Anticipatory Utility

Anticipatory Utility

Reviewed by Faisal Zaidi

Utility experienced now from representing a future act of consumption. The ordinary economic picture has you discount a future pleasure because it is not here yet; George Loewenstein's 1987 model adds a term for the pleasure of its being on the way. Positive anticipatory utility is savouring and negative anticipatory utility is dread. The structural point is that anticipation is treated as consumption in its own right rather than as a prediction about consumption, which is what allows delay to be worth paying for.

What it is

Loewenstein's paper, "Anticipation and the Valuation of Delayed Consumption", in The Economic Journal in 1987, carries two parameters: how much immediate utility a person draws from anticipated consumption, and how vivid or imaginable the outcome is. The model assumes the first exceeds the ordinary discount rate, which is the assumption that makes paying for delay rational within it. It is a theory paper with three small illustrative surveys attached, and any use of it has to say so. The default direction of the wider field is impatience, which is why savouring is the anomaly rather than the baseline.

In effect

The illustration is the famous one and it must be stated with its design attached. Thirty undergraduates said what they would pay now for five hypothetical outcomes at six delays. A kiss from a film star of their choice peaked at three days, valued at roughly one point eight times an immediate kiss, then fell away by one year and collapsed by ten, while money in the same survey discounted normally. Loewenstein chose the item because it is fleeting and vivid, which are the conditions his model predicts delay for, so the result illustrates the model rather than supporting it independently.

What it does not say

It does not license the commercial reading. In the only pre-order work located with experiments and a retail field test, Amaradri Mukherjee and colleagues treat delay as a cost that affect-laden promotion is deployed to offset, and their managerial advice is that longer delivery times need more anticipation-building to reduce the negative effect. A separate three-study paper by Stephen Nowlis and colleagues finds that delay raises enjoyment only when the thing actually arrives, and reduces it for merely imagined consumption, with vividness moderating both. Anticipation is a quantity with a sign, not a reliable bonus, and the discount rates measured across this literature vary so widely that no single number should be quoted.

Sources

  1. Loewenstein, G. (1987). "Anticipation and the Valuation of Delayed Consumption." The Economic Journal, 97(387), 666-684. Full text read. A theory paper with three small illustrative surveys; the kiss item was answered by thirty undergraduates on hypothetical outcomes.
  2. Mukherjee, A., Smith, R. J., & Burton, S. (2021). "The effect of positive anticipatory utility on product pre-order evaluations and choices." Journal of the Academy of Marketing Science, 51(3), 551-569. Abstract read in full; Mukherjee first author. Three online experiments, one retail field experiment and an internal meta-analysis. Published online 2021, in print 2023.
  3. Nowlis, S. M., Mandel, N., & McCabe, D. B. (2004). "The Effect of a Delay between Choice and Consumption on Consumption Enjoyment." Journal of Consumer Research, 31(3), 502-510. Abstract read in full; Nowlis first author.
  4. Frederick, S., Loewenstein, G., & O'Donoghue, T. (2002). "Time Discounting and Time Preference: A Critical Review." Journal of Economic Literature, 40(2), 351-401. Abstract read in full. Used for one point only: the default direction of the field is impatience, and the measured discount rates vary too widely for any single number to be quoted.