The Review of Austrian Economics

, Volume 19, Issue 1, pp 69–80

The relationship between wealth or income and time preference is empirical, not apodictic: a critique of Rothbard and Hoppe

Authors

    • Department of Economics, Joseph A. Butt, S. J. College of Business AdministrationLoyola University New Orleans
  • William BarnettII
    • Joseph A. Butt, S. J. College of Business AdministrationLoyola University New Orleans
  • Joseph Salerno
    • Lubin School of BusinessPace University
Article

DOI: 10.1007/s11138-006-6094-8

Cite this article as:
Block, W., Barnett, W. & Salerno, J. Rev Austrian Econ (2006) 19: 69. doi:10.1007/s11138-006-6094-8
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Abstract

There is no doubt that when income or wealth increases, impatience for present goods declines. When time preference for the present falls, interest rates decline as well. But is this phenomenon a necessary condition of human action as Rothbard and Hoppe contend? This is widely thought to be true when a man is on the very verge of death. There is an aphorism according to which “a drowning man will grasp even at the blade of a sword.” In this view, someone who is starving will not postpone the consumption of food for tomorrow that is necessary to keep him alive today. But we disagree. And what is the situation under more ordinary circumstances far removed from starvation? We argue in this paper that, contrary to Rothbard and Hoppe, under these conditions it is a reliable but only a broad empirical generalization that time preferences and interest rates are inversely related to wealth or income, it is not a matter of praxeology.

Keywords

WealthIncomeTime preferencePraxeologyEmpiricalInterest rates

Copyright information

© Springer Science + Business Media, Inc. 2006