Money & society · 2016
Do low-income U.S. households choose differently between money now and money later before versus after payday?
Yes. Participants surveyed before payday made choices about monetary rewards that suggested a stronger preference for the present than those surveyed after payday. This pattern did not appear in choices about when to do actual, non-monetary effort tasks, and the study found no before–after differences in the other decision-making and cognitive measures it tested.
Details
The researchers randomly assigned low-income U.S. households to take an online survey before or after payday. This timing created variation in cash, checking and savings balances, and spending. The survey measured cognitive performance and asked participants to make choices involving risk and outcomes at different times.
For monetary rewards, the before-payday group behaved as if it gave extra weight to the present. That pattern did not extend to choices about the timing of actual effort tasks without monetary rewards. The researchers also found no before–after differences in risk-taking, decision-making quality, cognitive task performance, or judgments based on mental shortcuts.
The central finding is therefore specific to choices about the timing of monetary rewards, not evidence of a general decline in thinking or decision-making before payday. The abstract does not report the size or precision of the effect, and not finding differences on the other measures does not prove that the groups were equivalent.
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