Age, income, and the discounting of delayed monetary losses

Objectives: Previous studies failed to find age-related differences in the discounting of delayed, monetary losses, potentially due to their failure to examine the effects of income and their use of relatively small loss amounts. Accordingly, the present study examined the effects of age and income on the degree to which adults discount a broad range of loss amounts. Methods: A total of 594 participants (age range: 20 to 80; income range: <$30,000 to >$100,000) performed an adjusting-amount discounting task. Delayed loss amounts were $150, $2,500, and $30,000; delays ranged from 1 month to 10 years. Results: Older participants discounted losses less steeply than younger participants. As expected, young adults’ discounting was unrelated to income, but among participants 35 years and older, those with higher incomes discounted less steeply than those with lower incomes. Analyses revealed a quadratic effect of age, reflecting the decrease in discounting between ages 35 and 65, after which discounting remained relatively stable until the age of 80. Additionally, age had much less of an effect when the delayed payments were small. Discussion: Contrary to the socioemotional selectivity theory, older adults discounted delayed monetary payments less steeply than younger adults, leading to decisions that minimized long-term losses. Age differences increased with the amount of loss, which may explain the failure to find significant relations between age and the discounting of delayed losses in studies that used much smaller amounts. Our results suggest that the decrease in discounting with income is a general finding observed with both delayed gains and losses.