Review of Behavioral Economics > Vol 7 > Issue 1

Social Discounting: Preference Reversals and Links with Temporal Discounting

Jerzy Osinski, University of Warsaw, Poland, Adam Karbowski, SGH Warsaw School of Economics, Poland, Jan Rusek, University of Warsaw, Poland,
Suggested Citation
Jerzy Osinski, Adam Karbowski and Jan Rusek (2020), "Social Discounting: Preference Reversals and Links with Temporal Discounting", Review of Behavioral Economics: Vol. 7: No. 1, pp 65-77.

Publication Date: 25 Mar 2020
© 2020 J. Osinski, A. Karbowski and J. Rusek
Behavioral economics,  Environmental economics,  Public economics,  Economics theory: Microeconomic theory,  Behavioral decision making
JEL Codes: D9
Social discountingTemporal discountingInterpersonal choiceIntertemporal choicePreference reversals


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In this article:
1. Introduction
2. Study 1
3. Study 2
4. Conclusions


The purpose of this study is twofold. First, we test the hypothesis that the preference reversal occurs in social discounting. Second, we investigate the relationship between social discounting and temporal discounting. In the conducted experiments, participants made hypothetical choices between a smaller monetary reward for a less socially distant beneficiary and a larger monetary reward for a more socially distant beneficiary (social discounting procedure), and between a smaller immediate monetary reward and a larger delayed monetary reward (temporal discounting procedure). The obtained results show that the rate of social discounting decreases as one moves beneficiaries towards more distant positions on the social distance scale, hence the preference reversal in social discounting has been observed. Further, the significant positive correlation between the rates of social and temporal discounting is reported, but only for women.