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An age-embedding effect: time sensitivity and time insensitivity when pricing health benefits
1Department of Operational Research, London School of Economics and Political Science, UK. d.read@lse.ac.uk
Acta Psychologica
|September 25, 2001
Summary
People do not consider their remaining lifespan when valuing lifelong benefits, showing an age-embedding effect. This suggests a disconnect between perceived importance and actual decision-making in benefit valuation.
Area of Science:
- Behavioral Economics
- Decision Science
- Psychology
Background:
- Benefit duration is often tied to lifespan.
- Understanding how individuals value long-term benefits is crucial.
Purpose of the Study:
- To investigate if people consider age when pricing lifelong benefits.
- To explore the age-embedding effect in willingness-to-pay (WTP) decisions.
Main Methods:
- Four studies were conducted, including assessing WTP for medical condition cures impacting driving.
- Investigated the role of self-information and normative beliefs about age in valuations.
Main Results:
- An age-embedding effect was observed: WTP was not related to remaining years.
- Little weight was given to age in individual pricing decisions, despite not being deemed normatively irrelevant.
Conclusions:
- Individuals exhibit an age-embedding effect when pricing lifelong benefits.
- Decision-making processes do not adequately incorporate age or remaining lifespan.