THE THEORY OF INTEREST

§9. Time Preference May be Negative

If these specifications are correct, some, at least, of thisfamily of Willingness curves, especially those far distantfrom the origin, and low down—that is, representing smallfuture and large present income—will have an inclina-tion less steep than 45° to the horizontal axis and aslope less than 100 per cent. At such income positionsthe rate of time preference would be negative. It issometimes said that it is a fundamental attribute ofhuman nature to prefer a dinner or a dollar this year toa dinner or a dollar next year, but this statement is evi-dently too narrow. Unconsciously it confines our view toregions of the income map where present income is rela-tively small or future income relatively large. For a starv-ing man it is notably true, that is, the Willingness linesthat lie in the left part of the map are far steeper than45°. Of a man expecting large future income it is alsotrue; that is, the Willingness lines toward the top of themap are also very steep.

But if we turn our attention in the opposite direction—to the right, or downward, or both—we find regions onthe map in which, if the foregoing description is correct,the curves flatten out and incline less than 45°; the man’sincome situation is such that he might even be willing tolend for nothing, or even less than nothing, simply be-cause he would, in such a case, be so surfeited with thisyear’s income and so short, prospectively, of next year’sincome that he would be thankful to get rid of some ofthis year’s superfluity, for the sake of adding even a trifleto next year’s meager real income. His situation would belike a Robinson Crusoe on a barren island, well supplied,but with foods that could serve him only this year. Such

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