Low time preference
Time preference is an economic term to describe the relative value of consuming a good or service today vs. in the future. A high time preference means that a large discount is placed on future consumption and therefore very little consumption is delayed.
One primary mediator of time preference is interest rates. The lower interest rates are the less we’re incentivized to delay consumption. Other mediators can be economic uncertainty or a society’s age.
Despite recent increases in interest rates we still live in a time of historically low rates. The result is a historically high time preference.
This is part of the reason why our society doesn’t value time. We are infamous for overconsumption, procrastination and indebtedness.
We over-consume because we don’t know whether our money will still allow us to consume the same amount in the future.
We procrastinate because it’s not clear that delayed gratification will pay off.
We indebt ourselves because debt is the only way to create economic value quickly enough to counterbalance monetary inflation.
If you are my age, it’s hard to remember a world of low time preference. A world where there were no obese people, where the products we bought were made to last, where leverage was not worn as a badge of honor.
