Journal of Neuroscience, Psychology, and Economics 2009, Vol. 2, No. 2, 71–74
© 2009 American Psychological Association 1937-321X/09/$12.00 DOI: 10.1037/a0017695
Intertemporal Choice: Neuronal and Psychological Determinants of Economic Decisions Marc Wittmann and Martin P. Paulus University of California–San Diego and Veterans Affairs San Diego Healthcare System This introductory article provides a short overview of empirical and theoretical articles presented in the special issue on psychological and neural models of intertemporal decision making, which is divided into 2 parts. The first part consists of contributions presenting different models of intertemporal choice. These contributions provide an overview of current conceptualizations; that is, providing several psychological and neural frameworks, investigating how memory processes are related to the anticipation of time, and showing how the perception of time underlies our decisions about the future. A final article deals with factors that influence choices on environmental policies where the consequences of decisions are delayed by decades or more. The second upcoming part is concerned with functional neuroimaging of intertemporal decision making. Two reviews of studies in neuroimaging and 2 empirical articles examine the questions of which brain regions (and associated functions) are involved in deciding on options with different temporal consequences. We hope this volume will be conducive in developing a better understanding of intertemporal decision making as part of complex sets of neural processes as well as psychological factors that include cognitive reasoning, emotional states, and the interconnected perception of time. Keywords: delay discounting, intertemporal choice, time perception, neuroimaging
Intertemporal choices involve a tradeoff between costs and benefits that occur over time. Decisions on options often involve competing short-term versus long-term outcomes, such as spending money on a luxury product now or investing that money for the future. The delay until the beneficial higher outcome of the investment can be obtained is seen as a cost and is weighed against the benefits of the possible outcomes (e.g., possessing the automobile now or greater financial power in a few years). Intertemporal decisions affect all aspects of life; they determine the success in achieving life goals both personal and career related. For longterm success, one has to voluntarily postpone impulsive urges for immediate gratification and persist in goal-directed behavior to achieve positive outcomes that are delayed in future. Be-
cause time-related decisions underlie all aspects of life, one must cover fields from behavioral economics to psychology, medicine, and neuroscience. Therefore, research studies assess consumer behavior related to the choice of product delivery times, kids’ choices between a marshmallow now and two marshmallows in a few minutes, or health-related decisions of patients in a clinical context. These investigations have started to identify psychological and neuronal mechanisms that determine intertemporal choice. In recent years, functional magnetic resonance imaging (fMRI) studies have begun to examine the neural correlates of intertemporal decisions in humans, revealing distinct brain regions activated when subjects are more present orientated and choose immediate options versus when they are more patient and show self-controlled behavior. Here, the ongoing debate is whether two distinct and competing brain systems underlie impulsive and self-controlled behavior or whether one system computes the subjective delay and the value of the outcomes. Moreover, the perception of time has recently become the focus of attention. Because individuals have to make decisions based on predictions of rewards on different
Marc Wittmann and Martin P. Paulus, Department of Psychiatry, University of California–San Diego, La Jolla, California; Veterans Affairs San Diego Healthcare System, San Diego, California. Correspondence concerning this article should be addressed to Marc Wittmann, Department of Psychiatry, University of California–San Diego, 9500 Gilman Drive, La Jolla, CA 92093-9116. E-mail:
[email protected] 71
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time scales, the dimension of time is an essential entity when making everyday decisions; that is, the subjective perception of time as related to the delay of an outcome influences choice behavior (Wittmann & Paulus, 2009). This special issue on intertemporal choice aims at highlighting recent developments and challenges in neuroscience, psychology, and economics to understand how intertemporal choices are made. Takahashi (2009) presents building blocks for a unified understanding of the neuroeconomics of intertemporal choice. In his contribution, behavioral and mathematical models of delay discounting as well as findings on the underlying neural substrates and the neurochemistry of observed behavior are presented. This is done within the framework of an idea that time perception guides intertemporal choice. Specifically, this contribution includes considerations of both impulsivity and dynamic inconsistency, which could in the future be addressed with the q-exponential model of discounting, which is presented and discussed in this article. Kim and Zauberman (2009) examine the impact time perception has on intertemporal decision making. Recent models try to explain how the subjective experience of time leads to hyperbolic discounting because people anticipate duration not linearly but logarithmically (Takahashi, 2005; Zauberman, Kim, Malkoc, & Bettman, 2009). With their model and experiment, Kim and Zauberman (2009) empirically confirm the notion that the perception of time has an influence on temporal discounting. They are able to show that the perception of anticipated delay is a reliable predictor of the amount of discounting; that is, the subjective estimation of a shorter or longer delay corresponds to the degree of hyperbolic discounting. Yi, Landes, and Bickel (2009) investigate the hypothesis that past and future are psychologically interconnected; that is, the ability to project into the future is related to mental representations of the past. Their analysis of participants’ choice behavior in intertemporal tasks with future and past events included the fit of six single-parameter models. Out of these, the exponential power model provided the best fit for both future and past discounting. Moreover, correlations between the different future and past conditions were mostly significant, indicating that the two time perspectives are strongly
related. The authors discuss their findings in the context of evidence supporting an overlap of neurobehavioral processes involved in anticipation and memory. Decisions on environmental policies such as those concerned with climate change involve consequences that are decades or centuries away. Strategies to fight global warming typically have high up-front costs with benefits becoming visible only many years later. Time scales under question go far beyond the election cycles of politicians and the duration of their (and our) lives—they concern future generations. Carson and Roth Tan (2009) argue that if standard constant discount rates commonly used for financial transactions would be applied for these far-distant future benefits, their present (discounted) value would be negligible. To date, there is no consensus on which parameter values one should use for evaluating the discount rate of long-lived environmental issues. Carson and Roth Tan highlight various approaches to solve this issue and also show the intra- and interindividual heterogeneity of personal preferences with time scales of a life time (e.g., when purchasing products with different efficiencies or, as currently under hot debate in the United States, when deciding on health insurance issues). They argue that an understanding of the diverse influences on personal decisions—ranging from beliefs, attitudes toward different commodities, wealth, and education— will predict the choice and support of environmental decisions. The second part of this special issue provides two reviews of the current functional neuroimaging literature and two novel empirical studies on the neural basis of intertemporal choice. In their summary, Monterosso and Luo (in press) review the current debate on whether there are two value systems in a person that compete with each other over decisions in life; that is, one impulsive agent favoring a cigarette now and one more self-controlled agent favoring abstinence of smoking. Bound to act on different time scales, gratification now versus long-term interest, some neuroimaging results (McClure, Ericson, Laibson, Loewenstein, & Cohen, 2007; McClure, Laibson, Loewenstein, & Cohen, 2004) have implicated an interpretation that the exposure to immediately gratifying rewards activates the— hot, emotional—limbic system and exposure to choices of rewards that are delayed
SPECIAL ISSUE: INTRODUCTION
leads to the activation of— cold, rational— fronto-parietal areas of the brain. Monterosso and Luo (in press) highlight competing conceptualizations by referring to studies that show that specific structures of the brain represent the subjective value of rewards irrespective of delay (Kable & Glimcher, 2007). Moreover, they make a strong case in arguing that the impact of psychological framing in a given situation influences the perceived value and the individual’s preferences for rewards. In summary, this contribution proposes a single process that includes cognitive and affective components that lead to our preferences as a function of time/ delay. Most human neuroimaging studies on intertemporal choice have investigated choices between either hypothetical or real rewards with delays ranging in the minutes (real rewards) to years range (hypothetical rewards). Because there is evidence that different temporal processing mechanisms operate on separate time scales (Wittmann, 2009), and intertemporal choices and their underlying processes depend on subject’s consideration of the temporal delay, Wittmann, Lovero, Lane, and Paulus (in press) assessed whether intertemporal decisions with delays in the range between 2 and 64 s would lead to similar brain activations found in delay discounting tasks with reward delays with longer wait times. Complementing earlier studies with longer delays, they found activation in the bilateral insula and striatum when subjects chose between different reward delays in the seconds’ range, as well as when the consequences of choices were received after the end of the delays they had to wait through. The anterior insula and the striatum have long been identified as being associated with the anticipation of rewards and expectation of events, functions that are also inherently involved in the temporal anticipation of delay. Carter et al. (in press) provide a further overview regarding functional neuroimaging studies on delay discounting. To pin down the regions of the brain consistently found in studies of intertemporal choice, they used an activation estimation method on 13 published studies showing two main active networks: (1) a network of areas known to be sensitive to value (ventral striatum, medial prefrontal cortex, orbitofrontal cortex, anterior insula, the posterior cingulate cortex); and (2) regions associated
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with a core network of processes such as autobiographical memory, theory of mind, and planning for the future (inferior prefrontal cortex, medial prefrontal cortex, temporal-parietal cortex, and the peri-splenial posterior cingulate). After focusing on two distinct processing areas of the posterior cingulate and discussing their meta-analytic findings in the context of further empirical evidence, Carter et al. (in press) conclude that the posterior cingulate is specifically relevant for the valuation of delayed rewards, that is, it is sensitive to the delay of a reward— or, more generally—to time. In their research study with a version of the Iowa Gambling Task (IGT), Johnston et al. (in press) employed steady state topography, a special electroencephalogram technique that records steady state evoked potentials, to assess neural correlates of intertemporal decisions. Although it can be said that in the IGT the payoffs when choosing a stack of cards do not necessarily have temporal implications, the task nevertheless can be characterized as presenting an individual with short-term and long-term incentives. For example, impulsive individuals show a propensity to select actions associated with short-term gains (with long-term losses) over those with small short-term gains (with larger long-term gains) (Bechara & Damasio, 2002). This behavior has been explained with a shorter temporal perspective in decision making because of a different sense of time, that is, impulsive individuals are more present-time oriented (Wittmann & Paulus, 2008; Zimbardo & Boyd, 1999). Results in this study with 20 subjects show that choices in the selected version of the IGT were activated in relation to different stages of the decision-making processes. The authors interpret the findings of left dorsolateral frontal cortex activation as resulting from the analysis of gain and loss frequency, right dorsolateral frontal cortex activation is seen to be involved in somatic labeling as hypothesized by Damasio’s somatic marker hypothesis. Despite the well-established empirical findings and mathematical models of how individuals discount delayed rewards, the underlying cognitive and affective processes as well as the neural substrates that account for intertemporal decision making are not well understood. Cognitive processes that link memory, the anticipation of events, and the experience of time are being discussed. Moreover, the neural mechanisms
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related to intertemporal choice behavior depend on brain areas that are important for regulating emotions and feelings, for example, functional imaging studies using delay discounting tasks are beginning to examine how specific brain areas are associated with impulsivity and self-control. A better understanding of the psychological and neural mechanisms underlying intertemporal choice will eventually lead to new strategies across disciplines ranging from the treatment of clinically impulsive individuals to better economic and environmental decisions—which may, perhaps, even help to save the ecosystem of our planet.
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