It’s been said by everyone from Cyndi Lauper to Alex Rodriguez that “money changes everything.”
Now psychologists at Washington University in St. Louis have published a paper to support that claim. Studying delayed gratification and risk, the psychologists found that people are more likely to wait on collecting full payment for a non-consumable monetary reward than they are for any of three consumable rewards ? beer, candy and soda.
Leonard Green, Ph.D., professor of psychology, and Joel Myerson, Ph.D., research professor of psychology, in Arts & Sciences at Washington University, along with their graduate students, Daniel D. Holt and Sara J. Estle, study the effect that delay to receipt of a reward has on the subjective value of that reward.
Their research looks at factors that affect the degree of self-control that people exercise, both the factors that increase the degree of self-control and those that increase impulsive decision-making.
More specifically, the researchers recently found that delayed monetary rewards are discounted less steeply than rewards that are directly consumable, such as soda.
For instance, if the average person were given the choice between an amount of soda right away and $50 worth of soda that they would have to wait six months to get, most people would take significantly less than $50 worth of soda now (discounting the value of the delayed soda considerably).
In contrast, the person given a choice between an amount of money right now and $50 in six months would not discount the delayed money nearly as much as the soda.
Their paper reporting this research was published in the January 2007 edition of Psychological Science. The work has far-reaching implications for many fields, including marketing, economics and the psychology of self-control.
Green and Myerson found that delayed money was discounted less steeply than beer, candy and soda, which were all discounted at approximately the same rate. Additionally, smaller delayed rewards of all types were discounted more steeply than corresponding larger amounts of rewards.
Interestingly, if the rewards are probabilistic, meaning that there is only a chance that one will get the reward (say, a 50 percent chance), then there is no difference in the rates at which money, candy, soda and beer are discounted.