Time preference is a foundational concept because it provides deep insights into human behavior and the inner workings of the economy. At its core, time preference captures people's subjective preferences for current versus future consumption. This preference to satisfy wants sooner rather than later is a ubiquitous feature of human action. Time preference explicates people's natural incentive to consume now rather than save and wait. It therefore helps elucidate saving and consumption patterns across society.

Moreover, time preference is embodied in the interest rate, which is the price paid to forego present consumption. Interest rates arise naturally from individuals' varying time preferences and willingness to exchange present for future goods. Interest rates therefore signal society's time preferences and coordinate distinct preferences into a coherent structure of production over time. They provide entrepreneurial insight into the tradeoffs between current and future consumption, allowing for rational allocation of resources across the stages of production.

Time preference illuminates intertemporal decision making, the phenomenon of interest, saving behavior, capital structure, and economic coordination over time. By analytically grounding many disparate economic phenomena in the simple fact of human preference for present over future, time preference facilities a unified and profound understanding of the market economy. Time preference thus sits at the heart of economic insights about prices, capital, business cycles, and the transcendent ability of markets to align individual choices and social outcomes over time.