Time preference

‘..The law of time preference is just another way of expressing the following essential principle: any actor, in the course of his action, tries to achieve the results of the action as soon as possible, and he is separated from his ends by a series of intermediate stages involving a certain time period. Hence time preference is not a psychological or physiological concept, but necessarily follows from the logical structure of action present in the mind of all human beings. In short, human action is directed toward certain ends and the actor chooses the means to accomplish them. The goal is the actor’s purpose in performing any action, and in any action, time is what separates the actor from the goal..


Hence it is impossible to imagine a human action to which the principle of time preference does not apply. A world without time preference is inconceivable and would be absurd..’

– Jesús Huerta de Soto, Money, Bank Credit, and Economic Cycles, page 270 and page 271

‘2. Time Preference as an Essential Requisite of Action The answer to this question is that acting man does not appraise time periods merely with regard to their dimension. His choices regarding the removal of future uneasiness are directed by the categories sooner and later. Time for man is not a homogeneous substance of which only length counts. It is not a more or a less in dimension. It is an irreversible flux the fractions of which appear in different perspective according to whether they are nearer to or remoter from the instant of valuation and decision. Satisfaction of a want in the nearer future is, other things being equal, preferred to that in the farther distant future. Present goods are more valuable than future goods.Time preference is a categorial requisite of human action.’

– Ludwig von Mises, Human Action, page(s) 480 & 481

‘..the essential difference between rich societies and poor societies does not stem from any greater effort the former devote to work, nor even from any greater technological knowledge the former hold. Instead it arises mainly from the fact that rich nations possess a more extensive network of capital goods wisely invested from an entrepreneurial standpoint. These goods consist of machines, tools, computers, buildings, semi-manufactured goods, software, etc., and they exist due to prior savings of the nation’s citizens. In other words, comparatively rich societies possess more wealth because they have more time accumulated in the form of capital goods, which places them closer in time to the achievement of much more valuable goals..’

– Jesús Huerta de Soto, Money, Bank Credit, and Economic Cycles, page 279

‘Even in a hypothetical world in which nature provides every man with the means for the preservation of biological survival (in the strict sense of the term), in which the most important foodstuffs arc not scarce and action is not concerned with the provision for bare life, the phenomenon of time preference would be present and direct all actions.’

– Ludwig von Mises, Human Action, page 485