The Sign Effect in Past and Future Discounting

Abstract

We compared the extent to which people discounted positive and negative events in the future and in the past. We found that the tendency to discount gains more than losses (i.e., the sign effect) emerged more strongly for future than for past outcomes. We present evidence from six studies (total N = 1,077) that the effect of tense on discounting is tied to differences in the contemplation emotion of these events, which we assessed by measuring participants’ emotions while they either anticipated or remembered the event. We ruled out loss aversion, uncertainty, utility curvature, thought frequency, and connection to the future and past self as explanations for this phenomenon, and we discuss why people experience a distinct mixture of emotions when contemplating upcoming events.