My last note spoke about Time-Preference on the level of the individual, but what about on the group level?

Well, my belief is that the process of civilization is in itself only possible through the process of lowering Time-Preference.

How?

When people have low Time-Preference, they save and invest in the future. These savings enable them to undertake long-term projects that build capital, that in its turn increases productivity. This leads to more abundance, which enables the raising of living standards and the creation of all the infrastructure we associate with civilization.

However, when people have high Time-Preference, they consume now and don’t save for the future. This means they don’t accumulate capital, and instead are stuck in the survival hamsterwheel. This means scarcity instead of abundance and sleeping in a cave rather than in a man-made structure.

So I would go even further and say that the process of lowering Time-Preference IS the process of civilization!

How’s that for the importance of #TimePreference!