Increased likelihood of selection of decision options whose positive consequences occur at an earlier date in the future, i.e., closer to the immediate present. This effect diminishes as the reward/utility alternatives occur further out in the future.
Source: Behavioral Science Lab, 2017
Time discounting research investigates differences in the relative valuation placed on rewards (usually money or goods) at different points in time by comparing its valuation at an earlier date with one for a later date (Frederick et al., 2002). Evidence shows that present rewards are weighted more heavily than future ones. Once rewards are very distant in time, they cease to be valuable. Delay discounting can be explained by impulsivity and a tendency for immediate gratification (see self-control), and it is particularly evident for addictions such as nicotine (Bickel et al., 1999).
Hyperbolic discounting theory suggests that discounting is not time-consistent; it is neither linear nor occurs at a constant rate. It is usually studied by asking people questions such as “Would you rather receive £100 today or £120 a month from today?” or “Would you rather receive £100 a year from today or £120 a year and one month from today?” Results show that people are happier to wait an extra month for a larger reward when it is in the distant future. In hyperbolic discounting, values placed on rewards decrease very rapidly for small delay periods and then fall more slowly for longer delays (Laibson, 1997). (See also present bias.)
Research has shown different ways to reduce discounting, such as primed future focus (Sheffer et al., 2016), mental simulation of future experiences (e.g. Stein et al., 2016), and interactions with visual representations of one’s future self (Hershfield et al., 2011).
Source: Behavioral Economics