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The role of cognitive resources in the valuation of near and far future events
Acta Psychologica 108 (2001) 155±171
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The role of cognitive resources in the valuation of near and far future events Jane E.J. Ebert Massachusetts Institute of Technology, Sloan School of Management, 38 Memorial Drive, E56-345C, Cambridge, MA 02139, USA
Abstract People's behaviors often appear short-sighted, suggesting they overvalue the near future and undervalue the far future. In three experiments, the present research focussed on the role of cognitive resources in the valuation of near and distant future events. Experiment 1 tested a new discounting paradigm for use in the subsequent experiments. Experiments 2 and 3 used dierent manipulations (time pressure and a concurrent tone task) to restrict the cognitive resources of participants valuing a series of future events. In both experiments, this manipulation caused an increase in the valuation of far future events but not in the valuations of near future events. Implications of these ®ndings for the role of cognitive resources in time discounting processes are brie¯y discussed. Ó 2001 Elsevier Science B.V. All rights reserved. PsycINFO classi®cation: 2340 Keywords: Decision making; Time discounting; Time pressure; Cognitive load
1. Introduction Thinking about the future is something people need to do frequently. Whether they are buying the week's groceries, planning a visit to the dentist, organizing ®nances, deciding what work to do next, or applying for a new job, they must consider
E-mail address: [email protected] (J.E.J. Ebert). 0001-6918/01/$ - see front matter Ó 2001 Elsevier Science B.V. All rights reserved. PII: S 0 0 0 1 - 6 9 1 8 ( 0 1 ) 0 0 0 3 3 - 6
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the future to make a decision in the present. The importance they place on their future weight, health, wealth, career promotion and job satisfaction in¯uences the choices they make in the present. However, many behaviors shown by people suggest that they are short-sighted and that they give little weight to the future in their current decisions. For example, they may fail to take care of their health, invest insuciently, and procrastinate at work ± decisions they may regret later (see Loewenstein & Elster, 1992 for a review). In empirical research on discounting, economists and psychologists have focussed on measuring the rates at which people devalue or discount events over time, and on describing how these rates vary. Recognizing that immediate positive events appear to have a unique draw for people (also known as the ``immediacy eect'', see Prelec & Loewenstein, 1991), researchers typically use choices that do not involve present events, e.g., asking people to compare two choices in the future to assess their discount rates. A typical paradigm might involve asking participants to make a series of hypothetical choices such as ``would you prefer $10 tomorrow or $40 in two months'' using dierent values to estimate the discount rates used by the participants (Kirby & Herrnstein, 1995). These studies have provided a fairly detailed description of the rates that people use and how they vary. They have found that the discount rates people use tend to be rather high, which is to say that people give little weight to the future (e.g., Gately, 1980; Thaler, 1981). These high rates apply to both real and hypothetical choices (Holcomb & Nelson, 1989; Kirby & Herrnstein, 1995). Although we now have a good knowledge of how people's discount rates vary, we do not yet have a good understanding of why they are high nor why they vary as they do. There are a number of explanations for people's tendency to discount the future. Explanations provided by early economists are that people expect that their wealth will increase over their lifetime, view life and the future as uncertain, and ®nd waiting for a reward dicult or painful. These views lead people to emphasize current over future rewards (B ohm-Bawerk, 1889; Rae, 1834). Since these explanations were proposed, empirical work has con®rmed that such factors play a role in discounting (e.g., Mischel & Baker, 1975; Slemrod, 1984, 1986). But another explanation for the dierence in value assigned to near and distant future events may be that people think about near and distant future events quite dierently, which may lead them to value the events dierently. Economists such as Rae and B ohm-Bawerk ®rst suggested this idea. Their comments suggest a reduction in felt aect, a poverty of imagery, or a lack of eort when thinking of distant future events compared to thinking of near future events (B ohm-Bawerk, 1889; Rae, 1834). More recent economists have emphasized an eort-based explanation, suggesting that people show excessive discounting of the future because they do not spend sucient cognitive resources in valuation of the future, e.g., in imagining the future event to be valued (Becker & Mulligan, 1997). Valuations of future events are judgments, and the extensive literature on judgment-making suggests that two qualitatively dierent types of information processing underlie a wide variety of judgments (Chaiken, 1980; Fazio, 1990; Fiske & Neuberg, 1990; Gilbert & Hixon, 1991; Petty & Cacioppo, 1986). One type of
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processing tends to be rapid and relatively eortless, often using simple heuristics, while the other type of processing is slower and more eortful, using more systematic or substantive reasoning. Rapid, eortless processing is typically viewed as the default method. People will only use more eortful, systematic processing if they are motivated and have sucient time and cognitive resources to do so (see Smith & DeCoster, 1999, for a summary of existing dual-processing models). These processing types may be involved to dierent extents in the valuation of near and far future events. Accurate judgments of valuation for near future events may be relatively easy to make, as they are likely to resemble the valuation of the events in the present, while accurate judgments of valuation for far future events may be more complex, requiring the incorporation of the eects of waiting and uncertainty on the value of these events. Therefore, far future events may require more systematic processing than near future events. As discussed above, some current economists put forward the view that people assign the future as little value as they do because they fail to expend sucient cognitive eort and resources on these valuations (Becker & Mulligan, 1997). Applying this view, a manipulation resulting in less use of cognitive resources may result in even lower valuations for these far future events. Others, on the other hand, argue that the awareness of the uncertainty of obtaining far future outcomes and waiting for these outcomes explains the reduced value of these outcomes as compared to near future outcomes. Consideration of these aspects may take cognitive eort, requiring more systematic processing of far future events, relative to near future events, so the dierences in value between near and far future events are likely to be more pronounced when people have the opportunity to consider these aspects. Thus, fewer available cognitive resources should reduce the dierence in valuation of near and far future events through an increase in valuation of far future events. In either case, the valuation of near future events should remain unchanged. The present research used manipulations to restrict cognitive resources to distinguish between these two proposed hypotheses. Experiment 1 tested a valuation paradigm constructed to allow separate valuations of near and far future events and so enable an examination of the processes involved in the valuation of each. Experiment 2 used the same paradigm together with a time pressure manipulation, a method commonly used to restrict available cognitive resources. Experiment 3 was a conceptual replication of Experiment 2, using the same valuation paradigm with a dierent manipulation to restrict cognitive resources: dual task performance.
2. Experiment 1: Valuation paradigm The aim of this experiment was to demonstrate discounting using a new valuation paradigm in which participants made separate valuations for both near and far future events.
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2.1. Method 2.1.1. Participants Seventy students (undergraduates and university summer school students) participated in this experiment. There were 41 females and 29 males with a mean age of 20.2 years (SD 5:1 years). They were recruited using sign-up sheets at an activities fair and in the Psychology Department and were paid $5 for their participation. 2.1.2. Materials and procedure The software used for stimuli presentation and data collection for the valuation task was PsyScope 1.2.4.PPC. The task consisted of a series of trials to value future events and lasted approximately 30 minutes. Participants were ®rst presented with instructions for valuation. Participants were asked: (a) to rate how much they personally valued each event right now; (b) to think of each event as real when making a valuation, and (c) to work steadily through the valuations at their own pace. Following ®ve practice trials, the experimenter inquired whether the participants had any questions before telling them the length of the task, reinforcing the ``think of each event as real'' instruction, explaining where to go upon ®nishing, and leaving the room. Participants then completed the remainder of the task. The 90 valuation trials were presented in six blocks of 15 trials each, with a reminder of the valuation instructions at the start of each block and a rest break of at least one minute between each block. The order of the future events within each block and the order of the blocks were randomized for each participant. In each trial a future event was presented, such as ``Tomorrow you win a 20 inch TV (value $400)''. Participants indicated their value for the future event by using the computer mouse to click on a scale on the screen that was continuous and labeled at four points (Not at all valuable to me, Fairly valuable to me, Very valuable to me, Extremely valuable to me). For each event, one of three future times (``tomorrow'', ``in a month from now'' and ``in a year from now'') was shown alone on the screen for 3 s, then the remainder of the event appeared (e.g., ``. . . you win a 20 inch TV (value $400)'') and both parts then remained on the screen for a further 4 s. Participants were then prompted by a written instruction to move onto the next screen, where the scale was presented, to indicate their value for the event. Participants were also given the opportunity to correct any mistake in their valuation before moving onto the next event trial. Following the valuation trials, participants answered several biographical questions and indicated whether they would be in school in a year's time. The events used consisted of items chosen by the experimenter and undergraduate research assistants as desirable for our participants, such as a weekend ski trip, a stereo, an automatic camera, and a coupon for ice cream. Each event was phrased as a win for the participant and presented with an appropriate dollar value ranging from $15 to $700. The best of these items were randomly assigned to two matched lists of 30 items each, matched for value and type of item (Event Lists 1 and 2). For example, each list included an item of clothing assigned a value of $60. These lists were the primary stimuli in the task, to be labeled with either ``tomorrow'' or ``in a
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Table 1 Descriptive statistics for valuation measures in Experiment 1a Condition
Near (tomorrow)
Far (year)
Distractor (month)
Near±Far
All participants M SD
0.52 0.12
0.45 0.13
0.45 0.13
0.07 0.11
a
N 70. Value measures are given as a proportion of the continuous subjective scale, so they vary from 0 to 1.
year from now''. Thus, the two Future Time conditions, Near Future and Far Future, were manipulated within-subjects, with a list of 30 events for each condition (Event Lists 1 and 2). Event Label was counterbalanced across participants: participants were randomly assigned to Label condition `Tom1Year2 ' where the events of List 1 were labeled ``tomorrow'' and the events of List 2 were labeled ``in a year from now'' or to Label condition `Tom2Year1' where this labeling was reversed. Thirty of the remaining items were used to produce a third matched list for use as distractor items and labeled with ``in a month from now''; ®ve more were selected for use as practice events (two labeled ``tomorrow'', two labeled ``in a year from now'', and one labeled ``in a month from now''). 1 2.2. Results 2.2.1. Excluded and missing data Several participants neglected to complete the biographical questions following the valuation task, giving an N of 57 for age, and an N of 58 for the question asking whether they would be in school next year. 2.2.2. Valuation results The subjective values for each event were calculated as a proportion of the scale, so they varied from 0 to 1. Mean values for each participant were calculated across events for each of the future time conditions, Far Future (``in a year from now'') and Near Future (``tomorrow''), for the distractor events (``in a month from now''), and for the dierences between Near and Far Future values (see Table 1). The Near and Far Future valuation means were submitted to a 2 (Future Time: Near Future, Far Future) 2 (Label: Tom1Year2, Tom2Year1) mixed ANOVA on the valuation scores, with Future Time as a within-subjects variable and Label as a between-subjects variable. This analysis revealed only a signi®cant main eect of Future Time F 1; 68 33:81; P < 0:001; r 0:58 where Far 1
Lists of the events used in these experiments can be obtained from the author.
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Future events were rated as less valuable than the Near Future events, i.e., the events were discounted over time. There were no dierences between the two Label conditions, indicating that Event Lists 1 and 2 did not dier signi®cantly in value on average. 2.2.3. Fatigue analysis A number of participants commented that the valuation task was tiring. Therefore, Near and Far Future valuation measures for participants were also calculated separately for the ®rst and second halves of the study to see if there was any change in discounting over the course of the experiment due to fatigue or practice. A 2 (Future Time: Near Future, Far Future) 2 (Half: First, Second) mixed ANOVA revealed a signi®cant main eect of Future Time as before F 1; 69 33:46; P < 0:001; r 0:57, and a signi®cant interaction of Future Time Half F 1; 69 4:63; P < 0:05; r 0:25. Thus, there was a change in valuation of Near and Far Future events over the course of the study, such that the dierence between the Near and Far Future event valuations, i.e., the discounting, decreased over the experiment. 2.2.4. Biographic variables There were no signi®cant correlations between the valuation measures and biographic variables, i.e., the age, gender, and ``in school next year'' variables. 2.3. Discussion The new valuation paradigm, developed for this set of experiments and using separate valuations on a subjective scale for near and far future events, was successful in capturing the well-known phenomenon that future events are valued less when presented with a far future label than when presented with a near future label. This discounting decreased over the experiment, which may be due to fatigue and, hence, reduced cognitive resources. The eect of cognitive resources on valuation is tested directly in Experiments 2 and 3.
3. Experiment 2: Time pressure experiment Experiment 1 showed that this new paradigm can obtain temporal discounting in the value of the events used, and that, on average, the two lists of events used in the paradigm do not dier signi®cantly in value. In Experiment 2, a time manipulation was used with this paradigm to distinguish between two possible hypotheses that a restriction of cognitive resources will (a) decrease or (b) increase the valuations of far future events, while, in either case, leaving the valuations of near future events unchanged.
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3.1. Method 3.1.1. Participants Participants were 152 university summer school and undergraduate students of mean age 20.8 years (SD 4:3 years). There were 102 females and 50 males. They were recruited using sign-up sheets at an activities fair and in the Psychology Department and were paid $7 for their participation. The time pressure manipulation was between subjects: Time Pressure condition, n 76 (52 female); No Time Pressure condition, n 76 (50 female). 3.1.2. Procedure Participants completed the computer-based valuation task either under Time Pressure or with No Time Pressure, and then answered several manipulation check questions and provided biographical details. 3.1.3. Materials Valuation task. This was the valuation task from Experiment 1 with minor procedural changes to enable the use of a time pressure manipulation. Instructions. The instruction dierences for each time pressure condition were: for the No Time Pressure condition, participants were told they had unlimited time and to take as much time as they liked in answering; for the Time Pressure condition, participants were told that they had a limited time in which to answer, that a counter near the scale would count down from 3 to 1 to indicate the time they had to answer, and that it was important to respond within the time allowed. Trial. During each trial the time label (i.e., ``tomorrow'', ``in a year from now'', ``in a month from now'') was presented for 3 s, then the remainder of the event also appeared, then the scale also appeared on the screen after an additional delay 2 (No Time Pressure delay 5500 ms; Time Pressure delay 500 ms). In the No Time Pressure condition, the event and scale remained until the participants responded; in the Time Pressure condition, the event and scale remained for an additional 1200 ms while a counter below the scale counted down from 3 to 1. Participants' responses were recorded up to 500 ms following the disappearance of the scale to record those participants' responses that came just beyond the allowed time. Responses. (a) Participants were not given a chance to correct their responses; and (b) following each valuation response, participants recentered their mouse position by clicking on a cross in the center of the screen to move to the next trial. 2
This procedure meant that participants in both conditions had equal time to read the time label (3 s), but those in the Time Pressure condition had only a short time to read each item before the scale appeared. As dierent items were used for the near and far future events (Event Lists 1 and 2), it was important that reading time for both event lists used be roughly equivalent. Using number of syllables as a proxy measure of reading time, the events were checked and shown to be roughly equivalent on reading time, (dierence between lists on mean number of syllables, t 58 0:41; ns; r 0:05). Therefore, the lengths of the items were not changed.
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Experimental design. (a) As Experiment 1 had demonstrated that the event lists were not signi®cantly dierent on value assigned by participants, for simplicity only one Label condition was used in this experiment, i.e., the event labels ``tomorrow'' and ``in a year from now'' were not counterbalanced across participants; (b) as in Experiment 1, the items were presented in six blocks of 15 events, however, in this experiment the order of the blocks was not randomized. There were two orders of blocks: blocks 1 to 6 (Forward order) and blocks 6 to 1 (Reverse order). Block order was counterbalanced across participants with equal numbers in each of the two time pressure conditions. 3 Other materials. Following the valuation task, participants completed a questionnaire in which they: (a) rated each of the statements ``I felt time pressure during the experiment'' and ``I was able to think about each question'' on a ®ve-point scale from 1 (Not at all) to 5 (Very much) (see Edland, 1993) for use as manipulation checks; and (b) provided information on their age, gender and student status currently and for next year (i.e., high school, college or not a student). 3.2. Results 3.2.1. Excluded and missing data No data were excluded from the analysis, but two participants failed to complete the questionnaire, and three others missed several items on the questionnaire. 3.2.2. Valuation results Testing the predictions. Given the fatigue eects found in Experiment 1, mean subjective values were calculated for each participant for each half of the study (see Table 2). The valuations were ®rst submitted to a 2 (Pressure: No Time Pressure, Time Pressure) 2 (Block Order: Forward, Reverse) 2 (Future Time: Near Future, Far Future) 2 (Half: First, Second) mixed ANOVA, with Future Time and Half as within-subjects variables and with Pressure and Block Order as between-subjects variables. There were signi®cant main eects of Future Time F 1; 148 86:90; P < 0:001; r 0:61 and Pressure F 1; 148 6:05; P < 0:05; r 0:20. The overall means indicate that discounting occurred, i.e., Near Future events were valued more highly than were Far Future events, and that Time Pressure caused an increase in overall valuation for future events. Contrary to prediction, the Future Time Pressure interaction was not signi®cant. However, the Future Time Pressure Half interaction F 1; 148 6:70; P < 0:01; r 0:21, was signi®cant and was decomposed by submitting the First and Second Half means to separate analyses. For each half, the valuations were submitted to a 2 (Pressure: No Time Pressure, Time Pressure) 2 (Block Order: Forward, Reverse) 2 (Future Time: Near Future, 3
For pragmatic reasons, the two Block Order conditions were not initially randomized across participants. Therefore, for the ®rst half of the sample most participants were in the Forward order condition, while in the second half most participants were in the Reverse order condition.
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Table 2 Descriptive statistics for valuation measures for each half of time pressure experiment (Experiment 2)a Condition First Half No time pressure M SD Time pressure M SD Second Half No time pressure M SD Time pressure M SD
Near (tomorrow)
Far (year)
Distractor (month)
Near-Far
0.52 0.15
0.42 0.12
0.46 0.14
0.10 0.11
0.54 0.12
0.48 0.12
0.47 0.14
0.06 0.11
0.52 0.16
0.45 0.13
0.46 0.17
0.07 0.13
0.58 0.13
0.50 0.14
0.48 0.14
0.08 0.13
a
No time pressure n 76. Time pressure n 76. Value measures are given as a proportion of the continuous subjective scale.
Far Future) mixed ANOVA, with Future Time as a within-subjects variable and with Pressure and Block Order as between-subjects variables. For the First Half means, this analysis revealed signi®cant main eects of Future Time F 1; 148 88:71; P < 0:001; r 0:61 and of Pressure F 1; 148 4:12; P < 0:05; r 0:16. In addition, the predicted Future Time Pressure interaction F 1; 148 4:88; P < 0:05; r 0:18 was signi®cant for this Half. Focussed contrasts on these means, using the between eects error term from this ANOVA, showed that, as predicted, the eect of Pressure on valuation was signi®cant for the Far Future event means only (Near Future, t 148 0:70; ns; r 0:06; Far Future, t 148 2:16; P < 0:05; r 0:17), where the Far Future event valuations increased with time pressure. 4 For the Second Half means, the same ANOVA analysis revealed only signi®cant main eects of Future Time F 1; 148 51:64; P < 0:001; r 0:51 and of Pressure F 1; 148 7:05; P < 0:01; r 0:21. Other measures. The dummy-coded gender variable was generally positively correlated with valuation indicating that females gave items higher valuations. There were no signi®cant correlations between the age and student status variables and the valuation measures. For the manipulation checks, participants in the Time Pressure condition reported feeling signi®cantly more time pressure, (t 145 5 106 ; P < 0:001; r close to 1) and they reported having signi®cantly less time to
4 Further analyses of valuations for individual events across the Pressure conditions showed that plausible alternative explanations for the change in valuation of Far Future events (such as participants using the mouse more wildly under time pressure or making responses closer to the middle of the scale) were not supported by the data.
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think about each valuation question (t 145 5 106 ; P < 0:001; r close to 1) than participants in the No Time Pressure condition. 3.3. Discussion Thus, as predicted, time pressure caused a change in the valuation of far future events but had no signi®cant eect on the valuation of near future events. However, this predicted interaction occurred only in the ®rst half of the experiment. The change for far future events was an increase in valuation. These ®ndings suggest that the valuation of near future events is relatively eortless and requires fewer cognitive resources than the valuation of far future events, which is more eortful and uses more cognitive resources. This cognitive work leads people to reduce their valuations of far future events. As the main hypothesized interaction was found only in the ®rst half of the study, it is important to replicate this result. Therefore, Experiment 3 used a dierent manipulation to restrict cognitive resources as a conceptual replication of Experiment 2. In addition, Experiment 3 used a within-subjects design in an attempt to increase the power of the experiment.
4. Experiment 3: Tone task experiment 4.1. Method 4.1.1. Overview In this replication of Experiment 2, a concurrent tone monitoring task was used to restrict cognitive resources. Thus, the two Cognitive Load conditions, Monitoring and No Monitoring, were manipulated within-subjects. 4.1.2. Participants Participants were 101 undergraduate students (56 female, 45 male) with a mean age of 20.0 years (SD 3:5 years). They were recruited using sign-up sheets in the Psychology Department and were paid $7for their participation. 4.1.3. Materials and procedure Valuation task. The valuation task was very similar to that used in Experiments 1 and 2, with some improvements intended to increase the power of the paradigm, including: (a) shortening the task, and (b) replacing a number of items with new ones. Given the fatigue eects found in Experiments 1 and 2, the valuation task was shortened for the current study from 6 to 4 blocks of 15 items using 2 blocks of items for each condition. Also, the distractor items (i.e., those with time label ``in a month from now'') were removed. Thus, for each of the two cognitive load conditions there were 2 blocks of 15 items each, which included 15 Near Future items and 15 Far
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Future items. This task, therefore, used 30 Near and 30 Far Future items as before, but contained in 4 rather than 6 blocks of 15 items. A number of items on the matched event lists for the valuation task were reorganized (into dierent matched pairs) or removed based on their valuations by participants in Experiments 1 and 2. Replacement items came from the distractor list or were newly composed. The items from each pair were then randomly assigned to two Event Lists (Lists 1 and 2) which were to be labeled ``tomorrow'' or ``in a year from now''. The 30 matched pairs of items were randomly assigned to the ®rst or second half of the experiment with the constraint that the mean of assigned dollar values of items in the ®rst half be equal to that for the items in the second half. Within each half, the 30 items were randomized into 2 blocks of 15 items, with the constraint that the number of items labeled ``tomorrow'' or ``in a year from now'' was approximately equal in each block. After each block, participants had a 1-minute rest break. Valuation trials were very similar to those in the previous valuation task with some changes in the timing (see the No Time Pressure condition of Experiment 2). In these trials the time appeared for 3 s, then was joined by the remainder of the event for a further 3 s, when the scale also appeared and remained until the participants responded, or for a further 12 s, whichever was longer. After 9 s of this 12 s response period a counter appeared to count down the last 3 s. Responses were recorded up to 500 ms following the end of the trial. Tone task. The tone task was based on one used by Gilbert and Silvera (1996). The task used three tones at high, medium and low frequencies played in four randomized series at a rate of approximately 1.5 tones per second and recorded on a compact disk as four separate tracks. For each block of valuation trials the experimenter played a dierent track, stopping the track when participants ®nished the block (typically around 3 minutes for each block). The tracks were always played in the same order. For the Monitoring condition of the experiment, participants were required to monitor the tones for a speci®c pattern of tones, High then Low, and say ``yes'' every time they heard it. The experimenter recorded participants' responses. For the No Monitoring condition of the experiment, the tracks were played as in the Monitoring condition, but participants were not required to monitor the tones. The experimenter remained in the room with the participants for the entire valuation task. Instructions to participants. Participants were told they would be completing two tasks simultaneously, a valuation task and a tone-monitoring task, that both tasks were equally important, and that we cared about their performance on both tasks. For the valuation task, participants were asked to indicate the value to them of each event right now, to use the scale provided to indicate their valuations, and to try to think of each event as real for each valuation. They were told they would have lots of time in which to answer, but, to help them judge how much time they had, a counter would appear at the bottom of the screen towards the end of each trial to indicate the remaining time. Participants were given four practice trials. Next, for the tone task, participants were ®rst familiarized with the tones, then they were told about the tone task and given a 1 minute practice on monitoring and
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responding to the tones. Participants were then instructed that they would be doing the two tasks they had just practiced at the same time, and that for half the study they would do the tone task as they had practiced it while for the other half they would hear but would not have to monitor the tones. Participants then completed the experimental trials. At the beginning of each half of the study, further instructions reminded participants how to make their valuations and whether or not to monitor the tones, and, for the Monitoring condition, re-emphasized the equal importance of participants' performance on both tasks. Organization of stimulus presentation for tasks. For the valuation task, participants were randomly assigned to one of two Load Order conditions, Monitoring First or No Monitoring First, to counterbalance the order of the Monitoring and No Monitoring conditions. Item Order was counterbalanced across participants such that for half of the participants, Item Blocks 1 and 2 appeared in the ®rst half of the experiment (Item Order A) and for the remaining participants, Item Blocks 1 and 2 appeared in the second half of the experiment (Item Order B). 5 Within each half, the order of presentation of the two blocks and the order of presentation of the items within each block were randomized across participants. Following the valuation and tone tasks, the participants completed two questionnaires: (a) a manipulation check in which participants rated how much they were able to think about each valuation question on a scale of 1 (Not at all) to 5 (Very much) both when they had to monitor the tones and when they did not have to monitor the tones; and (b) a biographical information sheet. 4.2. Results 4.2.1. Excluded and missing data Three participants failed to follow the tone task instructions correctly so their data were excluded from the analysis. Eleven participants were excluded due to extreme performance scores on the tone task (see Section 4.2.2 below). This left the data of 88 participants in the analysis. In general, participants each completed 60 valuations of future events during the task. However, 25 participants were missing between 1 and 4 of these 60 valuations due to procedural problems, i.e., minor computer problems, or participants overrunning time on a valuation trial. 4.2.2. Tone task For the tone task, a signal detection analysis approach was used to measure participants' accuracy on the tone task. For each participant, the proportion of Hits and False Alarms (FAs) was calculated for the half of the experiment for which they monitored the tones (using the overall proportion of Hits and FAs summed across 5
For pragmatic reasons, the data for one Item Order condition (i.e., Item Order A) were collected prior to the data for the other Item Order condition (i.e., Item Order B). Therefore, assignment to these conditions was not random.
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Table 3 Descriptive statistics for valuation measures for tone task experiment (Experiment 3)a
a
Condition
Near (tomorrow)
Far (year)
Near±Far
No Monitoring M SD
0.54 0.14
0.44 0.15
0.10 0.13
Monitoring M SD
0.55 0.14
0.47 0.15
0.07 0.11
N 88. Value measures are given as a proportion of the continuous subjective scale.
the two relevant valuation task blocks). The mean Hit and FA proportions were calculated separately for participants in the two Load Order conditions, as they were monitoring dierent series of tones. These means were then used to identify participants with extreme performance scores (i.e., those with a score two or more standard deviations from the mean for their group). 4.2.3. Valuation results Testing the predictions. Mean valuations and a mean valuation dierence score were calculated for each participant in each experimental condition (see Table 3). Valuations for Near and Far Future events were submitted to a 2 (Cognitive Load: Monitoring, No Monitoring) 2 (Future Time: Near Future, Far Future) 2 (Load Order: Monitoring First, No Monitoring First) 2 (Item Order: Item Order A, Item Order B) mixed ANOVA, with Cognitive Load and Future Time as within-subjects variables and with Load order and Item Order as between-subjects variables. There were signi®cant main eects of Cognitive Load F 1; 84 8:48; P < 0:005; r 0:30, where the Monitoring condition caused an increase in valuation of future events, and Future Time F 1; 84 52:25; P < 0:001; r 0:62, where Near Future events were valued higher than Far Future events. The predicted Cognitive Load Future Time interaction 6 was signi®cant F 1; 84 7:71; P < 0:01; r 0:29. Focussed contrasts for each Future Time condition showed that the Monitoring condition caused a signi®cant change in the Far Future events only (Near Future, t 87 1:05; ns; r 0:11; Far Future, t 87 3:20; P < 0:001; r 0:32. This change was an increase in valuation, replicating the results in Experiment 2. Manipulation check. Participants' ratings on the follow-up questionnaire indicated that they were able to think about each valuation question more in the No
6
This interaction was quali®ed by a signi®cant four-way Cognitive Load Future Time Load Order Item Order interaction. Decomposing this using ANOVAs and focussed contrasts on Future Time for each Load Order resulted in a very similar pattern of results to those reported here.
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Monitoring condition (M 4.86, SD 0:35) than in the Monitoring condition M 3:10; SD 0:80; t 86 20:88; P < 0:001; r 0:91. Biographical variables. As in Experiment 2, gender was generally positively correlated with valuation, with a signi®cant correlation with the Near Future valuations in the No Monitoring condition, indicating that female participants gave higher valuations to events than did male participants. Age showed several signi®cant negative correlations with value, suggesting the older participants gave the events lower valuations, perhaps re¯ecting the speci®c appeal of these items to younger students, who may also be less likely to own them already. 4.3. Conclusion The main ®ndings of Experiment 3 replicated those of Experiment 2. There was an interaction between the restriction of cognitive resources manipulation and the valuation of events in the near and the far future. The within-subjects analysis showed that cognitive load had no eect on the valuation of near future events but caused an increase in the valuation of far future events. The eect size of the Cognitive Load Future Time interaction in this experiment was double that in Experiment 2, demonstrating the power of using a within-subjects approach for this task. 5. General discussion In a series of three experiments, the present research investigated the eect of the restriction of cognitive resources on the valuation of near and far future events. Experiment 1 established a new paradigm designed to assess separately the processes involved in the valuations both of near and of far future events. Experiments 2 and 3 used manipulations to restrict available cognitive resources and examine the eect on valuation. The results of these studies provided consistent support for the hypothesis that the valuations of near future events are unaected by the restriction of cognitive resources, while the valuations of far future events are increased by this manipulation. The eect was shown in two experiments, each of which used a dierent manipulation to restrict cognitive resources: time pressure in Experiment 2 and a simultaneous task in Experiment 3. These ®ndings suggest that the psychological processes underlying the valuations of near future events are dierent from those underlying far future events. For far future events, the ®ndings suggest that valuing a far future event requires more cognitive resources and that this leads to a reduced valuation of the event. When people cannot think this way about the far future event, their ®nal valuations increase and become more like their valuations for near future events. The events in these studies are discounted over time such that they are valued less when they occur later in time. Therefore, the direction of change in valuation suggests that cognitive elaboration involves taking the time of the event into account. Given the longstanding view of economists that the valuations people give for far future events are
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as low as they are because people fail to expend sucient cognitive eort and resources in making their valuations, a manipulation restricting available cognitive resources should decrease the valuations. Instead, the change in valuation, although small, was in the opposite direction. In other words, the ®nding in this series of studies that reducing time and cognitive resources for valuation results in less discounting does not support the assumption in the literature that if people had more time and used more eort to think about their future valuations, they would be more likely to act `rationally' and reduce discounting. On the contrary, in these studies discounting is reduced when less time and eort are expended in the service of future valuations. This ®nding may prompt others to examine this assumption more carefully. The ®nding of a change in value for far future events with restriction of cognitive resources suggests that making valuation judgments for far future events involves systematic processing. For the near future events, the valuations were unchanged by the restriction of cognitive resources suggesting that making these valuations is more eortless and therefore, may involve heuristic processing. A heuristic likely to be used for these preference-based events is the feelings-as-information heuristic (Schwarz & Clore, 1996). In making liking or aective judgments (e.g., ``how much do I want a TV''?), people are particularly inclined to use their feelings as information. In conditions of restricted cognitive resources in both Experiments 2 and 3, valuations of far future events were still lower than those for near future events, although the dierence in valuation was less. This suggests that the manipulations were insucient to prevent all systematic processing allowing some incorporation of time into the far future event valuations and hence lower valuations. The ®nding that dierent amounts of cognitive resources are involved in the valuation of near and far future events, suggesting that dierent processes may be used in these valuations, may have implications for other research in discounting. Speci®cally, this may assist in understanding why people show hyperbolic discounting, i.e., where discounting rates initially drop o very rapidly as the time to the future event increases and then change much less rapidly. This dramatic change in valuation between the near and the more distant future may correspond to a qualitative change in how valuations are made for events at more distant future times. The literature on `heuristic' versus `systematic' information processing (Chaiken & Trope, 1999) and recent ®ndings on how people mentally represent some near and distant future events (e.g., Liberman & Trope, 1998) might help us to understand dierences in how people value outcomes to be obtained sooner versus later. Acknowledgements This article is based on the author's doctoral dissertation. I thank, Daniel Gilbert for his important contributions at all points in this research; David Laibson, Dan Simons, Karen Ruggiero, Je Polzer and Drazen Prelec for their valuable comments
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and advice; the Happy Lab members, past and present, for their suggestions and insights; and the undergraduate research assistants who were so important in the execution of these studies. I gratefully acknowledge the ®nancial support of the Maria E. McMaster Bequest at Harvard University.
References B ohm-Bawerk, E. V. (1889). Capital and interest. South Holland, IL: Libertarian Press. Becker, G. S., & Mulligan, C. B. (1997). The endogenous determination of time preference. Quarterly Journal of Economics, 112, 729±758. Chaiken, S. (1980). Heuristic versus systematic information processing in the use of source versus message cues in persuasion. Journal of Personality and Social Psychology, 39, 752±766. Chaiken, S., Trope, Y. (Eds.), Dual-process theories in social psychology. New York: The Guilford Press. Edland, A. (1993). The eects of time pressure on choices and judgments of candidates to a university program. In O. Svenson, & A. J. Maule (Eds.), Time pressure and stress in human judgment and decision making. (pp. 145±156). New York: Plenum Press. Fazio, R. H. (1990). Multiple processes by which attitudes guide behavior: the MODE model as an integrative framework. In M. P. Zanna (Ed.), Advances in experimental social psychology (Vol. 23, pp. 75±109). San Diego, CA: Academic Press. Fiske, S. T., & Neuberg, S. L. (1990). A continuum model of impression formation, from category-based to individuating processes: in¯uences of information and motivation on attention and interpretation. In M. P. Zanna (Ed.), Advances in experimental social psychology (Vol. 23, pp. 1±74). San Diego, CA: Academic Press. Gately, D. (1980). Individual discount rates and the purchase and utilization of energy-using durables: comment. Bell Journal of Economics, 11, 373±374. Gilbert, D. T., & Hixon, J. G. (1991). The trouble of thinking: activation and application of stereotypic beliefs. Journal of Personality and Social Psychology, 60, 509±517. Gilbert, D. T., & Silvera, D. H. (1996). Overhelping. Journal of Personality and Social Psychology, 70, 678± 690. Holcomb, J. H., & Nelson, P. S. (1989). An experimental investigation of individual time preference. Unpublished manuscript, University of Texas, El Paso. Kirby, K. N., & Herrnstein, R. J. (1995). Preference reversals due to myopic discounting of delayed rewardst. Psychological Science, 6, 83±89. Liberman, N., & Trope, Y. (1998). The role of feasibility and desirability considerations in near- and distant future decisions: A test of temporal construal theory. Journal of Personality and Social Psychology, 75, 5±18. Loewenstein, G., Elster, J. (Eds.), Choice over time. New York: Russell Sage. Mischel, W., & Baker, N. (1975). Cognitive appraisals and transformations in delay behavior. Journal of Personality and Social Psychology, 31, 254±261. Petty, R. E., & Cacioppo, J. T. (1986). Communication and persuasion: central and peripheral routes to attitude change. New York: Springer. Prelec, D., & Loewenstein, G. (1991). Decision making over time and under uncertainty: a common approach. Management Science, 37, 770±786. Rae, J. (1834). The sociological theory of capital. London: MacMillan (1905, reprint of original 1834 edition). Schwarz, N., & Clore, G. L. (1996). Feelings and phenomenal experiences. In E. T. Higgins & A. W. Kruglanski (Eds.), Social psychology: Handbook of basic principles (pp. 433±465). New York: Guilford Press. Slemrod, J. (1984). The economic impact of nuclear fear. Bulletin of the Atomic Scientists, 40, 42±43. Slemrod, J. (1986). Saving and the fear of nuclear war. Journal of Con¯ict Resolution, 30, 403±419.
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Smith, E. R., & DeCoster, J. (1999). Associative and rule-based processing: a connectionist interpretation of dual-process models. In S. Chaiken, & Y. Trope (Eds.), Dual-process theories in social psychology. (pp. 323±336). New York: The Guilford Press. Thaler, R. (1981). Some empirical evidence on dynamic inconsistency. Economics Letters, 8, 201±207.
www.elsevier.com/locate/actpsy
The role of cognitive resources in the valuation of near and far future events Jane E.J. Ebert Massachusetts Institute of Technology, Sloan School of Management, 38 Memorial Drive, E56-345C, Cambridge, MA 02139, USA
Abstract People's behaviors often appear short-sighted, suggesting they overvalue the near future and undervalue the far future. In three experiments, the present research focussed on the role of cognitive resources in the valuation of near and distant future events. Experiment 1 tested a new discounting paradigm for use in the subsequent experiments. Experiments 2 and 3 used dierent manipulations (time pressure and a concurrent tone task) to restrict the cognitive resources of participants valuing a series of future events. In both experiments, this manipulation caused an increase in the valuation of far future events but not in the valuations of near future events. Implications of these ®ndings for the role of cognitive resources in time discounting processes are brie¯y discussed. Ó 2001 Elsevier Science B.V. All rights reserved. PsycINFO classi®cation: 2340 Keywords: Decision making; Time discounting; Time pressure; Cognitive load
1. Introduction Thinking about the future is something people need to do frequently. Whether they are buying the week's groceries, planning a visit to the dentist, organizing ®nances, deciding what work to do next, or applying for a new job, they must consider
E-mail address: [email protected] (J.E.J. Ebert). 0001-6918/01/$ - see front matter Ó 2001 Elsevier Science B.V. All rights reserved. PII: S 0 0 0 1 - 6 9 1 8 ( 0 1 ) 0 0 0 3 3 - 6
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the future to make a decision in the present. The importance they place on their future weight, health, wealth, career promotion and job satisfaction in¯uences the choices they make in the present. However, many behaviors shown by people suggest that they are short-sighted and that they give little weight to the future in their current decisions. For example, they may fail to take care of their health, invest insuciently, and procrastinate at work ± decisions they may regret later (see Loewenstein & Elster, 1992 for a review). In empirical research on discounting, economists and psychologists have focussed on measuring the rates at which people devalue or discount events over time, and on describing how these rates vary. Recognizing that immediate positive events appear to have a unique draw for people (also known as the ``immediacy eect'', see Prelec & Loewenstein, 1991), researchers typically use choices that do not involve present events, e.g., asking people to compare two choices in the future to assess their discount rates. A typical paradigm might involve asking participants to make a series of hypothetical choices such as ``would you prefer $10 tomorrow or $40 in two months'' using dierent values to estimate the discount rates used by the participants (Kirby & Herrnstein, 1995). These studies have provided a fairly detailed description of the rates that people use and how they vary. They have found that the discount rates people use tend to be rather high, which is to say that people give little weight to the future (e.g., Gately, 1980; Thaler, 1981). These high rates apply to both real and hypothetical choices (Holcomb & Nelson, 1989; Kirby & Herrnstein, 1995). Although we now have a good knowledge of how people's discount rates vary, we do not yet have a good understanding of why they are high nor why they vary as they do. There are a number of explanations for people's tendency to discount the future. Explanations provided by early economists are that people expect that their wealth will increase over their lifetime, view life and the future as uncertain, and ®nd waiting for a reward dicult or painful. These views lead people to emphasize current over future rewards (B ohm-Bawerk, 1889; Rae, 1834). Since these explanations were proposed, empirical work has con®rmed that such factors play a role in discounting (e.g., Mischel & Baker, 1975; Slemrod, 1984, 1986). But another explanation for the dierence in value assigned to near and distant future events may be that people think about near and distant future events quite dierently, which may lead them to value the events dierently. Economists such as Rae and B ohm-Bawerk ®rst suggested this idea. Their comments suggest a reduction in felt aect, a poverty of imagery, or a lack of eort when thinking of distant future events compared to thinking of near future events (B ohm-Bawerk, 1889; Rae, 1834). More recent economists have emphasized an eort-based explanation, suggesting that people show excessive discounting of the future because they do not spend sucient cognitive resources in valuation of the future, e.g., in imagining the future event to be valued (Becker & Mulligan, 1997). Valuations of future events are judgments, and the extensive literature on judgment-making suggests that two qualitatively dierent types of information processing underlie a wide variety of judgments (Chaiken, 1980; Fazio, 1990; Fiske & Neuberg, 1990; Gilbert & Hixon, 1991; Petty & Cacioppo, 1986). One type of
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processing tends to be rapid and relatively eortless, often using simple heuristics, while the other type of processing is slower and more eortful, using more systematic or substantive reasoning. Rapid, eortless processing is typically viewed as the default method. People will only use more eortful, systematic processing if they are motivated and have sucient time and cognitive resources to do so (see Smith & DeCoster, 1999, for a summary of existing dual-processing models). These processing types may be involved to dierent extents in the valuation of near and far future events. Accurate judgments of valuation for near future events may be relatively easy to make, as they are likely to resemble the valuation of the events in the present, while accurate judgments of valuation for far future events may be more complex, requiring the incorporation of the eects of waiting and uncertainty on the value of these events. Therefore, far future events may require more systematic processing than near future events. As discussed above, some current economists put forward the view that people assign the future as little value as they do because they fail to expend sucient cognitive eort and resources on these valuations (Becker & Mulligan, 1997). Applying this view, a manipulation resulting in less use of cognitive resources may result in even lower valuations for these far future events. Others, on the other hand, argue that the awareness of the uncertainty of obtaining far future outcomes and waiting for these outcomes explains the reduced value of these outcomes as compared to near future outcomes. Consideration of these aspects may take cognitive eort, requiring more systematic processing of far future events, relative to near future events, so the dierences in value between near and far future events are likely to be more pronounced when people have the opportunity to consider these aspects. Thus, fewer available cognitive resources should reduce the dierence in valuation of near and far future events through an increase in valuation of far future events. In either case, the valuation of near future events should remain unchanged. The present research used manipulations to restrict cognitive resources to distinguish between these two proposed hypotheses. Experiment 1 tested a valuation paradigm constructed to allow separate valuations of near and far future events and so enable an examination of the processes involved in the valuation of each. Experiment 2 used the same paradigm together with a time pressure manipulation, a method commonly used to restrict available cognitive resources. Experiment 3 was a conceptual replication of Experiment 2, using the same valuation paradigm with a dierent manipulation to restrict cognitive resources: dual task performance.
2. Experiment 1: Valuation paradigm The aim of this experiment was to demonstrate discounting using a new valuation paradigm in which participants made separate valuations for both near and far future events.
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2.1. Method 2.1.1. Participants Seventy students (undergraduates and university summer school students) participated in this experiment. There were 41 females and 29 males with a mean age of 20.2 years (SD 5:1 years). They were recruited using sign-up sheets at an activities fair and in the Psychology Department and were paid $5 for their participation. 2.1.2. Materials and procedure The software used for stimuli presentation and data collection for the valuation task was PsyScope 1.2.4.PPC. The task consisted of a series of trials to value future events and lasted approximately 30 minutes. Participants were ®rst presented with instructions for valuation. Participants were asked: (a) to rate how much they personally valued each event right now; (b) to think of each event as real when making a valuation, and (c) to work steadily through the valuations at their own pace. Following ®ve practice trials, the experimenter inquired whether the participants had any questions before telling them the length of the task, reinforcing the ``think of each event as real'' instruction, explaining where to go upon ®nishing, and leaving the room. Participants then completed the remainder of the task. The 90 valuation trials were presented in six blocks of 15 trials each, with a reminder of the valuation instructions at the start of each block and a rest break of at least one minute between each block. The order of the future events within each block and the order of the blocks were randomized for each participant. In each trial a future event was presented, such as ``Tomorrow you win a 20 inch TV (value $400)''. Participants indicated their value for the future event by using the computer mouse to click on a scale on the screen that was continuous and labeled at four points (Not at all valuable to me, Fairly valuable to me, Very valuable to me, Extremely valuable to me). For each event, one of three future times (``tomorrow'', ``in a month from now'' and ``in a year from now'') was shown alone on the screen for 3 s, then the remainder of the event appeared (e.g., ``. . . you win a 20 inch TV (value $400)'') and both parts then remained on the screen for a further 4 s. Participants were then prompted by a written instruction to move onto the next screen, where the scale was presented, to indicate their value for the event. Participants were also given the opportunity to correct any mistake in their valuation before moving onto the next event trial. Following the valuation trials, participants answered several biographical questions and indicated whether they would be in school in a year's time. The events used consisted of items chosen by the experimenter and undergraduate research assistants as desirable for our participants, such as a weekend ski trip, a stereo, an automatic camera, and a coupon for ice cream. Each event was phrased as a win for the participant and presented with an appropriate dollar value ranging from $15 to $700. The best of these items were randomly assigned to two matched lists of 30 items each, matched for value and type of item (Event Lists 1 and 2). For example, each list included an item of clothing assigned a value of $60. These lists were the primary stimuli in the task, to be labeled with either ``tomorrow'' or ``in a
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Table 1 Descriptive statistics for valuation measures in Experiment 1a Condition
Near (tomorrow)
Far (year)
Distractor (month)
Near±Far
All participants M SD
0.52 0.12
0.45 0.13
0.45 0.13
0.07 0.11
a
N 70. Value measures are given as a proportion of the continuous subjective scale, so they vary from 0 to 1.
year from now''. Thus, the two Future Time conditions, Near Future and Far Future, were manipulated within-subjects, with a list of 30 events for each condition (Event Lists 1 and 2). Event Label was counterbalanced across participants: participants were randomly assigned to Label condition `Tom1Year2 ' where the events of List 1 were labeled ``tomorrow'' and the events of List 2 were labeled ``in a year from now'' or to Label condition `Tom2Year1' where this labeling was reversed. Thirty of the remaining items were used to produce a third matched list for use as distractor items and labeled with ``in a month from now''; ®ve more were selected for use as practice events (two labeled ``tomorrow'', two labeled ``in a year from now'', and one labeled ``in a month from now''). 1 2.2. Results 2.2.1. Excluded and missing data Several participants neglected to complete the biographical questions following the valuation task, giving an N of 57 for age, and an N of 58 for the question asking whether they would be in school next year. 2.2.2. Valuation results The subjective values for each event were calculated as a proportion of the scale, so they varied from 0 to 1. Mean values for each participant were calculated across events for each of the future time conditions, Far Future (``in a year from now'') and Near Future (``tomorrow''), for the distractor events (``in a month from now''), and for the dierences between Near and Far Future values (see Table 1). The Near and Far Future valuation means were submitted to a 2 (Future Time: Near Future, Far Future) 2 (Label: Tom1Year2, Tom2Year1) mixed ANOVA on the valuation scores, with Future Time as a within-subjects variable and Label as a between-subjects variable. This analysis revealed only a signi®cant main eect of Future Time F 1; 68 33:81; P < 0:001; r 0:58 where Far 1
Lists of the events used in these experiments can be obtained from the author.
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Future events were rated as less valuable than the Near Future events, i.e., the events were discounted over time. There were no dierences between the two Label conditions, indicating that Event Lists 1 and 2 did not dier signi®cantly in value on average. 2.2.3. Fatigue analysis A number of participants commented that the valuation task was tiring. Therefore, Near and Far Future valuation measures for participants were also calculated separately for the ®rst and second halves of the study to see if there was any change in discounting over the course of the experiment due to fatigue or practice. A 2 (Future Time: Near Future, Far Future) 2 (Half: First, Second) mixed ANOVA revealed a signi®cant main eect of Future Time as before F 1; 69 33:46; P < 0:001; r 0:57, and a signi®cant interaction of Future Time Half F 1; 69 4:63; P < 0:05; r 0:25. Thus, there was a change in valuation of Near and Far Future events over the course of the study, such that the dierence between the Near and Far Future event valuations, i.e., the discounting, decreased over the experiment. 2.2.4. Biographic variables There were no signi®cant correlations between the valuation measures and biographic variables, i.e., the age, gender, and ``in school next year'' variables. 2.3. Discussion The new valuation paradigm, developed for this set of experiments and using separate valuations on a subjective scale for near and far future events, was successful in capturing the well-known phenomenon that future events are valued less when presented with a far future label than when presented with a near future label. This discounting decreased over the experiment, which may be due to fatigue and, hence, reduced cognitive resources. The eect of cognitive resources on valuation is tested directly in Experiments 2 and 3.
3. Experiment 2: Time pressure experiment Experiment 1 showed that this new paradigm can obtain temporal discounting in the value of the events used, and that, on average, the two lists of events used in the paradigm do not dier signi®cantly in value. In Experiment 2, a time manipulation was used with this paradigm to distinguish between two possible hypotheses that a restriction of cognitive resources will (a) decrease or (b) increase the valuations of far future events, while, in either case, leaving the valuations of near future events unchanged.
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3.1. Method 3.1.1. Participants Participants were 152 university summer school and undergraduate students of mean age 20.8 years (SD 4:3 years). There were 102 females and 50 males. They were recruited using sign-up sheets at an activities fair and in the Psychology Department and were paid $7 for their participation. The time pressure manipulation was between subjects: Time Pressure condition, n 76 (52 female); No Time Pressure condition, n 76 (50 female). 3.1.2. Procedure Participants completed the computer-based valuation task either under Time Pressure or with No Time Pressure, and then answered several manipulation check questions and provided biographical details. 3.1.3. Materials Valuation task. This was the valuation task from Experiment 1 with minor procedural changes to enable the use of a time pressure manipulation. Instructions. The instruction dierences for each time pressure condition were: for the No Time Pressure condition, participants were told they had unlimited time and to take as much time as they liked in answering; for the Time Pressure condition, participants were told that they had a limited time in which to answer, that a counter near the scale would count down from 3 to 1 to indicate the time they had to answer, and that it was important to respond within the time allowed. Trial. During each trial the time label (i.e., ``tomorrow'', ``in a year from now'', ``in a month from now'') was presented for 3 s, then the remainder of the event also appeared, then the scale also appeared on the screen after an additional delay 2 (No Time Pressure delay 5500 ms; Time Pressure delay 500 ms). In the No Time Pressure condition, the event and scale remained until the participants responded; in the Time Pressure condition, the event and scale remained for an additional 1200 ms while a counter below the scale counted down from 3 to 1. Participants' responses were recorded up to 500 ms following the disappearance of the scale to record those participants' responses that came just beyond the allowed time. Responses. (a) Participants were not given a chance to correct their responses; and (b) following each valuation response, participants recentered their mouse position by clicking on a cross in the center of the screen to move to the next trial. 2
This procedure meant that participants in both conditions had equal time to read the time label (3 s), but those in the Time Pressure condition had only a short time to read each item before the scale appeared. As dierent items were used for the near and far future events (Event Lists 1 and 2), it was important that reading time for both event lists used be roughly equivalent. Using number of syllables as a proxy measure of reading time, the events were checked and shown to be roughly equivalent on reading time, (dierence between lists on mean number of syllables, t 58 0:41; ns; r 0:05). Therefore, the lengths of the items were not changed.
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Experimental design. (a) As Experiment 1 had demonstrated that the event lists were not signi®cantly dierent on value assigned by participants, for simplicity only one Label condition was used in this experiment, i.e., the event labels ``tomorrow'' and ``in a year from now'' were not counterbalanced across participants; (b) as in Experiment 1, the items were presented in six blocks of 15 events, however, in this experiment the order of the blocks was not randomized. There were two orders of blocks: blocks 1 to 6 (Forward order) and blocks 6 to 1 (Reverse order). Block order was counterbalanced across participants with equal numbers in each of the two time pressure conditions. 3 Other materials. Following the valuation task, participants completed a questionnaire in which they: (a) rated each of the statements ``I felt time pressure during the experiment'' and ``I was able to think about each question'' on a ®ve-point scale from 1 (Not at all) to 5 (Very much) (see Edland, 1993) for use as manipulation checks; and (b) provided information on their age, gender and student status currently and for next year (i.e., high school, college or not a student). 3.2. Results 3.2.1. Excluded and missing data No data were excluded from the analysis, but two participants failed to complete the questionnaire, and three others missed several items on the questionnaire. 3.2.2. Valuation results Testing the predictions. Given the fatigue eects found in Experiment 1, mean subjective values were calculated for each participant for each half of the study (see Table 2). The valuations were ®rst submitted to a 2 (Pressure: No Time Pressure, Time Pressure) 2 (Block Order: Forward, Reverse) 2 (Future Time: Near Future, Far Future) 2 (Half: First, Second) mixed ANOVA, with Future Time and Half as within-subjects variables and with Pressure and Block Order as between-subjects variables. There were signi®cant main eects of Future Time F 1; 148 86:90; P < 0:001; r 0:61 and Pressure F 1; 148 6:05; P < 0:05; r 0:20. The overall means indicate that discounting occurred, i.e., Near Future events were valued more highly than were Far Future events, and that Time Pressure caused an increase in overall valuation for future events. Contrary to prediction, the Future Time Pressure interaction was not signi®cant. However, the Future Time Pressure Half interaction F 1; 148 6:70; P < 0:01; r 0:21, was signi®cant and was decomposed by submitting the First and Second Half means to separate analyses. For each half, the valuations were submitted to a 2 (Pressure: No Time Pressure, Time Pressure) 2 (Block Order: Forward, Reverse) 2 (Future Time: Near Future, 3
For pragmatic reasons, the two Block Order conditions were not initially randomized across participants. Therefore, for the ®rst half of the sample most participants were in the Forward order condition, while in the second half most participants were in the Reverse order condition.
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163
Table 2 Descriptive statistics for valuation measures for each half of time pressure experiment (Experiment 2)a Condition First Half No time pressure M SD Time pressure M SD Second Half No time pressure M SD Time pressure M SD
Near (tomorrow)
Far (year)
Distractor (month)
Near-Far
0.52 0.15
0.42 0.12
0.46 0.14
0.10 0.11
0.54 0.12
0.48 0.12
0.47 0.14
0.06 0.11
0.52 0.16
0.45 0.13
0.46 0.17
0.07 0.13
0.58 0.13
0.50 0.14
0.48 0.14
0.08 0.13
a
No time pressure n 76. Time pressure n 76. Value measures are given as a proportion of the continuous subjective scale.
Far Future) mixed ANOVA, with Future Time as a within-subjects variable and with Pressure and Block Order as between-subjects variables. For the First Half means, this analysis revealed signi®cant main eects of Future Time F 1; 148 88:71; P < 0:001; r 0:61 and of Pressure F 1; 148 4:12; P < 0:05; r 0:16. In addition, the predicted Future Time Pressure interaction F 1; 148 4:88; P < 0:05; r 0:18 was signi®cant for this Half. Focussed contrasts on these means, using the between eects error term from this ANOVA, showed that, as predicted, the eect of Pressure on valuation was signi®cant for the Far Future event means only (Near Future, t 148 0:70; ns; r 0:06; Far Future, t 148 2:16; P < 0:05; r 0:17), where the Far Future event valuations increased with time pressure. 4 For the Second Half means, the same ANOVA analysis revealed only signi®cant main eects of Future Time F 1; 148 51:64; P < 0:001; r 0:51 and of Pressure F 1; 148 7:05; P < 0:01; r 0:21. Other measures. The dummy-coded gender variable was generally positively correlated with valuation indicating that females gave items higher valuations. There were no signi®cant correlations between the age and student status variables and the valuation measures. For the manipulation checks, participants in the Time Pressure condition reported feeling signi®cantly more time pressure, (t 145 5 106 ; P < 0:001; r close to 1) and they reported having signi®cantly less time to
4 Further analyses of valuations for individual events across the Pressure conditions showed that plausible alternative explanations for the change in valuation of Far Future events (such as participants using the mouse more wildly under time pressure or making responses closer to the middle of the scale) were not supported by the data.
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think about each valuation question (t 145 5 106 ; P < 0:001; r close to 1) than participants in the No Time Pressure condition. 3.3. Discussion Thus, as predicted, time pressure caused a change in the valuation of far future events but had no signi®cant eect on the valuation of near future events. However, this predicted interaction occurred only in the ®rst half of the experiment. The change for far future events was an increase in valuation. These ®ndings suggest that the valuation of near future events is relatively eortless and requires fewer cognitive resources than the valuation of far future events, which is more eortful and uses more cognitive resources. This cognitive work leads people to reduce their valuations of far future events. As the main hypothesized interaction was found only in the ®rst half of the study, it is important to replicate this result. Therefore, Experiment 3 used a dierent manipulation to restrict cognitive resources as a conceptual replication of Experiment 2. In addition, Experiment 3 used a within-subjects design in an attempt to increase the power of the experiment.
4. Experiment 3: Tone task experiment 4.1. Method 4.1.1. Overview In this replication of Experiment 2, a concurrent tone monitoring task was used to restrict cognitive resources. Thus, the two Cognitive Load conditions, Monitoring and No Monitoring, were manipulated within-subjects. 4.1.2. Participants Participants were 101 undergraduate students (56 female, 45 male) with a mean age of 20.0 years (SD 3:5 years). They were recruited using sign-up sheets in the Psychology Department and were paid $7for their participation. 4.1.3. Materials and procedure Valuation task. The valuation task was very similar to that used in Experiments 1 and 2, with some improvements intended to increase the power of the paradigm, including: (a) shortening the task, and (b) replacing a number of items with new ones. Given the fatigue eects found in Experiments 1 and 2, the valuation task was shortened for the current study from 6 to 4 blocks of 15 items using 2 blocks of items for each condition. Also, the distractor items (i.e., those with time label ``in a month from now'') were removed. Thus, for each of the two cognitive load conditions there were 2 blocks of 15 items each, which included 15 Near Future items and 15 Far
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Future items. This task, therefore, used 30 Near and 30 Far Future items as before, but contained in 4 rather than 6 blocks of 15 items. A number of items on the matched event lists for the valuation task were reorganized (into dierent matched pairs) or removed based on their valuations by participants in Experiments 1 and 2. Replacement items came from the distractor list or were newly composed. The items from each pair were then randomly assigned to two Event Lists (Lists 1 and 2) which were to be labeled ``tomorrow'' or ``in a year from now''. The 30 matched pairs of items were randomly assigned to the ®rst or second half of the experiment with the constraint that the mean of assigned dollar values of items in the ®rst half be equal to that for the items in the second half. Within each half, the 30 items were randomized into 2 blocks of 15 items, with the constraint that the number of items labeled ``tomorrow'' or ``in a year from now'' was approximately equal in each block. After each block, participants had a 1-minute rest break. Valuation trials were very similar to those in the previous valuation task with some changes in the timing (see the No Time Pressure condition of Experiment 2). In these trials the time appeared for 3 s, then was joined by the remainder of the event for a further 3 s, when the scale also appeared and remained until the participants responded, or for a further 12 s, whichever was longer. After 9 s of this 12 s response period a counter appeared to count down the last 3 s. Responses were recorded up to 500 ms following the end of the trial. Tone task. The tone task was based on one used by Gilbert and Silvera (1996). The task used three tones at high, medium and low frequencies played in four randomized series at a rate of approximately 1.5 tones per second and recorded on a compact disk as four separate tracks. For each block of valuation trials the experimenter played a dierent track, stopping the track when participants ®nished the block (typically around 3 minutes for each block). The tracks were always played in the same order. For the Monitoring condition of the experiment, participants were required to monitor the tones for a speci®c pattern of tones, High then Low, and say ``yes'' every time they heard it. The experimenter recorded participants' responses. For the No Monitoring condition of the experiment, the tracks were played as in the Monitoring condition, but participants were not required to monitor the tones. The experimenter remained in the room with the participants for the entire valuation task. Instructions to participants. Participants were told they would be completing two tasks simultaneously, a valuation task and a tone-monitoring task, that both tasks were equally important, and that we cared about their performance on both tasks. For the valuation task, participants were asked to indicate the value to them of each event right now, to use the scale provided to indicate their valuations, and to try to think of each event as real for each valuation. They were told they would have lots of time in which to answer, but, to help them judge how much time they had, a counter would appear at the bottom of the screen towards the end of each trial to indicate the remaining time. Participants were given four practice trials. Next, for the tone task, participants were ®rst familiarized with the tones, then they were told about the tone task and given a 1 minute practice on monitoring and
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responding to the tones. Participants were then instructed that they would be doing the two tasks they had just practiced at the same time, and that for half the study they would do the tone task as they had practiced it while for the other half they would hear but would not have to monitor the tones. Participants then completed the experimental trials. At the beginning of each half of the study, further instructions reminded participants how to make their valuations and whether or not to monitor the tones, and, for the Monitoring condition, re-emphasized the equal importance of participants' performance on both tasks. Organization of stimulus presentation for tasks. For the valuation task, participants were randomly assigned to one of two Load Order conditions, Monitoring First or No Monitoring First, to counterbalance the order of the Monitoring and No Monitoring conditions. Item Order was counterbalanced across participants such that for half of the participants, Item Blocks 1 and 2 appeared in the ®rst half of the experiment (Item Order A) and for the remaining participants, Item Blocks 1 and 2 appeared in the second half of the experiment (Item Order B). 5 Within each half, the order of presentation of the two blocks and the order of presentation of the items within each block were randomized across participants. Following the valuation and tone tasks, the participants completed two questionnaires: (a) a manipulation check in which participants rated how much they were able to think about each valuation question on a scale of 1 (Not at all) to 5 (Very much) both when they had to monitor the tones and when they did not have to monitor the tones; and (b) a biographical information sheet. 4.2. Results 4.2.1. Excluded and missing data Three participants failed to follow the tone task instructions correctly so their data were excluded from the analysis. Eleven participants were excluded due to extreme performance scores on the tone task (see Section 4.2.2 below). This left the data of 88 participants in the analysis. In general, participants each completed 60 valuations of future events during the task. However, 25 participants were missing between 1 and 4 of these 60 valuations due to procedural problems, i.e., minor computer problems, or participants overrunning time on a valuation trial. 4.2.2. Tone task For the tone task, a signal detection analysis approach was used to measure participants' accuracy on the tone task. For each participant, the proportion of Hits and False Alarms (FAs) was calculated for the half of the experiment for which they monitored the tones (using the overall proportion of Hits and FAs summed across 5
For pragmatic reasons, the data for one Item Order condition (i.e., Item Order A) were collected prior to the data for the other Item Order condition (i.e., Item Order B). Therefore, assignment to these conditions was not random.
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Table 3 Descriptive statistics for valuation measures for tone task experiment (Experiment 3)a
a
Condition
Near (tomorrow)
Far (year)
Near±Far
No Monitoring M SD
0.54 0.14
0.44 0.15
0.10 0.13
Monitoring M SD
0.55 0.14
0.47 0.15
0.07 0.11
N 88. Value measures are given as a proportion of the continuous subjective scale.
the two relevant valuation task blocks). The mean Hit and FA proportions were calculated separately for participants in the two Load Order conditions, as they were monitoring dierent series of tones. These means were then used to identify participants with extreme performance scores (i.e., those with a score two or more standard deviations from the mean for their group). 4.2.3. Valuation results Testing the predictions. Mean valuations and a mean valuation dierence score were calculated for each participant in each experimental condition (see Table 3). Valuations for Near and Far Future events were submitted to a 2 (Cognitive Load: Monitoring, No Monitoring) 2 (Future Time: Near Future, Far Future) 2 (Load Order: Monitoring First, No Monitoring First) 2 (Item Order: Item Order A, Item Order B) mixed ANOVA, with Cognitive Load and Future Time as within-subjects variables and with Load order and Item Order as between-subjects variables. There were signi®cant main eects of Cognitive Load F 1; 84 8:48; P < 0:005; r 0:30, where the Monitoring condition caused an increase in valuation of future events, and Future Time F 1; 84 52:25; P < 0:001; r 0:62, where Near Future events were valued higher than Far Future events. The predicted Cognitive Load Future Time interaction 6 was signi®cant F 1; 84 7:71; P < 0:01; r 0:29. Focussed contrasts for each Future Time condition showed that the Monitoring condition caused a signi®cant change in the Far Future events only (Near Future, t 87 1:05; ns; r 0:11; Far Future, t 87 3:20; P < 0:001; r 0:32. This change was an increase in valuation, replicating the results in Experiment 2. Manipulation check. Participants' ratings on the follow-up questionnaire indicated that they were able to think about each valuation question more in the No
6
This interaction was quali®ed by a signi®cant four-way Cognitive Load Future Time Load Order Item Order interaction. Decomposing this using ANOVAs and focussed contrasts on Future Time for each Load Order resulted in a very similar pattern of results to those reported here.
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Monitoring condition (M 4.86, SD 0:35) than in the Monitoring condition M 3:10; SD 0:80; t 86 20:88; P < 0:001; r 0:91. Biographical variables. As in Experiment 2, gender was generally positively correlated with valuation, with a signi®cant correlation with the Near Future valuations in the No Monitoring condition, indicating that female participants gave higher valuations to events than did male participants. Age showed several signi®cant negative correlations with value, suggesting the older participants gave the events lower valuations, perhaps re¯ecting the speci®c appeal of these items to younger students, who may also be less likely to own them already. 4.3. Conclusion The main ®ndings of Experiment 3 replicated those of Experiment 2. There was an interaction between the restriction of cognitive resources manipulation and the valuation of events in the near and the far future. The within-subjects analysis showed that cognitive load had no eect on the valuation of near future events but caused an increase in the valuation of far future events. The eect size of the Cognitive Load Future Time interaction in this experiment was double that in Experiment 2, demonstrating the power of using a within-subjects approach for this task. 5. General discussion In a series of three experiments, the present research investigated the eect of the restriction of cognitive resources on the valuation of near and far future events. Experiment 1 established a new paradigm designed to assess separately the processes involved in the valuations both of near and of far future events. Experiments 2 and 3 used manipulations to restrict available cognitive resources and examine the eect on valuation. The results of these studies provided consistent support for the hypothesis that the valuations of near future events are unaected by the restriction of cognitive resources, while the valuations of far future events are increased by this manipulation. The eect was shown in two experiments, each of which used a dierent manipulation to restrict cognitive resources: time pressure in Experiment 2 and a simultaneous task in Experiment 3. These ®ndings suggest that the psychological processes underlying the valuations of near future events are dierent from those underlying far future events. For far future events, the ®ndings suggest that valuing a far future event requires more cognitive resources and that this leads to a reduced valuation of the event. When people cannot think this way about the far future event, their ®nal valuations increase and become more like their valuations for near future events. The events in these studies are discounted over time such that they are valued less when they occur later in time. Therefore, the direction of change in valuation suggests that cognitive elaboration involves taking the time of the event into account. Given the longstanding view of economists that the valuations people give for far future events are
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as low as they are because people fail to expend sucient cognitive eort and resources in making their valuations, a manipulation restricting available cognitive resources should decrease the valuations. Instead, the change in valuation, although small, was in the opposite direction. In other words, the ®nding in this series of studies that reducing time and cognitive resources for valuation results in less discounting does not support the assumption in the literature that if people had more time and used more eort to think about their future valuations, they would be more likely to act `rationally' and reduce discounting. On the contrary, in these studies discounting is reduced when less time and eort are expended in the service of future valuations. This ®nding may prompt others to examine this assumption more carefully. The ®nding of a change in value for far future events with restriction of cognitive resources suggests that making valuation judgments for far future events involves systematic processing. For the near future events, the valuations were unchanged by the restriction of cognitive resources suggesting that making these valuations is more eortless and therefore, may involve heuristic processing. A heuristic likely to be used for these preference-based events is the feelings-as-information heuristic (Schwarz & Clore, 1996). In making liking or aective judgments (e.g., ``how much do I want a TV''?), people are particularly inclined to use their feelings as information. In conditions of restricted cognitive resources in both Experiments 2 and 3, valuations of far future events were still lower than those for near future events, although the dierence in valuation was less. This suggests that the manipulations were insucient to prevent all systematic processing allowing some incorporation of time into the far future event valuations and hence lower valuations. The ®nding that dierent amounts of cognitive resources are involved in the valuation of near and far future events, suggesting that dierent processes may be used in these valuations, may have implications for other research in discounting. Speci®cally, this may assist in understanding why people show hyperbolic discounting, i.e., where discounting rates initially drop o very rapidly as the time to the future event increases and then change much less rapidly. This dramatic change in valuation between the near and the more distant future may correspond to a qualitative change in how valuations are made for events at more distant future times. The literature on `heuristic' versus `systematic' information processing (Chaiken & Trope, 1999) and recent ®ndings on how people mentally represent some near and distant future events (e.g., Liberman & Trope, 1998) might help us to understand dierences in how people value outcomes to be obtained sooner versus later. Acknowledgements This article is based on the author's doctoral dissertation. I thank, Daniel Gilbert for his important contributions at all points in this research; David Laibson, Dan Simons, Karen Ruggiero, Je Polzer and Drazen Prelec for their valuable comments
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and advice; the Happy Lab members, past and present, for their suggestions and insights; and the undergraduate research assistants who were so important in the execution of these studies. I gratefully acknowledge the ®nancial support of the Maria E. McMaster Bequest at Harvard University.
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