THE THEORY OF INTEREST

§6. The Influence of Mere Size

Our first step, then, is to show how a person’s impa-tience depends on the size of his income, assuming theother three conditions to remain constant; for, evidently,it is possible that two incomes may have the same timeshape, composition and risk, and yet differ in size, onebeing, say, twice the other in every period of time.

In general, it may be said that, other things being equal,the smaller the income, the higher the preference forpresent over future income; that is, the greater the im-patience to acquire income as early as possible. It is true,of course, that a permanently small income implies akeen appreciation of future wants as well as of immediatewants. Poverty bears down heavily on all portions of aman’s expected life. But it increases the want for im-mediate income even more than it increases the wantfor future income.

This influence of poverty is partly rational, becauseof the importance, by supplying present needs, of keepingup the continuity of life and thus maintaining the abilityto cope with the future; and partly irrational, becausethe pressure of present needs blinds a person to the needsof the future.

As to the rational aspect, present income is absolutelyindispensable, not only for present needs, but even as apre-condition to the attainment of future income. A manmust live. Any one who values his life would, underordinary circumstances, prefer to rob the future for thebenefit of the present—so far, at least, as to keep lifegoing. If a person has only one loaf of bread he wouldnot set it aside for next year even if the rate of interestwere 1000 per cent; for if he did so, he would starve in