This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
The preference for future over present use appears in many other relations of life. A fire-engine is less valuable now than it will be when the fire breaks out; indeed its present value is but a diminished reflection of the value we anticipate it will then have. We would gladly exchange the useless engine now, with the trouble and expense of care it involves, for the certainty of a similar engine when the fire occurs. In like manner a warship is less valuable now than is the prospect of its use when war occurs. The gift of a trip to Europe this year is less welcome when one is unable to go than would have been the promise of a trip for next year when one expects a vacation. In countless cases may be heard the words, "I don't care for it just now," or "If only it had been later." *
§ 4. Cases where present use is preferred. But with all his foresight, and with all his appreciation of future needs, even the most provident of men is, like the animals, compelled to live very largely in the present. There is no such thing as a future desire; there are only present desires for either present or future goods. The needs of the present and the desires for present goods are, in much the larger number of cases, the more insistent. It is not rational (or even possible) to provide for the future until a certain minimum provision, at least, is made for the present. The typical or average preference of men is for present goods or uses. This does not mean, of course, that there is not desire for future goods, but simply that a larger quantity of future goods will exchange for a smaller quantity of present goods. The smaller amount of present goods is regarded as worth as much as the larger amount of future goods. There are numberless illustrations of this type of preference. In the various cases mentioned in the preceding paragraph one would need merely to shift his position in point of time to reverse the order of preference. In the summer a quantity of present ice is valued more than the certainty of the same amount the next winter; in the winter present eggs are valued more than the trustworthy promise of an equal number the next spring. So with fruits and grains just before the new crop matures, the fire-engine when the conflagration is under way, the battleship when the war has begun.
4 This proposition that present goods of specific kinds are often valued less than the prospect of like goods later has been so strongly emphasized here because a different statement is often met in economic writings, namely, that present goods are always worth more than future goods of like kind and quantity. The erroneous idea results from thinking in terms of money, the loan of which in a developed money economy comes to command a general prevailing premium, to which the prices of other goods are adjusted. But a piece of money itself may be worth less now than later.
§ 5. Biologic basis for most choice of present use. The different time-periods, present and future, and their different economic situations are brought into comparison either by instinctive choice (necessarily involving a ratio of comparison), or by conscious choice between the thing actually present and the future good more or less clearly pictured in the imagination. To take and enjoy things as soon as the desire arises and the means are present seems to be a fundamental trait of men. The impulse to seek immediate gratification is rooted deep in man's biologic nature. It is found in the most elementary forms of animal life (see Chapter 2, sections 1 and 2) and continues to be a powerful guide to action as higher forms of life evolve. It has in the course of evolution been only slowly modified and supplemented by inhibiting instincts and by reason. This impulse is still dominant in the actions of most men, and is ever ready to reassert itself under unusual temptations even in prudent natures. With children and savages and with many civilized men the voluntary postponement of the gratification of desire is of very limited character. Powerful and universal impulses work in favor of present gratification; man's provision for the future occurs only when imagination, reason, habit due to long training, and a strong will to pursue a distant object hold these impulses in check.5
5 It is true that in the social insects (bees and ants) and occasionally among some higher animals (squirrels), the storing of food is an act of instinctive choice and is continued even in circumstances where the least forethought would show the futility of the process. But in man this choice seems to be possible only by the aid of forethought and reason, or of habit acquired by the individual through the earlier exercise of these faculties.
§ 6. Hope and risk as affecting time-preference. Hope is a blessed gift to man to help him bear the ills of life, but hope does not always operate with great discrimination. Hope of future provision for future needs encourages the present use of goods, leaving the future to care for itself. As the successive years will bring recurring needs, they will, while health and strength continue, bring also recurring supplies of goods. If this were the unbroken rule of life, the most economic use of goods would be to consume each year's products as they come. This, indeed, is the firmly fixed habit of life of a large portion of humanity, even under conditions where the results are clearly bad. In many provident and well-to-do families there are persons who are so sheltered from responsibility in caring for the future, that they blindly trust that good things will continue to come in unlimited quantities. Like the young robin with open mouth, ever eager to be fed, they accept unthinkingly the sacrifices of others. Business reverses, the illness or the death of the responsible member of the family, often leave all unprovided for, those in whom prodigality has thus grown into a habit.
The uncertainty of life likewise strengthens the preference for present over future goods. There are two possibilities of loss by waiting, one that the future goods may not be there ("A bird in the hand is worth two in the bush"), and the other that one may not be there himself to enjoy them. ("Eat, drink and be merry, for to-morrow we die.") Life itself is uncertain, all but the present moment. Each of these risks involves a discount on the future uses as compared with the present. So large is this uncertainty of life among savages, so many die of accidents and wounds, that many tribes are said to have only the vaguest conception of a natural death. In semi-civilized and in rude pioneer days, it was almost the rule to "die with one's boots on." Even in the most regular order of things, to-day's desires have the strongest claims of any desires in one's life, simply because they are the most certain.
In the best ordered plans there is some bad judgment. With most men this is increased by the prevalent under-esti-mate of the future and by the ever pressing temptations of present desires as compared with the weakness of the appeal of the future. The steady pressure of these motives directs the larger part of the efforts and thought of men toward the providing of present goods, often leaving the future (ever becoming the present) unprovided for. Accident, robbery, fire, storm, war, disease, death, countless mishaps, may bring upon any man, family, or community this maladjustment. Wherever any particular kinds of goods become in this way unusually scarce, they rise in value compared with future goods of like kind and quantity. Time-preference appears, and shows itself in the uses made of all existing economic agents, both objective and human.