Why Chinese Discount Future Financial and Environmental Gains but Not Losses More Than Americans

Published in: Journal of Risk and Uncertainty, v. 49, no. 2, Oct. 2014, p. 103-124

Posted on RAND.org on February 26, 2015

by Min Gong, David H. Krantz, Elke U. Weber

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Understanding country differences in temporal discounting is critical for extending incentive-based environmental policies successfully from developed countries to developing countries. We examined differences between Chinese and Americans in discounting of future financial and environmental gains and losses. In general, environmental use value was discounted significantly more than the monetary values, but environmental existence value was discounted similarly to the monetary values. Confirming previous research, we found that participants discounted gains significantly more than losses. Furthermore, there was a significant interaction between culture and gain/loss outcome: Chinese discounted gains but not losses in both outcome categories more than Americans. Open-ended comments suggest that respondents focused on the uncertainty and foregone returns associated with waiting for future rewards when discounting gains, but focused on the magnitude of the losses and the psychology cost of carrying debts when discounting losses.

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