Measurement Precision versus User Fatigue: Temporal Discounting in Politics

Many important policy choices involve intertemporal tradeoffs. For example, reducing greenhouse gas emissions entails raising energy costs sooner for the benefit of limiting catastrophic climate change decades in the future. Intertemporal choice focuses attention on how people discount future costs and benefits. Discounting describes a change in the relative valuation of an outcome that occurs because the timing of the outcome changes.

Measuring discounting is challenging for survey respondents because it involves a long series of questions asking about intertemporal allocations (of money or collective benefits or costs). Typical measurement approaches used in behavioral economics can involve dozens of such user choices. These questions vary in ways important for the calibration of the underlying measurement model, but the variation may appear minor, confusing, or repetitive to respondents. The measurement model we use here cannot provide discounting estimates even for some respondents that answer all questions. Discounting estimates based on CTB require completion of a large set of survey questions, non-constant responses, and some degree of monotonicity.

This paper examines the tradeoff between using a large number of questions (to measure discounting with high precision) and avoiding respondent fatigue or confusion (to optimize data quality). We separately measure discounting and smoothing preferences, both of which may cause impatient intertemporal tradeoffs. To isolate discounting, we use a measurement approach that controls for other processes that might affect intertemporal comparisons, including smoothing preference. Aiming to understand choice between present and future alternatives, behavioral economists have devoted a lot of attention to describing the extent to which people discount future benefits. One measurement strategy is the Convex Time Budget (CTB) approach developed by Andreoni and Sprenger (2012). It controls for the diminishing appeal of more and more of the same thing at the same time (which reveals the smoothing preference) in order to isolate the extent of discounting in intertemporal choice.