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|391||THE “IMPATIENCE THEORY„ OF INTEREST|
and it becomes the fashion to exhaust wealth in self-indulgence and leave little or nothing to offspring, the rate of impatience and the rate of interest are high. At such times the motto « After us the deluge », indicates the feverish desire to squander in the present, at whatever cost to the future. A noted gambler, who had led a wild and selfish life, once said, when life-insurance was first explained to him. « I have seen many schemes for making, money, but this is the first time I have seem a scheme where you had to die before you could rake in the pile ». That man didn’t care for a payment which would come in after his death. But there are many men who do, and in fact care much more for it than for anything else in the world. This care leads them to insure their lives in order that they may leave the money to their families. Their desire to provide for those who survive them gives them a low rate of impatience. Life insurance, by training people to provide for posterity, is acting as one of the most powerful means of lowering the rate of impatience and therefore the rate of interest. At present in the United States the insurance on lives amounts to 20,000,000,000 of dollars. This represents, for the most part, an investment of the present generation for the next. The investment of this sum springs out of a low rate of impatience, and tends to produce a low rate of interest.
Thus we see that men may differ in many ways which affect the rate of impatience and rate of interest. We may contrast two extreme types of men, irrespective of the character of their income. Men may have a high rate if they are shortsighted, or are weak -willed, or have spendthrift habits or look forward to a short or uncertain life, or are selfish and without regard for posterity. They will have a low rate if they have the opposite characteristics, — foresight, self-control, habits of thrift, length and certainty of life, and altruism with respect to posterity.
But not only does impatience vary as between different individuals; it varies also for the same individual according to circumstances. The most important circumstance affecting an individual’s degree of impatience is the character of his expected income in the immediate and in the remote future.
Smith’s impatience for satisfactions will depend on the abundance of his present as compared with his future satisfactious.