Time Preference A Day After Thanksgiving
I can’t connect Thanksgiving and economics quite as easily as Gary North can without copying others’ ideas so I’m going to stretch this one 🙂
Time itself is a scarce good that must be economized — that is, an individual must choose to act with his highest values respective of the amount of time it takes to act. All other things equal, any good will be preferred sooner rather than later. This is the universal fact of time preference.
Immediate counter-examples may be brought up: some people prefer ice cream during the summer over ice cream in the winter. Since it is November right now, doesn’t that invalidate time preference? After all, I would prefer the good, in this case, ice cream, later (during summer) rather than sooner (during winter).
This type of argument confuses the concept of a “good” with its physical properties. The good, ice cream during summer, is actually a different good than the good, ice cream during winter. In this case, ice cream over summer has so much more value over ice cream over winter that a person will choose to wait till summer rather than having it sooner or immediately.We can think about this differently by replacing the word “good” with the word “satisfaction”. A person will prefer to have any given satisfaction sooner rather than later. In this case, the satisfactions are different; hence, they are not the same good.
Another example that may be brought up is preferring to wait until next year’s Thanksgiving rather than celebrating it today, the day after Thanksgiving (this example works much better with birthdays but bare with me). If I had to choose, I wouldn’t pick to celebrate Thanksgiving two days in a row and then be “forced”(obviously we could celebrate two days in a row and still celebrate next year’s Thanksgiving but we are assuming one or the other must be picked) to skip the next year’s Thanksgiving. I would rather celebrate Thanksgiving on the actual day rather than having it sooner.
This argument also confuses the concept of a good, but it also confuses the concept of timing with the concept of time preference (we can apply this to the previous argument as well). The timing of Thanksgiving plays a role in how much it is valued: a person generally will value any holiday on its actual date (its timing) rather than celebrating it sometime earlier on a different date. Time preference still holds in that, if a person could truly have the good Thanksgiving (with its timing on Thanksgiving) sooner rather than later, he would, but it is impossible.
As we can see, time preference is not a concept that can be denied (much like the “fact” of heterogeneous subjective values during exchange). However, instead we may compare different levels of time preference: low time preference versus high time preference. Just like subjective values, we cannot put a number on time preference: for example, we cannot say that Mary has 7 time preference and Bill has 5.4 time preference. However, we can say Bill has a low time preference and Mary has a high time preference and we can compare their time preferences by saying Bill’s time preference is lower. So if Bill was willing to wait a day to receive satisfaction from eating an apple, whereas Mary was only willing to wait 10 minutes to receive the same satisfaction from eating an apple, we could say Bill has a lower time preference than Mary.
Note: There is an inherent problem in comparing time preferences because we do not know if Bill and Mary have equal satisfactions or if their satisfactions received from eating the apples are different so it would be truly difficult to compare their time preferences. We have ignored this problem for simplification purposes.
Also if anyone is interested in learning praxeology, you can check out praxgirl on YouTube.
It may be tough to follow and completely comprehend each lesson in one watching, so if you have to watch it multiple times to understand some of the concepts, don’t be frustrated. For more serious learners of economics, I would recommend buying a copy of Man, Economy, and State with Power and Market by Murray N. Rothbard. (there are free pdf and audio links in that link as well).