Beyond Time Discounting

The intertemporal tradeoffs made by most persons appear inconsistent when viewed through the lens of the standard time-discounting model. At different times and in different decision contexts, the same individual will often display behavior suggestive of a wide range of discount rates, from strongly positive (indicative of a lack of concern of future consequences) to strongly negative (implying greater concern for the future than the present). We argue that many of these apparent inconsistencies can be attributed to three aspects of time preference that are not part of the conventional model: decreasing impatience, a preference for sequences of outcomes that improve over time, and preference interactions between consumption and payments.