IDEAS home Printed from https://ideas.repec.org/a/eee/jobhdp/v111y2010i2p71-92.html
   My bibliography  Save this article

The surprisingly low motivational power of future rewards: Comparing conventional money-based measures of discounting with motivation-based measures

Author

Listed:
  • Ebert, Jane E.J.

Abstract

Temporal discount rates are often poor predictors of behaviors that we expect will be motivated by the future. The current research suggests this may be because conventional discounting measures are poor measures of the motivational value of future rewards. In six studies, I develop motivation-based measures of the present value (PV) of future rewards and compare the PVs obtained with those obtained using conventional money-based discounting measures. Conventional money-based PVs consistently overestimate motivation-based PVs and are discriminable from them. I explore explanations for this mismatch, including timing of effort exertion (Study 2) and loss aversion (Study 3), both features of the motivation-based measures. In Study 5, I use self-reports of valuation strategies and a time pressure manipulation to demonstrate that participants use different valuation strategies in the conventional money-based and the motivation-based measures that, in part, determine the difference in PVs obtained and the relatively low correspondence between them.

Suggested Citation

  • Ebert, Jane E.J., 2010. "The surprisingly low motivational power of future rewards: Comparing conventional money-based measures of discounting with motivation-based measures," Organizational Behavior and Human Decision Processes, Elsevier, vol. 111(2), pages 71-92, March.
    • Handle: RePEc:eee:jobhdp:v:111:y:2010:i:2:p:71-92
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0749-5978(09)00101-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Camerer, Colin F & Hogarth, Robin M, 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 7-42, December.
    2. Victor R. Fuchs, 1982. "Economic Aspects of Health," NBER Books, National Bureau of Economic Research, Inc, number fuch82-1.
    3. Dorte Gyrd‐Hansen & Jes Søgaard, 1998. "Discounting life‐years: whither time preference?," Health Economics, John Wiley & Sons, Ltd., vol. 7(2), pages 121-127, March.
    4. Sultan, Fareena & Winer, Russell S., 1993. "Time preferences for products and attributes and the adoption of technologydriven consumer durable innovations," Journal of Economic Psychology, Elsevier, vol. 14(4), pages 587-613, December.
    5. Read, Daniel & van Leeuwen, Barbara, 1998. "Predicting Hunger: The Effects of Appetite and Delay on Choice, , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 189-205, November.
    6. Thaler, Richard, 1981. "Some empirical evidence on dynamic inconsistency," Economics Letters, Elsevier, vol. 8(3), pages 201-207.
    7. Victor R. Fuchs, 1982. "Time Preference and Health: An Exploratory Study," NBER Chapters, in: Economic Aspects of Health, pages 93-120, National Bureau of Economic Research, Inc.
    8. Gretchen B. Chapman & Arthur S. Elstein, 1995. "Valuing the Future," Medical Decision Making, , vol. 15(4), pages 373-386, October.
    9. Gretchen B. Chapman & Elliot J. Coups, 1999. "Time Preferences and Preventive Health Behavior," Medical Decision Making, , vol. 19(3), pages 307-314, August.
    10. Shane Frederick, 2005. "Cognitive Reflection and Decision Making," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 25-42, Fall.
    11. Jerry A. Hausman, 1979. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 33-54, Spring.
    12. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    13. Jane E. J. Ebert & Drazen Prelec, 2007. "The Fragility of Time: Time-Insensitivity and Valuation of the Near and Far Future," Management Science, INFORMS, vol. 53(9), pages 1423-1438, September.
    14. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, August.
    15. Maribeth Coller & Melonie Williams, 1999. "Eliciting Individual Discount Rates," Experimental Economics, Springer;Economic Science Association, vol. 2(2), pages 107-127, December.
    16. Dermot Gately, 1980. "Individual Discount Rates and the Purchase and Utilization of Energy-Using Durables: Comment," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 373-374, Spring.
    17. Liu, Wendy & Aaker, Jennifer, 2007. "Do you look to the future or focus on today? The impact of life experience on intertemporal decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 102(2), pages 212-225, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pepper, Alexander & Gore, Julie, 2014. "The economic psychology of incentives: An international study of top managers," Journal of World Business, Elsevier, vol. 49(3), pages 350-361.
    2. Pepper, Alexander & Gore, Julie, 2014. "The economic psychology of incentives: an international study of top managers," LSE Research Online Documents on Economics 51655, London School of Economics and Political Science, LSE Library.
    3. Arshad Ali Javed & Patrick T.I. Lam & Albert P.C. Chan, 2014. "Change negotiation in public-private partnership projects through output specifications: an experimental approach based on game theory," Construction Management and Economics, Taylor & Francis Journals, vol. 32(4), pages 323-348, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    2. Kossova, Tatiana (Коссова, Татьяна) & Kossova, Elena (Коссова, Елена) & Sheluntsova, Maria (Шелунцова, Мария), 2014. "A healthy lifestyle and individual intertemporal preferences of Russia [Здоровый Образ Жизни И Индивидуальные Межвременные Предпочтения Жителей России]," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, vol. 5, pages 172-190, October.
    3. Dodd, Mark C., 2014. "Intertemporal discounting as a risk factor for high BMI: Evidence from Australia, 2008," Economics & Human Biology, Elsevier, vol. 12(C), pages 83-97.
    4. Krupka, Erin L. & Stephens, Melvin, 2013. "The stability of measured time preferences," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 11-19.
    5. Borghans, Lex & Golsteyn, Bart H.H., 2005. "Time Discounting and the Body Mass Index," IZA Discussion Papers 1597, Institute of Labor Economics (IZA).
    6. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
    7. Borghans, Lex & Golsteyn, Bart H.H., 2005. "Time Discounting and the Body Mass Index," IZA Discussion Papers 1597, Institute of Labor Economics (IZA).
    8. Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2013. "Who Is ‘Behavioral’? Cognitive Ability And Anomalous Preferences," Journal of the European Economic Association, European Economic Association, vol. 11(6), pages 1231-1255, December.
    9. Borghans, Lex & Golsteyn, Bart H.H., 2006. "Time discounting and the body mass index: Evidence from the Netherlands," Economics & Human Biology, Elsevier, vol. 4(1), pages 39-61, January.
    10. Tatiana Kossova & Elena Kossova & Maria Sheluntcova, 2013. "Estimating the relationship between rate of time preferences and healthy lifestyle in Russia," HSE Working papers WP BRP 45/EC/2013, National Research University Higher School of Economics.
    11. Harrell Chesson & Jami Leichliter & Gregory Zimet & Susan Rosenthal & David Bernstein & Kenneth Fife, 2006. "Discount rates and risky sexual behaviors among teenagers and young adults," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 217-230, May.
    12. Tatiana Kossova & Elena Kossova & Maria Sheluntcova, 2014. "Estimating the Relationship Between Rate of Time Preferences And Socio-Economic Factors In Russia," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 39-68.
    13. Duquette, Eric & Higgins, Nathaniel & Horowitz, John, 2014. "Inferring discount rates from time-preference experiments," Economics Letters, Elsevier, vol. 123(2), pages 212-215.
    14. Jane E. J. Ebert & Drazen Prelec, 2007. "The Fragility of Time: Time-Insensitivity and Valuation of the Near and Far Future," Management Science, INFORMS, vol. 53(9), pages 1423-1438, September.
    15. Di Falco, Salvatore & Berck, Peter & Bezabih, Mintewab & Köhlin, Gunnar, 2019. "Rain and impatience: Evidence from rural Ethiopia," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 40-51.
    16. Stahl, Dale O., 2013. "Intertemporal choice with liquidity constraints: Theory and experiment," Economics Letters, Elsevier, vol. 118(1), pages 101-103.
    17. Jindrich Matousek & Tomas Havranek & Zuzana Irsova, 2022. "Individual discount rates: a meta-analysis of experimental evidence," Experimental Economics, Springer;Economic Science Association, vol. 25(1), pages 318-358, February.
    18. Sébastien Foudi, 2024. "Are risk attitude, impatience, and impulsivity related to the individual discount rate? Evidence from energy-efficient durable goods," Theory and Decision, Springer, vol. 96(4), pages 627-661, June.
    19. Wang, Mei & Rieger, Marc Oliver & Hens, Thorsten, 2016. "How time preferences differ: Evidence from 53 countries," Journal of Economic Psychology, Elsevier, vol. 52(C), pages 115-135.
    20. James Andreoni & Charles Sprenger, 2012. "Estimating Time Preferences from Convex Budgets," American Economic Review, American Economic Association, vol. 102(7), pages 3333-3356, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jobhdp:v:111:y:2010:i:2:p:71-92. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/obhdp .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.