely is a product of the experiment's particular social and economic field context. More comparative research is required to establish the working of specific mechanics of morality that may operate differently in diverse socioeconomic contexts, thus contributing to elucidating the heterogeneous nature of findings in this area of study.

Estimation of Social Discount Rate in Iran

Estimation of Social Discount Rate in Iran

Cannabis as a shareable commodity in a social discounting task.

Cannabis use and cannabis use disorder diagnoses continue to increase in United States college-aged students as more states legalize recreational cannabis. Previous studies have attempted to associate cannabis use with delay discount rates, which involves participants making choices for smaller sooner versus larger later hypothetical rewards. More smaller sooner choices result in higher discount rates and suggest increased impulsivity. Delay discounting studies have shown a significant, but small effect size with people who use cannabis more likely to choose the smaller sooner rewards, relative to people who do not use cannabis. The present study tested whether students with different experience using cannabis (people who currently use cannabis, people who formerly used cannabis, or people who never used cannabis) would be sensitive to sharing a proportion of hypothetical marijuana with another individual at a given social distance, as a putative measure for cannabis value. Results from two separate data sets showed that students classified as current cannabis users were significantly less likely to share a proportion of hypothetical marijuana across a range of social distances, relative to students that self-reported never using cannabis. Students classified as either former or current users were not statistically different. These results were consistent with previous delay discounting results and showed a medium effect size (η² ≥ 0.10) for each data set, both separately and when combined. These results indicate that social distance is a meaningful variable that can be used in a modified discounting task to assess differential cannabis value in a student population who are increasingly susceptible to cannabis use disorder. These results may have future clinical implications. Social discount rates for cannabis may be able to differentiate individuals who will continue recreational use versus individuals that may develop cannabis dependence problems. (PsycInfo Database Record (c) 2024 APA, all rights reserved).

Pricing carbon in a multi-sector economy with social discounting

Economists tend to view a uniform emissions price as the most cost-effective approach to reducing greenhouse gas emissions. This paper scrutinizes the assumptions in general equilibrium which underlie the established view that uniform emissions pricing is optimal, focusing on economies where society values the well-being of future generations more than private actors. When social and private discount rates differ, we show that a uniform carbon price is optimal only under restrictive assumptions about technology homogeneity and intertemporal decision-making. Non-uniform pricing spurs capital accumulation and benefits future generations. Depending on sectoral heterogeneity in the substitutability between capital and energy inputs, we find that optimal carbon prices differ widely across sectors and yield substantial welfare gains relative to uniform pricing. Realizing these welfare gains, however, requires that the regulator has information on the technology heterogeneity across sectors. Differentiated carbon pricing based on imperfect estimates of technology heterogeneity can yield significant welfare losses.

Little evidence that androstadienone affects social distance-dependent prosocial behaviour: a pre-registered study.

In navigating the complexities of social life, humans have evolved to interpret invisible odorous chemical cues, with profound behavioural impacts often unbeknown to the conscious mind. The manifestation of this in humans is evident in the scent of androstadienone (androsta-4,16-dien-3-one), an odorous compound which is considered a putative human pheromone. The current study investigated the effect of androstadienone on social distance-dependent prosocial behaviour measured by a social discounting task, in which participants chose between selfish and generous options. Based on our pre-registration, we predicted a sex-specific effect, with males exposed to androstadienone exhibiting increased generosity, while females would choose more selfishly. Employing a double-blind, placebo-controlled, between-subject design, we recruited 170 participants who were randomly assigned to either the androstadienone or control condition. Olfactory stimuli were administered while participants completed the social discounting task. Inconsistent with our hypothesis, inhaling androstadienone did not impact social distance-dependent prosocial behaviour. This finding was supported by multiple estimates of prosociality, including model-free, model-based and maximum likelihood estimation. Further analyses indicated that androstadienone administration did not influence perceived social distance or bias participants towards being generous or selfish. Thus, our empirical findings provide no support for the hypothesis that androstadienone modulates generosity.

Altruism, reciprocity, and probability: Examining relations through a discounting framework

Probability and reciprocation have been implicated as key variables for understanding altruism and cooperation. Social discounting, which describes the decline in reward value as the recipient increases in social distance, has provided a framework through which to examine altruistic and cooperative choice. A previous study introduced reciprocal discounting as a way of studying perceived altruism from others (termed reciprocal altruism). But probability discounting has not yet been examined in relation to reciprocal discounting. In order to extend research on reciprocal discounting, the present study evaluated correlations between social, reciprocal, and probability discounting as well as relations between standard social distance (used in social discounting) and reciprocal social distance (the participant’s perceived social distance placement on someone else’s list) among 129 participants. Upon evaluation, the fit of median reciprocal discount rates to the hyperbolic form was replicated. A strong correlation between social and reciprocal discount rates and a moderate correlation between social and probability discount rates were found as well. Additionally, reciprocal and probability discount rates yielded moderate correlations while reciprocal and standard social distance analyses revealed more correspondence between reward values when persons were socially close (i.e., Person 1) or socially distant (i.e., Person 100). This study provides further evidence that reciprocation and probability likely impact altruistic choice while laying groundwork for further investigations into social distance.

The Social Discount Rate: A Definition

The Social Discount Rate: A Definition

Questions on Cost-Benefit Analysis and a Discussion of Present Answers: How Should One Determine the Social Discount Rate to Be Announced?

In the wake of the CBA used for public investment programming in France, new recommendations have been formulated for projects whose advantages (costs or benefits) are exposed to macroeconomic risks (correlation with GDP per capita), distinguishing between classically Gaussian hazards and “rare disasters” à la Barro. Taking rare disasters into account significantly modifies the value of the discount rate, along with the mathematical expectation of the advantages, and accentuates the distinction between procyclical and counter-cyclical projects.

AGE DIFFERENCES IN SOCIAL DISCOUNTING AND CHARITABLE GIVING IN A US SAMPLE

Abstract Social discounting describes the tendency to show less generosity to more socially distant recipients. With respect to age differences, prior studies (Pornpattananangkul et al., 2019; Lin & Zhang, 2020) found that older adults showed more generosity to distant others (i.e., lower social discounting rates) than younger adults. However, prior research relied on small samples, compared extreme age groups, and focused on Asian countries. To examine generalizability, this pre-registered study examined social discounting and charitable giving in a U.S. adult life-span sample (N = 426, age 18-96, Mage = 50.93, SDage = 19.51, 51% female, 61% non-Hispanic White). The social discounting measure was adapted from Jones and Rachlin (2006) and involved five social distances (1, 5, 10, 50, 100) on a 100-point scale (0 = closest, 100 = most distant). For each social distance, participants were asked how much of $100 they would allocate to themselves versus a person at that distance. They made the same decision for their favorite charity. Contrary to previous findings and our predictions, results revealed a significant positive association between age and social discounting rates (p< .01), such that older adults’ generosity declined more with increasing social distance. Age differences remained robust after controlling for demographics. There were no significant age differences in average giving across social distances and in charitable giving, but, regardless of age, charitable giving was higher among those with lower social discounting rates (p< .001). Findings suggest that age differences in social discounting may be sensitive to cultural context.

The Social Discount Rate: Legal and Philosophical Underpinnings

Discounting of deferred impacts of government policies is a long-established practice that has been the target of substantial litigation and continued philosophical debate. Legal challenges to the social rate of discount have resulted in general acceptance of the principle of discounting at a nonzero rate for both monetary and nonmonetary impacts. Courts have displayed a general familiarity with discounting and often require transparent justification for the selection of the discount rate based on established scientific principles. The philosophical issues are more wide-ranging and include whether nonmonetary impacts should be discounted, the use of the opportunity cost of capital or the social rate of time preference, the time frame that is pertinent for setting the discount rate, and determination of whose preferences should have standing. Intergenerational issues are particularly challenging, raising questions regarding which generation's preferences should be recognized, the potential for dynamic inconsistencies arising from preferential discount rates, and intertemporal inequities. Benefit-cost analyses that include appropriate recognition of benefits and costs for future generations serve a constructive function in providing a mechanism for recognizing future effects on social welfare.

Impact of transient shocks to productivity on long-term social discounting

The cost-benefit analysis of long-run climate mitigation projects and valuations of a social cost of carbon critically depend on the long-term social discount factor. Here, we consider the problem of the socially optimal risk-adjusted ‘Gamma discounting’ in the presence of strong exogeneous shocks to productivity of capital. We establish that the declining schedule of the long-term forward discount rates over time is very sensitive to the average frequency of shocks, λ, and the difference between the key model parameters: the intergenerational inequality aversion of a social planner η and the shape parameter a of the assumed Gamma distribution of productivity rates. We establish that for a relatively small intergenerational inequality aversion, η≤a−1, the lowest possible forward discount rate is equal to λ. Qualitatively, this important conclusion can be explained by a higher sensitivity of the discount factor to technological breakthroughs bringing back high productivity rates (positive shocks) than to disasters (negative shocks). However, if η>a−1>0, the socially optimal forward discount rate can decline further down, towards zero, with a growth of the time horizon. Thus, socioeconomic projections of long-term discount rates require account of potential advances in technology.

A multi-method investigation of motive dispositions: affiliative and antagonistic dispositions in psychopathy

Purpose To replicate and extend research on psychopathy and intrinsic interpersonal preferences under the broader umbrella of affiliation, intimacy and antagonism, this paper aims to examine motivational correlates of psychopathy in a nonclinical sample (N = 125). Design/methodology/approach We used a multimethod design, including self-reports, a behavioral task and a physiological assessment of motive dispositions (automatic affective reactions to stimuli of interpersonal transactions measured with facial electromyography). Findings Results showed that self-reported psychopathy was negatively associated with self-reported intimacy motive. In the same vein, via the social discounting task, this paper found a negative association between psychopathy and a tendency to share hypothetical monetary amounts with very close others. Finally, regarding fEMG findings, multilevel analyses revealed that although individuals with low levels of psychopathy reacted more positively to affiliative stimuli, individuals with high levels of psychopathy reacted equally positively to both affiliative and antagonistic stimuli, and these results were robust across psychopathy measures. Results remained mostly unchanged on the subscale level. Originality/value These findings highlight the contribution of multimethod assessments in capturing nuances of motivation. Implicit physiological measures might be particularly sensitive in capturing motive dispositions in relation to psychopathy. Identifying mechanisms that foster positive connections between psychopathic traits and nonprosocial tendencies may be theoretically and clinically informative, with implications for forensic and penal practices.

Choosing the Future: Markets, Ethics, and Rapprochement in Social Discounting

This paper provides a critical review of the literature on choosing social discount rates (SDRs) for public cost-benefit analysis. We discuss two dominant approaches, the first based on market prices and the second based on intertemporal ethics. While both methods have attractive features, neither is immune to criticism. The market-based approach is not entirely persuasive even if markets are perfect, and faces further headwinds once the implications of market imperfections are recognised. By contrast, the ‘ethical’ approach—which relates SDRs to marginal rates of substitution implicit in a single planner’s intertemporal welfare function—does not rely exclusively on markets, but raises difficult questions about what that welfare function should be. There is considerable disagreement on this matter, which translates into enormous variation in the evaluation of long-run payoffs. We discuss the origins of these disagreements, and suggest that they are difficult to resolve unequivocally. This leads us to propose a third approach that recognises the immutable nature of some normative disagreements, and proposes methods for aggregating diverse theories of intertemporal social welfare. We illustrate the application of these methods to social discounting, and suggest that they may help us to move beyond long-standing debates that have bedevilled this field. (JEL D60, D61, D71, H43, H54)

To produce or not to produce? Contrasting the effect of substance abuse in social decision-making situations

Substance use disorders (SUD) have been related to high criminal justice costs, expensive healthcare, social impairment, and decision-making deficits. In non-social decision-making tasks, people with SUD tend to take more risks and choose small immediate rewards than controls. However, few studies have explored how people with SUD behave in social decision-making situations where the resources and profits depend directly on participants' real-time interaction, i.e., social foraging situations. To fulfill this gap, we developed a real-time interaction task to (a) compare the proportion of producers (individuals who tend to search for food sources) and scroungers (individuals who tend to steal or join previously discovered food sources) among participants with SUD and controls with respect to the optimal behavior predicted by the Rate Maximization Model, and (b) explore the relationship between social foraging strategies, prosocial behavior, and impulsivity. Here participants with SUD (n = 20) and a non-user control group (n = 20) were exposed to the Guaymas Foraging task (GFT), the Social Discounting task (SD), and the Delay Discounting task (DD). We found that participants in the control group tended to produce more and obtain higher profits in contrast to substance abuser groups. Additionally, SD and DD rates were higher for scroungers than producers regardless of the group. Our results suggest that producers tend to be more altruistic and less impulsive than scroungers. Knowing more about social strategies and producers' characteristics could help develop substance abuse prevention programs.

Introduction to the ARFE Theme on the Social Discount Rate

Governments allocate a large share of real and financial capital globally, and their choices of discount rates for project and policy evaluation have a first-order effect on social welfare. The importance of adopting a principles-based approach to selecting discount rates has new urgency in light of the very long horizons over which the benefits and costs of policies to address climate change are being evaluated. The four articles in this theme provide an interpretive overview of the literature on many of the theoretical, practical, legal, and philosophical considerations for discount rate selection by governments. This introduction summarizes the main points of each article and highlights some of the common threads that emerge. These include the importance of using risk-adjusted rates, the problems that arise when discount rates are chosen to be artificially low, and the large disconnect between common government practices and the principles of financial economics.

Reflections on What Financial Economics Can and Cannot Teach Us About the Social Discount Rate

The principles of financial economics provide equally important insights into the optimal choice of discount rates for both public and private sector decision-makers. However, most governments largely ignore those principles, taking their cost of capital for most purposes as their borrowing rate. This article reviews the arguments often made in support of status quo discounting practices, along with the counterarguments to them. Governments have a choice between several methodologies for risk adjustment, and the practical and conceptual reasons that favor a fair value approach are recapped. The limitations of a financial economics approach become apparent for decisions involving very long time horizons, such as for climate policies. For policies with long-term impacts, intergenerational concerns become paramount, projections of cash flows and discount rates become highly uncertain, and present value calculations are an intrinsically unreliable measure of value. No approach to discount rate selection can overcome those problems; alternative decision criteria need to be established. However, most government investments involve much shorter horizons, and the adoption of standard approaches to risk adjustment could significantly improve social welfare.

Missing Participants, Missing Markets, and the Social Discount Rate: Borrowing Constraints, Intergenerational Transfers, Altruism, and the Desire for Legacy

Market interest rates reflect the preferences of market participants. When market participants are missing, the average discount rate in the population may therefore differ from the market rate. Missing current market participants, such as constrained borrowers, tends to imply an average discount rate that is above the market rate, whereas missing future market participants, such as future generations, tends to imply an average rate below the market rate. Nonetheless, a government with the ability to transfer wealth intratemporally across agents will generally wish to use the market interest rate as a guide to policy. One robust argument for the use of a lower social discount rate is intrapersonal: Future selves discount the past, whereas current selves discount the future. Legacy utility may also justify a low social discount rate.

The social discount rate and the cost of public funds: a search for more consistency and better practice

ABSTRACT Three, mutually inconsistent approaches to social discounting and the cost of public funds have persisted for fifty years. All have distinguished academic support. All present problems of concept and/or application. This leads to a global loss of cost effectiveness in public spending and regulation. This essay reviews the issues and offers a practitioner’s view on what limited but realistic potential there may be for more consistency and better practice.

Neural responses underlying extraordinary altruists' generosity for socially distant others.

Most people are much less generous toward strangers than close others, a bias termed social discounting. But people who engage in extraordinary real-world altruism, like altruistic kidney donors, show dramatically reduced social discounting. Why they do so is unclear. Some prior research suggests reduced social discounting requires effortfully overcoming selfishness via recruitment of the temporoparietal junction. Alternatively, reduced social discounting may reflect genuinely valuing strangers' welfare more due to how the subjective value of their outcomes is encoded in regions such as rostral anterior cingulate cortex (ACC) and amygdala. We tested both hypotheses in this pre-registered study. We also tested the hypothesis that a loving-kindness meditation (LKM) training intervention would cause typical adults' neural and behavioral patterns to resemble altruists. Altruists and matched controls (N = 77) completed a social discounting task during functional magnetic resonance imaging; 25 controls were randomized to complete LKM training. Neither behavioral nor imaging analyses supported the hypothesis that altruists' reduced social discounting reflects effortfully overcoming selfishness. Instead, group differences emerged in social value encoding regions, including rostral ACC and amygdala. Activation in these regions corresponded to the subjective valuation of others' welfare predicted by the social discounting model. LKM training did not result in more generous behavioral or neural patterns, but only greater perceived difficulty during social discounting. Our results indicate extraordinary altruists' generosity results from the way regions involved in social decision-making encode the subjective value of others' welfare. Interventions aimed at promoting generosity may thus succeed to the degree they can increase the subjective valuation of others' welfare.

The Impacts of Social Discount Rate in Countries Striving for Industrialization

The Impacts of Social Discount Rate in Countries Striving for Industrialization