Do you use a credit card for any purchases or contribute to a retirement account? If so, then you’ve experienced something called an intertemporal choice. An intertemporal choice is one in which the cost and reward occur at different times.
For instance, with a credit card, you swipe your card to get the item you want right now, but you don’t actually pay the cost until you pay your credit card bill a month or so from now.
With a retirement account, however, the money leaves your account now, but you won’t get to experience the rewards of that cost until way down the road when you retire.
In the consumer setting, how intertemporal choices influence behavior is pretty well established, but can we leverage this idea for charitable giving as well?
That’s the question we’ll be tackling today.