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In this paper we advance the hypothesis that the trade-off between the future and the present does not only depend on pure taste but also depends on the quality of the image of the future. We analyze this idea in the context of the choice for a field of study using data about 19,000 Dutch high school and college graduates. In our sample, the discount rate is highly correlated with the ability to imagine the future and graduates with a high discount rate make less adequate investment choices. Pure discounting lowers the value of all future consumption whereas a lack of imagination will especially lower the value of specific situations that are more difficult to be imagined. So while in general high discount rates are associated with lower investments, the uncertainty related to the transition from school to work is a counteracting force that stimulates high discounters to stay longer in education. Consistent with this we show that on the one hand students with a high discount rate put less effort per time period in their study. On the other hand, we find persistent evidence that high discounters stay longer in school.
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