If people regarded future benefits as equally desirable with similar benefits at the present time, they would probably endeavour to distribute their pleasures and other satisfactions evenly throughout their lives.They would therefore generally be willing to give up a present pleasure for the sake of an equal pleasure in the future, provided they could be certain of having it.But in fact human nature is so constituted that in estimating the "present value" of a future benefit most people generally make a second deduction from its future value, in the form of what we may call a "discount," that increases with the period for which the benefit is deferred.One will reckon a distant benefit at nearly the same value which it would have for him if it were present; while another who has less power of realizing the future, less patience and self-control, will care comparatively little for any benefit that is not near at hand.And the same person will vary in his mood, being at one time impatient, and greedy for present enjoyment; while at another his mind dwells on the future, and he is willing to postpone all enjoyments that can conveniently be made to wait.Sometimes he is in a mood to care little for anything else: sometimes he is like the children who pick the plums out of their pudding to eat them at once, sometimes like those who put them aside to be eaten last.And, in any case, when calculating the rate at which a future benefit is discounted, we must be careful to make allowance for the pleasures of expectation.
The rates at which different people discount the future affect not only their tendency to save, as the term is ordinarily understood, but also their tendency to buy things which will be a lasting source of pleasure rather than those which give a stronger but more transient enjoyment; to buy a new coat rather than to indulge in a drinking bout, or to choose simple furniture that will wear well, rather than showy furniture that will soon fall to pieces.
It is in regard to these things especially that the pleasure of possession makes itself felt.Many people derive from the mere feeling of ownership a stronger satisfaction than they derive from ordinary pleasures in the narrower sense of the term: for example, the delight in the possession of land will often induce people to pay for it so high a price that it yields them but a very poor return on their investment.There is a delight in ownership for its own sake; and there is a delight in ownership on account of the distinction it yields.Sometimes the latter is stronger than the former, sometimes weaker; and perhaps no one knows himself or other people well enough to be able to draw the line quite certainly between the two.
4.As has already been urged, we cannot compare the quantities of two benefits, which are enjoyed at different times even by the same person.When a person postpones a pleasure-giving event he does not postpone the pleasure; but he gives up a present pleasure and takes in its place another, or an expectation of getting another at a future date: and we cannot tell whether he expects the future pleasure to be greater than the one which he is giving up, unless we know all the circumstances of the case.And therefore, even though we know the rate at which he discounts future pleasurable events, such as spending ? on immediate gratifications, we yet do not know the rate at which he discounts future pleasures.(3*)We can however get an artificial measure of the rate at which he discounts future benefits by making two assumptions.These are, firstly, that he expects to be about as rich at the future date as he is now; and secondly, that his capacity for deriving benefit from the things which money will buy will on the whole remain unchanged, though it may have increased in some directions and diminished in others.On these assumptions, if he is willing, but only just willing, to spare a pound from his expenditure now with the certainty of having (for the disposal of himself or his heirs) a guinea one year hence, we may fairly say that he discounts future benefits that are perfectly secure (subject only to the conditions of human mortality) at the rate of five per cent per annum.And on these assumptions the rate at which he discounts future (certain) benefits, will be the rate at which he can discount money in the money market.(4*)So far we have considered each pleasure singly; but a great many of the things which people buy are durable, i.e.are not consumed in a single use; a durable good, such as a piano, is the probable source of many pleasures, more or less remote; and its value to a purchaser is the aggregate of the usance, or worth to him of all these pleasures, allowance being made for their uncertainty and for their distance.(5*)NOTES:
1.Our illustration belongs indeed properly to domestic production rather than to domestic consumption.But that was almost inevitable; for there are very few things ready for immediate consumption which are available for many different uses.And the doctrine of the distribution of means between different uses has less important and less interesting applications in the science of demand than in that of supply.See e.g.V, III, sec.3.
2.The working-class budgets which were mentioned in Ch.IV, sec.
