Time and Action

Humans act in every conscious, perceptible moment. As we proceed through time, always forward, we are constantly selecting and employing means at our disposal toward the satisfaction of some end. This means that every action is costly: the means we used for our satisfaction could have been used in a different way to satisfy a different end, or we could have used a different set of means entirely to satisfy some different end. The next highest ranked alternative is the opportunity cost of any action. Because action always takes place in the present, but is forward-looking, and because we cannot revisit or retry an action in the past, there is a time cost for every action as well. Given a set of means suitable for want-satisfaction, we can mentally distribute, allocate, or plan the use of those means for a certain time or in a certain order based on our current expectations of future valuations/preference rankings. This type of action may be called a temporal allocation of means.

In production or lending or borrowing, however, we do not simply temporally allocate a given set of means toward want-satisfaction at various times, we substitute, or trade, a satisfaction of one time for a satisfaction of a different time. I may give up a present satisfaction so that I may have a future satisfaction, or I may forego a future satisfaction by presently employing some means to satisfy an end. This type of action may be called an intertemporal exchange of satisfactions. All present consumption reveals a systematic preference for present consumption over future consumption because all present consumption has the opportunity cost of delaying or postponing the consumption of the same means for later. An intertemporal exchange of present satisfaction for a future satisfaction can only happen if the future satisfaction is (presently considered) more highly ranked than the present one foregone. As such, all future satisfactions carry a present discount in relation to present satisfactions. This feature of human action is called time preference.

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