§ 1. Time as a condition in valuation. § 2. Tbe time element in man's provision for his needs. § 3. Cases where future use is preferred. § 4. Cases where present use is preferred. § 5. Biologic basis for most choice of present use. § 6. Hope and risk as affecting time-preference. § 7. Hastening the ripening process. § 8. Postponing the use and the readiness for use. § 9. Physical change accompanying time-change. Note on Present and future goods, uses, desires.

§ 1. Time as a condition in valuation. Let us recall here that every object of choice is characterized, or qualified, in some way with reference to its stuff, form, place, and time; and according as our attention is directed toward the one or the other quality we speak of the stuff-, form-, place-, and time-value. Time-value now calls for fuller consideration.

The luscious fruit on the table makes a certain appeal to us, is valued, as compared with anything else. Why? Partly because of the physical and chemical elements of which it is composed, partly because of the particular form in which those elements are combined, partly because the fruit is close at hand rather than in some distant place, and finally because it is available at the present moment rather than at some future time.

The man who is suffering the pangs of starvation desires food, and he desires it at once. The promise of a good meal at some time in the distant future makes no appeal to him. In great extremity he will pay for food any price within his power. "All that a man hath will he give for his life." A loaf of bread put into his hands at the present moment would mean more to him than the promise of a whole bakery a year from now. A grasping person, willing to take advantage of him, might get from him a promise to pay almost any sum in the future for present bread. He might agree to pay back at the end of a year five loaves, or ten loaves, or almost any number of loaves in return for the single loaf now which will save his life.

We are dealing here with a case of time-preference. The food is preferred at one time rather than another, in this case at present rather than in the future. An extreme case has been cited for purposes of illustration, but it is possible every day and almost every hour to observe cases involving the same kind of preference, that for present goods as compared with an equal amount of like future goods, and other cases where like goods are preferred in the future rather than at present. In every conjuncture of human life, the timeliness of goods is an ever present factor in their valuation, and often it is of the very greatest significance. The demands of consumers always have reference to a particular time, and the business man is always seeking to supply goods at the right time as well as of the right stuff and form and in the right place. Palm-leaf fans are not marketed in winter time, nor overcoats and furs in summer. The promissory note must be paid when due. The bond has a greater value just before an interest payment than just after. And from these limitations of time, as from those of space, there is no escape. A man can not be in two places at once, nor can he command the sun to stand still and halt the passage of time.

§ 2. The time element in man's provision for his needs. If the needs of men were supplied from day to day by some outside agency, if the things we need fell like manna from the skies, or if man lived the uncalculating life of some animals, there would be no such thing as time-preference or time-value. The lowest animals live entirely in the present. Their whole activity consists in appropriating whatever agreeable things, or rejecting whatever disagreeable things, are at the mornent within their reach.1 And with few exceptions even the higher animals live very largely from day to day, as did primitive men and as some men do still in the midst of modern civilization. For these the desires of the present engross almost the entire attention.

But even some of the animals are guided by their feeble intelligence or by instinct to make choices that do involve a relation between goods in the present and in the future. Squirrels, bees, and ants store up in the season of superfluity for the season of scarcity. Man, and especially civilized man, in a far greater measure, takes the future into account in his plans, his calculations, and his labors. He lives his economic life of choice, so to speak, both in the present and in the future. His economic life and his economic judgment comprehend a great number of periods at once. He attempts to provide for the needs of the future almost as carefully as for those of the present. This means a much more complicated adjustment of goods to desires. The typical animal-choice is lacking the time-dimension (the objects and uses are synchronous). The typical human choice is between goods in different periods (the objects and uses are non-synchronous).2

§ 3. Cases where future use is preferred. It should, however, be carefully observed that time-preference is not always preference for present goods as compared with future goods. We sometimes, indeed very frequently, prefer to have certain things in the future. After any meal, the present use of the remaining food in the pantry, the cellar, the granary, is worth less than its possibility of future uses, some of which are a few hours, others a few days, others perhaps weeks distant. (See above, Chapter 4, section 6 and section 7). The changes of the seasons with their effects on the abundance of plant and animal life cause a pretty regular cycle of valuations. When the crops are harvested in the fall, the farmer, while setting apart some of the fruits of the field to provide for the present nourishment of himself and family, yet stores up the rest for later use. His immediate needs are over-supplied, and his anticipated future needs induce him to save. In a fishing tribe after a great haul of fish a present fish is worth less than the certainty of a fish six months later when fish will be scarce. After a successful buffalo hunt, when all the members of the tribe are sated with meat, present meat is worth less than the chance of an equal amount of meat any time for nearly a year. Ice has less value in winter both because the need for ice in refrigerators is less, and because ice is more plentiful. In January one would gladly exchange a larger amount of present ice for a smaller amount to be delivered the following July. Crops of fruit, vegetables, etc., are on the average worth less per unit at the moment they are gathered than at any other time in the year until the next crop is due. Coal and wood are worth somewhat less in spring and summer than in the following winter. Fresh eggs in the months of April and May when most plentiful could hardly be exchanged for half the quantity to be delivered in November and December, - despite the attempts to keep them over and thus equalize conditions and values by cold-storage and preserving in enormous quantities.

1 Agreeable or disagreeable mean here only so in accord with (in agreement with) the nervous organization (or vice versa) that the animal reaches out toward, or withdraws from, the object.

2 See note on "Present and future goods, uses, desires," at end of chapter.

Such seasonal changes within the year comprise a large proportion of the cases in which present uses are worth less than future uses. The present values of most goods as anticipated through a series of years are adjusted to a pretty regular scale. So far as men can see in advance, one year is going to be much like another. Differences can be allowed for on the average, but no one knows just when the greater crop or the crop failure is to occur. So all must be estimated in advance in relation to the average, or normal.3

3 But see ch. 21, sec. 7, for examples of individual differences in estimates.