ABSTRACT
Given the ability to make investments with positive rates of return, the earlier money is available to invest, the larger are the returns at any time in the future. People also feel impatience, fear uncertainty and inflation, and have finite lifetimes, all of which makes it preferable to receive money and other benefits sooner rather than later. Consider the option to receive $1,000 today or in ten years. When would you rather have the money? The rational response is today, in part because:
• Money received now can be invested to obtain even more money in the future • It is discomforting to delay gratification from money and expenditures • The later a benefit comes, the more likely it is that you will not live to receive it,
or that it will come when you are less able to enjoy it due to poor health
Due to preferences for up-front benefits, 80 to 90 percent of lottery winners opt to receive a lump-sum payment of around half the jackpot immediately rather than annual payments over several decades. If the carbon dioxide build-up in the oceans were curbed, annual revenues for the mollusk fishing industry alone would increase by between $75 million and $187 million over the coming decades, but the largely
The decision to beautify a lawn with chemicals may have unintended effects on wildlife and humans. Our decisions always involve trade-offs.
