On the intertemporal allocation of consumption, mortality and life-history strategies

Abstract

This paper studies the bio-evolutionary origin of time preference. By examining human life-history strategies, it demonstrates that time discounting and mortality reflect the age-variation in the value of survival, which in turn depends on future reproduction and production. Consistent with empirical findings, it also suggests that our biologically endowed time preference is positive, reaches its lowest at around age twenty and increases thereafter, and is higher when exchange transactions involve a reduction in present consumption than when they involve an increase in present consumption.