Sunday, February 17, 2008

Rate of Time Preference

(Very) oddball idea: How is the value you place on delaying your date of birth related to the rate of time preference?

For example, it's worth a lot to me that I was born in 1986 and not in 1132. A lot. In fact, my willingness to pay is severely distorted because I would be willing to forego considerably more wealth to be born in 1986 rather than 1132 than my current total net worth.

I wouldn't go back for a million. Since (1.0163)^(1986-1132) =~ 1,000,000, does that mean my rate of time preference is at least 1.63%?

Note this calculation is, in my belief, fairly closely approximating the intrinsic nature of the rate of time preference, and not at all the discount rate. Of course, we're invoking ceteris paribus all over the place, particularly when it comes to social aspects.

POSTSCRIPT: Still no admits. :/ No rejects either, though.

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