THE THEORY OF INTEREST

to posterity of any income continuing after death. Thisis because the individual is in the double capacity ofbeing at once a producer and a consumer.

The effect of risk, therefore, is manifold, according tothe degree and range of application of risk to variousperiods of times. It also depends on whether or not therisk relates to the continuation of life; and if so, accord-ing to whether or not the individual’s interest in thefuture extends beyond his own lifetime. The manner inwhich these various tendencies operate upon the rate ofinterest will be discussed in Chapter IX.

§9. The Personal Factor

The proposition that, in the theory of interest, the im-patience of a person for income depends upon the char-acter of his income—as to its size, time shape, and prob-ability—does not deny that it may depend on other fac-tors also, just as, in the theory of prices, the propositionthat the marginal want for an article depends upon thequantity of that article does not deny that it may dependon other elements as well.

But the dependence of impatience on income is of chiefimportance; for impatience, whatever else it depends on,is always impatience for income—exactly as the depen-dence of the marginal want for bread on the quantity ofbread is more important than the dependence of thismarginal want for bread on the quantity of some othercommodity, such as butter. 8

We have seen, therefore, how a given man’s impatience

"For a theoretical discussion of marginal want as a function of va-rious factors, see my Mathematical Investigations in the Theory ofValue and Prices. For a mathematical formulation of impatience asa function of successive installments of income, see Appendix to thischapter, §7. See also Pareto, Manuel d’Sconomie Politique, p. 546 et seq.

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