TIME PREFERENCE (IMPATIENCE)

depends both upon the characteristics of his expected in-come stream, and on his own personal characteristics. Therate of impatience which corresponds to a specific incomestream will not be the same for everybody. This has al-ready been noted, incidentally, but requires special dis-cussion here. One man may have an annual rate of timepreference of 6 per cent, and another 10 per cent, althoughboth have the same income. Impatience differs with dif-ferent persons for the same income and with different in-comes for the same person. The personal differences arecaused by differences in at least six personal character-istics 9 : (1) foresight, (2) self-control, (3) habit, (4) ex-pectation of life, (5) concern for the lives of other per-sons, (6) fashion.

(1) Generally speaking, the greater the foresight, theless the impatience, and vice versa. 10 In the case of primi-tive races, children, and other uninstructed groups insociety, the future is seldom considered in its true pro-portions. This is illustrated by the story of the farmer

B Cf. Rae, Sociological Theory of Capital, p. 54; Bohm-Bawerk, ThePositive Theory of Capital, Book V, Chapter III.

10 To be exact, however, we should observe that lack of foresight mayeither increase or decrease time preference. Although most persons wholack foresight err by failing to give due weight to the importance offuture needs, or, what amounts to the same thing, by estimating over-confidently the provision existing for such future needs, cases are to befound in which the opposite error is committed; that is, the individualexaggerates the needs of the future or underestimates the provisionlikely to be available for them. Such people stint themselves needlessly,even impairing health by insufficient food in their efforts to save forthe dreaded future. Their lack of foresight in this case errs in under-estimating instead of overestimating future income and so makes themtoo patient instead of too impatient. But in order not to complicatethe text, only the former and more common error will be hereafter re-ferred to when lack of foresight is mentioned. The reader may, in eachsuch case, readily add the possibility of the contrary error.

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