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| 392 | “scientia„ |
If the future satisfactions that he expects and looks forward to are very great, and his present satisfactions are very small, he will be impatient to hurry from his present scarcity and arrive at the expected future abundance; that is, he will have a high rate of preference for present over future satisfactions. This is on the same principle that prices are high when goods are scarce. The preference for present satisfactions is high if present satisfactions are scarce. Now the rate of preference which Smith has for present satisfactions over future satisfactions will depend on his whole future stream of satisfactions, that is, what we call his final enjoyable income. It will depend on four chief characteristics of that income: first, as just said, it will depend on the time-shape of the income, the relative abundance of his present and his future satisfactions; second, on the amount of the income, i. e. whether his satisfactions are few or many; third, on the uncertainties of the income, i. e. to what extent his satisfactions throughout future years can be depended upon; and fourth, on the composition of the income, i. e. the relative amounts of foods, shelter, etc., of which it is composed.
For brevity we shall here consider only the time-shape of income, i. e. the distribution of income in time. Three different types of time-shape may be distinguished: uniform income, consisting of equal yearly items, income increasing in the future, and income decreasing in the future.
The effect of possessing an increasing income is, as we have already indicated, to make the possessor impatient, i. e. to make his preference for present over future income higher than otherwise; for it means that the earlier parts of his income ares relatively scarce, and the remoter, relatively abundant. For instance, a man who is now enjoying an income of only 1000 dollars a year, but expects in ten years to be enjoying one of 10,000 dollars a year, will be impatient to have ten years elapse. He has « great expectations ». lie may, to satisfy his impatience, borrow money to eke out this year’s income, and make repayment by sacrificing from his more abundant income ten years later.
Reversely, a decreasing income, making, as it does, the earlier income relatively abundant, and the remoter income relatively scarce, tends to reduce impatience, or the preference for present as compared with future income. The man
