Overview
In finance and behavioral economics, discounting refers to the process of determining the current value of future gains. For instance, getting 10 in a week since you can invest the 10 in a week will be worth less due to inflation. When businesses put products on sale, they often consider the value of being able to quickly move products to reinvest into new operations or inventory with a smaller profit margin compared to waiting for full-price purchases. Delay discounting, or temporal discounting, refers to the discounting methods that pertain specifically to time, in contrast to forms like probability discounting that consider the risk of future cash flows not materializing.
In the context of addiction, behavioral economic paradigms frame the decision to use substances despite the consequences, including losing the rewards of sobriety, through hyperbolic discounting, in which the rewards of present substance use are valued overwhelmingly highly compared to waiting for future rewards. The influence of chronic substance use on the neural pathways behind impulsivity and seeking instant gratification operating through the limbic system can interfere with the calculated judgment of a prefrontal cortext responsible for one’s inhibition and long-term planning.