Sozial-, Wirtschafts- und Entscheidungspsychologie


Social, Economic, and Decision Psychology Blog

Archive for June, 2018

age differences in intertemporal choice

David Richter and I have a new paper out on age differences in intertemporal choice. We analyzed data from the German Socio-economic panel asking individuals between 18 and 96 years of age to decide between a smaller-sooner amount, say 200 EUR today, or a larger-later amount, say ca. 310 EUR in 1 year. Our results suggest (at least for longer delay conditions; the blue lines in the figure above) a weak U-shaped association between age and “patience”, with young and older adults being less patient (i.e., preferring the immediate payment more often) relative to middle-aged adults (the red line represents the effect for a 1-month delay). We conclude that future work needs to consider time horizon more closely when investigating the adult development of intertemporal choice (title, abstract, and reference below).

Age Differences in Intertemporal Choice: U-Shaped Associations in a Probability Sample of German Households

To describe adult age differences in intertemporal choice, we analyzed data from 1,491 participants who completed an incentivized monetary intertemporal discounting choice task involving different conditions (e.g., time delay of 12 months vs. 1 month). Respondents completed a number of other survey measures including behavioral measures of cognitive ability and self-reports concerning health, financial security, and demographic characteristics. We found significant quadratic (U-shaped) effects of age in task conditions involving 12-month (but not 1-month) delays, with middle-aged adults proving most patient relative to younger and older adults. The age effects found were robust to the inclusion of covariates, including cognitive ability, that have been suggested to underlie individual and age differences in time preferences. The results favor theories that propose nonlinear effects of age-related processes or multiple mechanisms underlying the development of intertemporal choice across the life span and suggest that it is important to consider long time delays and wide age ranges when trying to understand age differences in time preferences.

Richter, D., & Mata, R. (2018). Age differences in intertemporal choice: U-shaped associations in a probability sample of German households. Psychology and Aging. http://doi.org/10.1037/pag0000266

Barcelona GSE Summer Forum

The Barcelona Graduate School of Economics is hosting a summer forum involving several workshops on many interesting topics in economics/behavioral sciences.

I’m attending and presenting at the workshop on “External Validity, Generalizability and Replicability of Economic Experiments” that combines a set of presentations from economists and psychologists discussing growing concern about the external validity and generalizability of economics experiments to real-world contexts. You can find the program here.

Tobin Hanspal

This final speaker in this semester’s SWE Colloquium series is Tobin Hanspal, Assistant Professor, Research Center SAFE, University of Frankfurt, who visits on Thursday 7 June.

Market Expectations and Investment Behavior: The Case of the Disposition Effect

 We study the relationship between market expectations, preferences, and investment behavior. We analyze individuals’ portfolio investments alongside a laboratory experiment eliciting incentivized subjective beliefs, risk preferences, and financial sophistication. Our sample consists both of investors who previously exhibited a high degree of the disposition effect as well as a control group. We find that disposition-prone investors expect a market return on a balanced portfolio of assets to be approximately 5 percentage points greater than other investors, an economically significant effect relative to a mean expected return of 14%. Moreover, we find that elicited beliefs predict future investment behavior, including the incidence of the disposition effect, as well as risk taking in general. Surprisingly, our characterizations of risk preferences are not related to the incidence of disposition effect – neither in the past nor after the experiment. Our results suggest that optimism or differences in expectations may be important aspects of the disposition effect – and thus potentially for many other documented behavioral investment biases

Symposium on the Aging Lexicon

The Center for Cognitive and Decision Sciences is hosting a symposium on The Aging Lexicon, June 7-8! We will have a number of researchers from around the world coming to Basel to discuss current knowledge about how development and aging shape the content and structure of information in our minds.

One goal of this workshop is to understand how current mathematical and neural theories of information representation can account for adult age differences found in the literature – which we hope will help guide future conceptual and empirical work in this area! 

The symposium is funded by SNSF and you can find additional information, including a list of attendants here.