TIME PREFERENCE (IMPATIENCE)

on the amount of his expected real income and the man-ner in which it is expected to be distributed in time. Itdepends in particular on the relative abundance of theearly as compared with the remote income items—orwhat we shall call the time shape of the expected incomestream. If income is particularly abundant in the future;that is, if the person expects an increase in his incomestream, he would willingly promise to sacrifice out of thatincrease, when it comes, a relatively large sum for thesake of receiving a relatively small sum at once. Thusthe possessor of a strawberry patch might, in winter, bewilling to exchange two boxes of strawberries, due insix months, for one available today. On the other hand,if immediate income is abundant but future incomescarce, the opposite relation may exist. In strawberryseason, the same man might willingly give up two boxesof his then abundant crop for the right to only one box inthe succeeding winter. That is, time preference may notalways be a preference for present over future goods; itmay, under certain conditions, be the opposite. Impa-tience may be and sometimes is negative!

It is, therefore, not necessary in beginning our studyof interest to distinguish, as many writers do, betweenthe principles which lead to the existence of interest andthose which regulate the rate of interest. By the existenceof interest these writers mean that the rate is greaterthan zero. It seems preferable to reverse the order ofthe two problems and seek first to find the principleswhich fix the terms on which present and future goodsexchange, without restricting ourselves in advance to thethesis that, always and necessarily, present goods com-mand a premium over future goods. If our principles per-mit the deviations from par to be in either direction, this

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