time preference

Time preference refers to the degree to which people value immediate rewards over future rewards. Essentially, it reflects how individuals prioritize receiving benefits sooner rather than later. For example, if someone chooses to take a small amount of money today instead of a larger sum in a year, they have a higher time preference. This concept plays a significant role in economics, influencing savings, investments, and consumption choices. Generally, people with a low time preference are more willing to wait for bigger future gains, while those with a high time preference prefer instant gratification.