Re: poly: Why interest rates may stay low

Curt Adams writes:
>>...the tradeoff between dollars today and next year, assuming
>> you're alive. This is the discount rate I've been talking about.
>
>My understanding of the theory of consumption allocation over time
>was that *that* discount rate was essentially zero.

Sorry, that's just wrong.

>The alternative theory would be that consumption gets allocated
>in a way to maximize reproductive fitness (the evolutionary
>psychology approach). I haven't seen anything on that, but from
>what I know about biological evolution indicates that, too, would
>be primarily driven by the mortality rate.

Ingemar Hansson, Charles Stuart, "Malthusian Selection of Preferences",
American Economic Review, June 1990, V.80 No. 3. pp.529-544. deals
specifically with how time preferences should vary with age & gender.
On average though, people should discount a factor of two per generation,
because when you trade off resources for you now vs. resources for a
child of yours a generation from now, your child only shares half your
genes.

Robin Hanson
hanson@econ.berkeley.edu http://hanson.berkeley.edu/
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614
Received on Thu Mar 5 19:13:32 1998