FIRST APPROXIMATION

sent the extreme and unusual cases of the spendthriftand the miser.

But whatever the personal equation, it remains truethat, for each individual, other things being equal, themore ascending his income curve, the higher his rate ofpreference; and the more descending the curve, the lowerthe rate of preference. If the descent of the income stream

CHART 13

Effects of Alternate Borrowing and Lending Upon a FluctuatingIncome Stream.

is sufficiently rapid, the rate of preference could be madezero or even negative . 3

These foregoing types of income streams are, of course,not the only ones which could be considered, but they aresome of the more important. To them we may add the

’This is the case mentioned by Carver (The Distribution of Wealth,pp. 232-236), when he remarks that a man with $100 in his pocket wouldnot think of spending it all on a dinner today, but would save at leastsome of it for tomorrow. Whether these conformations of the incomestream resulting in zero or negative preference may ever actually bereached so that the market rate of interest itself may be zero or nega-tive is another question.

[Ill]