discounting

Eric ChouShow me the money.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.

Photo by Joe Angeles/WUSTL PhotoAre gamblers impulsive?Why do people engage in behaviors they know are harmful to them in the long run? Why do we give in to that incredible chocolate cake even though we’re trying to lose weight and stay fit? The answer, suggests a recent study on the psychology of gambling and impulsive behavior, is a simple economic phenomenon known as discounting. While good health may be its own reward, research suggests that the value of that reward diminishes as it’s delayed; and the longer it’s delayed, the less it controls your present behavior. Although gamblers may deserve their reputations as notorious risk-takers, they often do better than non-gamblers at delaying gratification to maximize long-term rewards.