Discounting of Environmental Goods and Discounting in Social

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Discounting of Environmental Goods and Discounting in Social Contexts David J. Hardisty 1; Kerry

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 ►

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

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 ►

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

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 [

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 [

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…

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

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 [

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

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.

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

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

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.

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.

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

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

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.

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.

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.

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 -

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 -

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 -

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 -

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

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

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

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

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

Discounting by Frame & Condition * * p <. 05

Thanks to. . . ► Elke Weber & Dave Krantz ► The CRED &

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!

Thank You!

References Chapman, G. B. (1996). Temporal Discounting and Utility for Health and Money. Journal

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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