Re: Market failure to sufficently weigh the future

Date: Fri Nov 03 2000 - 11:17:37 MST

Dan Fabulich writes:
> It is, IMO, ridiculous to explain the existence of an interest rate by
> virtue of the fact that I'd rather have pleasure today than tomorrow.
> [...]
> The standard argument claims that, since I prefer pleasure more today
> than tomorrow, and since I'm rational, I'd refuse to trade away
> today's pleasure for tomorrow's pleasure, unless tomorrow's pleasure
> was sufficiently greater than today's pleasure.
> This argument is wrong, because, if rational, it seems I'd also rather
> have pleasure yesterday than today, which is false. I WOULD rather
> have $1M 20 years ago than $1M today, yet it's not at all obvious that
> I'd like to eat an ice cream cone yesterday more than I'd like to eat
> that cone today.

This was the same basic argument the authors were making, except that
they did not feel that this made you irrational. It does mean that you
regret your past decisions, but that is not necessarily irrational.

> (So far, we notice, there's no reason for a beneficient utilitarian
> government to step in and make me eat my cone tomorrow instead of
> eating it today, assuming that the government is trying to maximize
> the sum of my pleasure states over time. If I eat the cone at time X
> rather than at time Y, at time Y I'll wish I had a cone, and at time X
> I'll be happy to have one. It doesn't matter whether time X comes
> before or after time Y; I'd be just as happy, overall, either way.)

Maybe you could have half the cone today and half tomorrow? "Half your
cake and eat it too," so to speak (sorry).


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