Thanks, interesting but in my view, it was such a missed opportunity by not pointing out that sound money’s deflationary impact on prices is a little bit like a universal basic income as well.
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!
What is Time-Preference? - Have you heard about the marshmallow experiment?
In the 70s, kids were given a choice between eating one marshmallow immediately or waiting 15m to eat two of them.
It’s generally portrayed as testing children's ability to delay gratification, but most people don’t know that it’s also an excellent portrayal of Time-Preference.
You see, eating the marshmallow immediately is called high Time-Preference behavior, as you prioritize the present over the future, while foregoing the immediate gratification in favor of the doubled prize in the future is called low Time-Preference behavior as you prioritize the future over the present.
It’s a simple concept, but with huge implications for our lives.
Follow me along on my journey of exploration of this fascinating concept and how it can make or break our lives!
#TimePreference