TIME PREFERENCE (IMPATIENCE)

from 10 to 7 per cent, and the second’s from, say, 4 to 3per cent.

If, now, we consider the combined effect on time pref-erence of both the size and the time shape of income, weshall observe that those with small incomes are muchmore sensitive to time shape in their feeling of impatiencethan are those with larger incomes. For a poor man, avery slight stinting of the present suffices to enhanceenormously his impatience for present income; and op-positely, a very slight increase in his present income willsuffice enormously to diminish that impatience. A richman, on the other hand, presumably requires a relativelylarge variation in the comparative amounts of this year’sand next year’s income in order to suffer any materialchange in his time preference.

It will be clear to readers of Bohm-Bawerk that the de-pendence of time preference on the time shape of a per-son’s income stream is practically identical with what hecalled the “first circumstance” making for the superiorityof present over future goods:

“The first great cause of difference in value between present andfuture goods consists in the different circumstances of want and pro-vision in present and future. ... If a person is badly in want ofcertain goods, or of goods in general, while he has reason to hopethat at a future period he will be better off, he will always valuea given quantity of immediately available goods at a higher figurethan the same quantity of future goods .” 7

The only important difference between this statementand that here formulated is that in this book the “pro-vision” has the definite meaning contained in the incomeconcept.

It is only for completeness that I have included in the

* Bohm-Bawerk , The Positive Theory oj Capital, p. 249.

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