Time Preference, Growth and Civilization: Economic Insights into the Workings of Society

Abstract

Economic concepts are not mere ivory tower abstractions disconnected from reality. To a certain extent they can help interdisciplinary endeavours at explaining various non-economic realities (the family, education, charity, civilization, etc.). Following the insights of Hoppe (2001), we argue that the economic concept of social time preference can provide insights – when interpreted in the proper context – into the degree of civilization of a nation/region/city/group of people. More specifically, growth and prosperity backed by the proper institutional context lead, ceteris paribus, to a diminishing of the social rate of time preference, and therefore to more future-oriented behaviours compatible with a more ambitious, capital intensive structure of production, and with the accumulation of sustainable cultural patterns; on the other hand, improper institutional arrangements which hamper growth and prosperity lead to an increase in the social rate of time preference, to more present-oriented behaviours and, ultimately, to the erosion of culture.