Talk:Time preference/Archive 1

Request for clarity

So high preference means I want to spend my money now, right? Can this be explicitely mentioned in the article? --Tmh 09:34, 14 Oct 2004 (UTC)

Criticism of theory of positive rates of time preference

Time preference (in reality as opposed to pinhead micro) can be positive or negative and it is mostly negative. People who save do so because they have a current surplus. If you spent all your current surplus on food you would become quite ill, and you really do have limited near term desires and/or you do recognize that one day you will be disabled by age and you will not be productive at that time (a deficit as opposed to a surplus). You know that when the winter comes you will need to have "saved" some stuff to eat. The reward that you anticipate for this saving is the delayed consumption and there is COST associated with the protection and preservation of that wich has been saved. You, the saver, should expect to pay these costs.

Therefore, the concept of paying "interest" to someone for "saving" money (the stuff that is created by government and banks out of thin air) is proposterous. You should be paying the bank and/or he government for looking after your savings.

--208.54.14.25 13:27, 30 November 2005 (UTC)

You have a negative time preference? Let's check.

I like your contribution to this article and willing to pay you $10 for it.

Would you like to receive the $10 check now or in twenty years?

Or a better example - to remove inflation effects:

I can give you a movie ticket (to a movie of your choice) now or in 50 years. Which you prefer?

The problem with your questions is that they don't make it clear whether the subject is being asked whether she'd like to generally receive more goods and services now (as opposed to later), or just a single movie ticket. They also don't distinguish bona fide time preference from precautionary bringing-forward of consumption. (The former would abide in Mises' ER, the latter would not!)

There is empirical work that strongly suggests that the average rate of time preference is in fact negative. That doesn't particularly fit my introspection and evidently doesn't fit yours, but we don't get to trump data on large numbers of people simply based on one observation (that of oneself) nor on the testimony of Austrian School economists (who are a relatively small share of the over-all population). —SlamDiego 16:05, 11 April 2007 (UTC)

(sorry for my bad english, not my first language)

I think that there is an evident misconception in the whole article and in this discussion. Time preference refers to the preference of having the power to use your capital 2008-until you die vs. having the power to use your capital 2050-until you die. It's not about having to actually use your capital 2008 or 2050.

Having the property of the money now means that you can decide when to use it 2008-until you die. Having the property of the money in 2050 means that you can (if still alive) decide when to use it 2050-until you die.

2008-until you die includes (and is more than) 2050-until you die. This is why is a non-sense to hypothesize a negative time preference, everything else being equal. Someone should correct the article making clear this conception of the time preference.

In your movie ticket example, you must at least make it clear that the ticket leaves the time and name (all) of the movie undetermined.

--87.4.152.58 (talk) 08:46, 13 October 2008 (UTC) (Diego)

You are confusing time preference with some estimation of present, typical marginal rates of substitution. Positive time-preference does not correspond to having marginal rates of substitution that are everywhere greater than one; instead, positive and negative time-preference correspond to an overall bias in marginal rates of substitution. —SlamDiego 16:09, 11 April 2007 (UTC)

Hey, I thought this section was going to say something about how we should include Frank Ramsey (who called discounting "unethical" and a "failure of the imagination" - but in a particular context) in this article. Anyway, here I am saying it. It might also be used to mention the Diamond Impossibility Theorem though that's more in the context of inter generational social welfare rather than personal time preference. Also, SlamDiego, what "negative time preference"? I'm more used to thinking it in terms of more or less than 1.radek (talk) 16:34, 10 October 2008 (UTC)

Request for check

Will somebody please check the second paragraph I added this in an attempt to explain time preference in a way that average Joe could understand, but not sure if my understanding is complete.

btw, 208.54.14.25 is wrong. Though it does cost money to save money, this cost is covered by the interest paid by those to whom the saved money is lent. This is true even under a full reserve banking system (which 208.54.14.25 clearly prefers) or at least for non-demand deposits therein ( for demand deposits as well provided the depositor understands that he/she will not be entitled to immediately withdraw his/her funds should an imbalance between the rate of deposits and the rate of withdrawals suddenly arise).

65.191.152.19 02:19, 10 December 2006 (UTC)

A note on Fisher

Although Fisher at one time explained interest with an agio theory, time preference is utterly absent from Fisher's formal exposition in Theory of Interest (1930). Specifically, his indifference curves are symmetrical relative to the 45° line — the MRS there is just 1 — whereäs a positive or negative rate of time-preference would mean that the MRS would be something else. —SlamDiego 15:42, 11 April 2007 (UTC)

Positive rates of interest with negative rates of time preference

Using the basic formal apparatus introduced by Fisher, we can see how negative time preference is compatible with a positive rate of interest. The indifference curves will have a wide range of MRS. The production-possibilities frontiers will be convex (due to diminishing marginal productivity), and have slope of less that -1 at the 45° line. Hence, even with negative time preference, there will be ranges of possible intersection where the MRS will still imply an MRS of greater than 1.

(One should also see that if round-a-bout means of production were generally wasteful, then a positive rate of time preference could still be compatible with a negative rate of interest.) SlamDiego 15:54, 11 April 2007 (UTC)

Reisman's theory of the foundation

I have included the the foundation of time preference that George Reisman states. It actually makes perfect sense to me. I would add other material as well, but N.O.R. :) JJMcVey 10:29, 15 September 2007 (UTC)