Discounting health and money: New evidence using a more robust method

Area of Science:

• Behavioral Economics
• Health Economics
• Decision Science

Background:

• Understanding how individuals value future rewards over immediate ones is crucial in economics and public health.
• Previous research often shows high discount rates, posing challenges for policy interventions.
• The direct method offers a way to measure discounting independently of utility, potentially resolving discrepancies.

Purpose of the Study:

• To compare the rate at which individuals discount monetary rewards versus health outcomes.
• To assess the validity of the direct method for measuring discounting in a real-world setting.
• To investigate factors influencing individual differences in discounting behavior.

Main Methods:

• A field study was conducted with a representative French sample.
• The direct method was employed to measure discounting for both money and health.
• Participants were interviewed in their homes by professional interviewers.

Main Results:

• Individuals exhibited significantly higher discounting for money (median 6.5%) compared to health (median 2.2%).
• Discount rates approximated market interest rates, suggesting the direct method addresses the 'high discount rate puzzle'.
• Constant discounting models provided a better fit to the data than hyperbolic models.
• Individual heterogeneity in discounting was associated with age and occupation.

Conclusions:

• The direct method provides realistic discount rates for money and health in a field setting.
• Health is valued more consistently over time than monetary gains.
• Demographic factors like age and occupation play a role in individual time preferences.