A second important finding from behavioral economics that the theory of consumption as commensuration helps explain is the tendency, discussed in Chapter 2, for subjects to discount the utility of future rewards hyperbolically as opposed to at an exponential rate. To recap, in studies of intertemporal choice, behavioral scientists have found that subjects tend to place very high value on a reward expected in the short-term, after which its value is steeply discounted. However, the same reward, with an equivalent delay, when expected in the longer term, is discounted to a much smaller degree. In terms of consumer behavior, hyperbolic discounting implies a tendency to spend in the short term as opposed to saving strategically (to “smooth” consumption over the long term), since the utility attached to satisfying an immediate desire dwarfs the envisioned utility of satisfying more temporally distant wants. When graphed, the discount function that describes this valuation of rewards over time produces a hyperbolic curve.
Hyperbolic discounting has been a source of great puzzlement to behavioral scientists and philosophers, as it would seem to violate certain canons of rationality.33 Rational consumers are supposed to think about the future mainly in terms of the utility cost of delayed consumption, modified by degrees of uncertainty. Economists assume that utility is discounted over time at an exponential rate, producing a discount curve that is much less bowed than a hyperbolic one. Similarly, although more distant points in time are more uncertain than closer ones, assessments of uncertainty over time should, other things being equal, be much more consistent than is suggested by the hyperbolic function that describes much economic behavior. If hyperbolic discounting simply reflects increasing degrees of uncertainty about the future, then the uncertainty attributed to the future would increase very rapidly over short intervals of time, then, oddly, flatten out over the longer term. It thus seems implausible that hyperbolic discounting has to do with the epistemic status of the future.34
A Theory of Mass Consumption as Wage-Labor Commensuration
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