Time Preferences of Money - Deepstash

Time Preferences of Money

Time Preferences of Money

Time Preferences of Money

Time preference for money is an individual's preference for possession of a given amount of money now, rather than the same amount at some future time. The time preference for money is generally expressed by an interest rate. This rate will be positive even in the absence of any risk. The natural implication of this process is to reduce savings and increase borrowing.

Individuals will consume more of their income and borrow more against the future. This will not just have implications on their time preference in financial decisions; it will likely reflect on everything in their lives.

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