TIME PREFERENCE (IMPATIENCE)

erence, or degree of impatience, of its possessor. It is to beremembered that the degree of impatience is the percen-tage preference for $1 certain of immediate income, over$1, also certain, of income of one year hence, even if allthe income except that dollar be uncertain. The influenceof risk on time preference, therefore, means the influenceof uncertainties in the anticipated income of an individ-ual upon his relative valuation of present and futureincrements of income, both increments being certain.

The manner in which risk operates upon time prefer-ence will differ, among other things, according to the par-ticular periods in the future to which the risk applies. If,as is very common, the possessor of income regards hisimmediately future income as fairly well assured, butfears for the safety or certainty of his income in a moreremote period, he may be aroused to a high appreciationof the needs of that remote future and hence may feelforced to save out of his present relatively certain abun-dance in order to supplement his relatively uncertainincome later on. He is likely to have a low degree of im-patience for a certain dollar of immediate income as com-pared with a certain dollar added to a remoter uncertainincome.

Such a type of income is, in fact, not uncommon. Theremote future is usually less known than the immediatefuture, a fact which of itself means risk or uncertainty.The chance of disease, accident, disability, or death isalways to be reckoned with; but under ordinary circum-stances this risk is greater in the remote future than inthe immediate future. As a result, uncertainty has atendency to keep impatience down. This tendency is ex-pressed in the phrase “to lay up for a rainy day.” Thegreater the risk of rainy days in the future, the greater the

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