ECONOMICS FOR REAL PEOPLE: Time Preference
Here’s what’s on the bill tomorrow night for the Auckland Uni Econ Group:
The topic for this week’s economics presentation to our ‘Economics for Real People’ group involves one of the most important ideas in economics - and one that is rarely understood. That is, what is the key driver of interest rates? We will see that interest rates depend on the concept known as Time Preference and this implications of this concept are huge.
We are lucky to have this seminar taken by Sean Kimpton, an economics lecturer from AUT who took us through Say's Law earlier this year. Sean will integrate the idea of Time Preference with reference to all the ideas we have covered this year, and illustrate Time Preference with reference to taxation.
Gene Callahan notes that “Time preference itself is implied by the existence of human action…All other things being equal, if we didn't prefer the same satisfaction sooner rather than later, we would never act.”
“Time Preference” is little known, but it as the centre of all economic calculation.
“Natural” interest rates are set by Time Preference. The degree to which people save (and consume) is explained by their time preference—this preference is subjective and different for each person and will change over time. The difference between the Reserve Bank’s interest rates and the “natural” rate set by Time Preference is the very source of the Business Cycle.
So come along and hear about this little known but hugely important topic.
We will also provide more information about the November seminar being run in Auckland by Professor Fekete which we have mentioned in recent weeks. Don't miss the opportunity to listen and learn from another interesting International Economist coming to our shores.
What: Presentation on Time Preference
Date: Tuesday 19th October
Location: Engineering School, Room 3402
It’s Economics for Real People. All real people welcome.
NB: Please note the room and time change for this week. If you are unsure, the Engineering Building is 20 Symonds St, opposite the Rec Centre. If you walk through the Engineering School’s main doors off Symonds St and straight across the hall, room 3402 is almost directly opposite the entrance.
See you there!
Fraser, Julian & Peter