From this , the following quote from Matthew Rabin :
“…We call this “time inconsistent preference,” and it’s hard to convey how categorically, how unambiguously economists have been wrong about this. Economists have assumed a time-consistent discounting, that to whatever degree we care more about today than tomorrow, we care that same amount more about 7 days from now than about 8 days from now. Every single study done by psychologists, studying humans, rats, pigeons, always shows this other kind of discounting, this hyperbolic discounting which captures time-inconsistent preferences, the fact that we care much more about today than tomorrow, that that’s a bigger difference to us than how much more we care about 7 days from now vs. 8 days from now. …”
Your homework assignment is show that the decreasing rate of time decay in the value of a good is NOT in conflict with Austrian Economics, but rather is a necessary implication of the subjective theory of value. Extra credit for any pertinent references from Mises.org.
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Don,
A thought -
The rate of time preference is itself subject to diminishing marginal utility. A good is enjoyed today more than tomorrow (as perceived today), and that is a value judgment. This rate of preference for a good on a given day to the day following diminishes with projections further out in time.
Am I close?
Unfortunately I don’t have my Bohm-Bawerk handy, but I recall aan example of BB’s that might serve as a useful corollary: BB said, to the effect, that people spend more time analyzing situations that have greater (subjective) importance to them with decreasing levels of analysis or thought given to things as they decrease in subjective importance. For example, I will give more attention to studying for an exam tomorrow than I will to one next week, but I may also give more thought and attention to both than to what I have for lunch today. I guess you could say that people have hyperbolic or “inconsistent” time preferences within a framework of subjective goals and decisions.
On the other hand… Do you think this trend will continue? Would love to hear your thoughts. Cheers!
I just want to emphasize the good work on this
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