Discounting of Environmental Goods and Discounting in Social
- Slides: 33
Discounting of Environmental Goods and Discounting in Social Contexts David J. Hardisty 1; Kerry F. Milch 1; Kirstin Appelt 1; Michel J. J. Handgraaf 2; Poonam Arora 1; David H. Krantz 1; Elke Weber 1 1 Columbia University 2 University of Amsterdam SJDM Annual Meeting 11/17/2007
How Are Environmental Outcomes Different From Monetary Outcomes? ► Many people are affected ► Social goals ► Difficult to quantify ► Ambiguous probabilities ► Often longer time horizon ► Often less domain familiarity
Study Objectives ► Compare discount rates for environmental and monetary outcomes when equalizing the previous factors as much as possible ► Compare with health discounting ► See if typical framing manipulations affect discounting of environmental outcomes
Experimental Overview ► 2 Studies ► 184 US residents, recruited & run online ► Within subjects designs ► Hypothetical monetary, environmental & health scenarios ► DV: transformed discount factor, -lnδ
Monetary Gain Scenario Imagine you just won a lottery, worth $250, which will be paid to you immediately. However, the lottery commission is giving you the option of receiving a different amount, paid to you one year from now.
Indifference Point Elicitation ► Please pair: choose which option you prefer in each [ ] Win $250 immediately [ ] Win $410 one year from now. [ ] Win $250 immediately [ ] Win $390 one year from now. [ ] Win $250 immediately [ ] Win $370 one year from now. . . . ► Please fill in the number that would make you indifferent between the following two options: A. Win $250 immediately. B. Win $ one year from now.
Indifference Point Elicitation ► Please pair: choose which option you prefer in each [ ] Win $250 immediately [x] Win $410 one year from now. [ ] Win $250 immediately [x] Win $390 one year from now. [x] Win $250 immediately [ ] Win $370 one year from now. . . . ► Please fill in the number that would make you indifferent between the following two options: A. Win $250 immediately. B. Win $ 380 one year from now.
Monetary Loss Scenario Imagine you just got a parking fine for $250…
Air Quality Scenarios ► Imagine the current air quality in your area is moderate ► Temporary emissions regulation test will immediately improve [worsen] air quality for 3 weeks ► Alternately, the test may be carried out one year from now, for a different length of time ► We are interested in your preference, as someone who will be personally affected by it
Indifference Point Elicitation ► Please pair: choose which option you prefer in each [ ] Improved air quality immediately, for 21 days. . [ ] Improved air quality one year from now, for 37 days. [ ] Improved air quality one year from now, for 35 days. [ ] Improved air quality one year from now, for 33 days. . Please fill in the number that would make you indifferent between the following two options: A. Improved air quality immediately, for 21 days. B. Improved air quality one year from now, for ____ days.
Other Scenarios ► Improvement in mass transit ► Garbage piling up in the streets Study 2: ► Air Quality Index (rather than # of days) ► Health Gains and Losses (Chapman, 1996)
Study 1: Results Mean Negative Ln Delta 0. 6 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario transit+ garbage-
Study 1: Results Mean Negative Ln Delta 0. 6 *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario transit+ garbage*** p <. 001
Study 1: Results Mean Negative Ln Delta 0. 6 *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario transit+ garbage*** p <. 001
Study 1: Results Mean Negative Ln Delta 0. 6 *** *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario transit+ garbage*** p <. 001
Study 2: Results Mean Negative Ln Delta 0. 6 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario health+ health-
Study 2: Results Mean Negative Ln Delta 0. 6 *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario health+ health*** p <. 001
Study 2: Results Mean Negative Ln Delta 0. 6 *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario health+ health*** p <. 001
Study 2: Results Mean Negative Ln Delta 0. 6 *** *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario health+ health*** p <. 001
Study 2: Results ** Mean Negative Ln Delta 0. 6 *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 $+ $- air+ air- Scenario health+ health** p <. 01 *** p <. 001
Study 2: Results ** Mean Negative Ln Delta 0. 6 *** 0. 5 0. 4 0. 3 0. 2 0. 1 0 -0. 1 -0. 2 ** $+ $- air+ air- Scenario ** health+ health** p <. 01 *** p <. 001
Study 2: Discount Correlations $+ $- Air + Air - Health + Health - $+ $- -. 04 Air + . 39*** -. 03 Air - -. 01 . 09 . 11 -. 15 . 39*** . 04 . 269** -. 13 . 03 Health +. 39*** Health - -. 14 -. 07 ** = p <. 01, *** = p <. 001
Study 2: Discount Correlations $+ $- Air + Air - Health + Health - $+ $- -. 04 Air + . 39*** -. 03 Air - -. 01 . 09 . 11 -. 15 . 39*** . 04 . 269** -. 13 . 03 Health +. 39*** Health - -. 14 -. 07 ** = p <. 01, *** = p <. 001
Study 2: Discount Correlations $+ $- Air + Air - Health + Health - $+ $- -. 04 Air + . 39*** -. 03 Air - -. 01 . 09 . 11 -. 15 . 39*** . 04 . 269** -. 13 . 03 Health +. 39*** Health - -. 14 -. 07 ** = p <. 01, *** = p <. 001
Study 2: Discount Correlations $+ $- Air + Air - Health + Health - $+ $- -. 04 Air + . 39*** -. 03 Air - -. 01 . 09 . 11 -. 15 . 39*** . 04 . 269** -. 13 . 03 Health +. 39*** Health - -. 14 -. 07 ** = p <. 01, *** = p <. 001
Discussion ► When equalizing as many factors as possible, environmental outcomes discounted similarly to monetary outcomes ► Interpretation: Participants applied their strategies for monetary choices to the environmental situations ► Gain/loss framing effects much more important than domain/topic ► Discount rates constructed based on contextual features
Intertemporal Choice Predecided vs. Naïve Groups ► Participants: 3 -person groups § Drawn from campus clubs, organizations, & offices § N = 33 § 2 conditions: predecided vs. naïve ► Task: decide whether to accept small additional $ today or to wait for larger sum to be delivered in 3 months § Split evenly among group members § Group decision binding ► Frame: delay vs. accelerate § Delay: $65 today or more in 3 months (up to $120) § Accelerate: $75 in 3 months or smaller amount today (as low as $20)
Intertemporal Choice You have won a $65 ($75) check which will be divided evenly among the people in your group and given to each of you at the end of this experiment (in 3 months). However, you could receive a larger amount 3 months from today (smaller amount today).
Prize Money Task $65 Today ► ? ? ? In Three Months ► Remember that the amount of the money that you receive today is $65. How large would the amount of money in the second envelope (that you would receive in 3 months) have to be before you would prefer the second envelope?
Discounting by Frame & Condition * * p <. 05
Thanks to. . . ► Elke Weber & Dave Krantz ► The CRED & PAM labs ► The Center for the Decision Sciences ► The National Science Foundation ► Research Assistants: Aleksandra Petrović, Tara Wedin, & Jill Colvin
Thank You!
References Chapman, G. B. (1996). Temporal Discounting and Utility for Health and Money. Journal of Experimental Psychology: Learning, Memory, and Cognition, 22, 771 -791
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