Instructions/Remarks: Time Preference
Clause Is Applicable
By the time the pure time preference
theory (PTPT) of interest reached its full elaboration by Fetter (1914), a work which is absent from Braun's otherwise very comprehensive reference list, it was clearly based on a comparison of satisfactions equal in all but their timing.
Topics treated include: a definition of "action," and principles flowing from it; economic theory versus historical understanding; society and the division of labor; the role of ideas and importance of reason; economic calculation; economics of market society; how prices are formed on the market; indirect exchange and money; money and banking; capital, time preference
and the theory of interest; Austrian business cycle theory; the impossibility of economic calculation under socialism; government intervention in the market economy; and the place of economics in society.
In addition, we show how the model can be used to estimate rates of time preference
In addition, the rates of pure time preference
ascertained from surveys vary wildly across individuals and thus provide little guidance for public investment choices.
Rather, as the Austrian economist Ludwig von Mises emphasized, they are a reflection of people's aggregate time preference
- or desire for present versus future satisfaction - not a determinant of it.
This note examines the effect of monetary growth on capital using the cash-in-advance (CIA) model with endogenous time preference
and establishes a qualitative equivalence.
Instead, he regarded time preference
as a necessary condition of interest.
The preference structure incorporates heterogeneity in time preference
, varying taste parameters for full-time and part-time work, and the possibility of changes in preferences after retirement.
The authors investigate such policies as discounting and time preference
, the elasticity of marginal evaluation and sustainable preferences.
The second does not; it constitutes merely the working out of endogenous changes in taste or time preference
in the case under discussion.
A company with a high rate of time preference
won't invest unless the payback period is very short.