Economics Dictionary of ArgumentsHome
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| Time preference: Time preference refers to the tendency of individuals to value present gratification over future gains. This attitude influences decision-making in the economy. See also Decisions, Decision theory, Consumption, Investments, Entrepreneurship._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Samuel Bailey on Time Preference - Dictionary of Arguments
Rothbard II 137 Time-preference/Bailey: The first presentation of time as the determinant of interest came from a theory related but superior to abstinence: Samuel Bailey's pioneering time-preference theory. Bailey's discussion came in the course of his brilliant demolition of Ricardo's labour theory of value and his championing of an alternative utility theory. Bailey begins his discussion of time and value by noting that if one commodity takes more time than another for its production, even using the same amount of capital and labour, its value will be greater. >Value/Ricardo. James Mill: While Ricardo admits a problem here, James Mill in his Elements of Political Economy indefatigably asserts that time, being ‘a mere abstract word’, could not possibly add to anything's value. >James Mill, >David Ricardo, >Interest rates. VsMill/James: Rebutting Mill, Bailey points out that ‘every creation of value’ implies a ‘mental operation’ - in short, a subjective analysis of value. Given a particular pleasure, Bailey went on, ‘We generally prefer a present pleasure or enjoyment to a distant one’ – in short, the omnipresent fact of time-preference for human life. Thus: We are willing, even at some sacrifice of property, to possess ourselves of what would otherwise require time, to procure it, without waiting during the operation... If any article were offered to us, not otherwise attainable, except after the expiration of a year, we should be willing to give something to enter upon present enjoyment. Considerations of time-discount influence buyers, sellers and capitalists, as well as both parties who realize, for example, that wine gains value by being kept for longer periods of time. Rothbard: Bailey, interested in rebutting labour and other objective theories of value rather than explaining interest per se, did not press on to explain time-preference as the basis of interest nor to discuss the time-discount rate. But his analysis clearly paved the way for the later Rothbard II 138 Austrian time-preference theory, although Böhm-Bawerk, the creator of the theory, remained unaware of Bailey's insights. >Austrian School, >Böhm-Bawerk._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Bailey I Samuel Bailey Money and its vicissitudes in value; as they affect national industry and pecuniary contracts: with a postscript join-stock banks London 1837 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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