As older Americans tap into their retirement funds, they often face a choice between receiving a smaller, immediate payout and a larger, future payout. How does memory affect these "intertemporal" choices?
Summary
This study, part of a two-year project, examines whether decline in episodic memory and structural changes in the medial temporal lobe system in older adults are associated with temporal discounting, i.e., overvaluing the present and undervaluing the future. The first phase of the research explored whether a simple psychological manipulation – retrieving positive autobiographical memories – can reduce discounting in older adults and potentially compensate for age-related decline.
Key Insights
- People tend to prefer immediate payouts over delayed payouts, even when the delayed payout is much larger.
- The rate at which people discount future rewards varies widely and may depend on context, but most people exhibit some degree of temporal discounting.
- Steep temporal discounting is associated with smoking, gambling, excessive credit card borrowing and other risky behaviors.
- Retrieving positive memories before making intertemporal choices does not appear to affect temporal discounting in cognitively normal older adults.
