Time Preferences & Godliness

Gary North wrote an interesting piece recently that referenced an idea that Austrian Economist Ludwig von Mises called time preference. Regarding it, North said this:

The more future-oriented you are, the more attention you will pay to the ticking clock. Ludwig von Mises called this time-preference. Future-oriented people have low time preference. They discount the future at a lower rate of interest. This applies to future benefits, but it also applies to future costs.

The present-oriented person is like the grasshopper in the story of the grasshopper and the ants. He fiddles all summer and starves in winter. In the Disney cartoon, he sings, "The world owes me a living." It doesn’t.

Edward Banfield’s book, The Unheavenly City (1970), got him in a lot of trouble on campus at Harvard because he wrote that inner-city men are present-oriented. He defined lower class as present-oriented. This was politically incorrect in 1970 . . . and probably today. His point was that inner-city men, especially if they are single, act for the moment. They want action. They don’t count the long-term cost of their actions. Mises would have said that such people discount the future with a very high rate of interest. The distant future is worth almost nothing to them. So, it has little effect on their present actions.

There is no doubt that the poor have a high time preference and the rich have a much lower one. Interestingly, the Bible has a lot to say on this subject as well. Easau had a very high time preference: And Esau said, Behold, I am at the point to die: and what profit shall this birthright do to me? Gen 25:32. Nothing beyond the present moment meant a thing to him, no matter how valuable. In contrast, Jacob had an extremely low time preference. He was willing to take great risk to cheat Esau out of his blessing (Gen 27), and wrestled with the angel of God that he might receive a blessing on the eve of what he expected to be his last day before Esau would kill him (Gen 32). One writer said that Esau throwing away his birthright as he did was an affront to God. God desires men who have a very low time preference. No doubt that is why He loved Jacob, but hated Esau (Rom 9:13).

Let us consider next what Jesus taught us by words and example. Jesus himself had a very low time preference:

Looking unto Jesus the author and finisher of our faith; who for the joy that was set before him endured the cross, despising the shame, and is set down at the right hand of the throne of God. Heb 12:2.

He also taught the same:

Sell that ye have, and give alms; provide yourselves bags which wax not old, a treasure in the heavens that faileth not, where no thief approacheth, neither moth corrupteth. Luk 12:33

Lay not up for yourselves treasures upon earth, where moth and rust doth corrupt, and where thieves break through and steal: But lay up for yourselves treasures in heaven, where neither moth nor rust doth corrupt, and where thieves do not break through nor steal: For where your treasure is, there will your heart be also. Mat 6:19-21

This last verses gives us a hint as to why God desires men to have a low time preference. He wants our heart to be on Him as our greatest treasure.

What can we learn from these passages? We already know that the poor have a high time preference. The bible seems to confirm such an idea when Jesus says:

The blind receive their sight, and the lame walk, the lepers are cleansed, and the deaf hear, the dead are raised up, and the poor have the gospel preached to them. Mat 11:5

It is also apparent that when a man believes in Christ, his time preference becomes very low. Paul testifies of such:

If in this life only we have hope in Christ, we are of all men most miserable.
1Co 15:19

A faithful Christian will gladly yield most of this life's pleasures, for a reward in the resurrection. Therefore, faith in Christ changes a man's time preference from high to very low. What of the rich however? Seeing his time preference is already low, does that imply godliness? No it does not. While it is certainly lower than that of say Esau, it is not necessarily very high. Indeed it is too low. Examples include the rich young ruler of Luke 18, and the foolish rich man of Luke 12.

Another striking implication of the gospel is one often misunderstood. Because when a man becomes a believer his time preference goes from high to very low, he also replaces those characteristics that made him poor with those that can generate wealth. He therefore, will no longer be poor except that which makes him poor that he may be rich toward God. He will not be poor however because of former ways such as squandering his resources, foolishness and sloth. Instead he will be industrious, save his money, give to the poor, and provide for his own. The bible is replete with descriptions of such Godly men, and this short post doesn't permit going into detail at this time.

What can we learn from these truths?

1. Lay not up treasures on earth, but in heaven - forgo today's pleasures for eternal riches.
2. Give and lend generously to the poor.
3. Preach the gospel to the poor - encourage them to forgo today's pleasures for eternal riches.
4. Work hard and be diligent. Make the most of both time and money for God's kingdom.
   

Grace to you all.