Psychological Connectedness and Intertemporal Choice

People tend to attach less value to a good if they know a delay will occur before they obtain it. For example, people value receiving $100 dollars tomorrow more than receiving $100 in 10 years. We explore one reason for this tendency (due to Derek Parfit, 1984): In terms of psychological properties, such as beliefs, values, and goals, the decision maker is more closely linked to the person (his or her future self) receiving $100 tomorrow than to the person receiving $100 in 10 years. For this reason, she prefers her nearer self to have the $100 than her more remote self. Studies 1 and 2 show that the greater the rated psychological connection between two parts of a participant’s life, the less she discounts future monetary and nonmonetary benefits (good days at work) over that interval. In Studies 3-5, participants read about characters who undergo large life-changing (and connectedness-weakening) events at different points in their lives, and then make decisions about the timing of benefits on behalf of these characters. All five studies reveal a relation between perceived psychological connectedness and intertemporal choice: Participants prefer benefits to occur before large changes in connectedness, but prefer costs to occur after these changes.