The answer to this question is that acting man does not appraise time periods merely with regard to their dimensions. His choices regarding the removal of future uneasiness are directed by the categories sooner and later. Time for man is not a homogeneous substance of which only length counts. It is not a more or a less in dimension. It is an irreversible flux the fractions of which appear in different perspective according to whether they are nearer to or remoter from the instant of valuation and decision. Satisfaction of a want in the nearer future is, other things being equal, preferred to that in the farther distant future. Present goods are more valuable than future goods. [p. 484]
Time preference is a categorial requisite of human action. No mode of action can be thought of in which satisfaction within a nearer period of the future is not--other things being equal--preferred to that in a later period. The very act of gratifying a desire implies that gratification at the present instant is preferred to that at a later instant. He who consumes a nonperishable good instead of postponing consumption for an indefinite later moment thereby reveals a higher valuation of present satisfaction as compared with later satisfaction. If he were not to prefer satisfaction in a nearer period of the future to that in a remoter period, he would never consume and so satisfy wants. He would always accumulate, he would never consume and enjoy. He would not consume today, but he would not consume tomorrow either, as the morrow would confront him with the same alternative.
Not only the first step toward want-satisfaction, but also any further step is guided by time preference. Once the desire a to which the scale of values assigns the rank 1 is satisfied, one must choose between the desire b to which the rank 2 is assigned and c that desire of tomorrow to which--in the absence of time preference--the rank 1 would have been assigned. If b is preferred to c, the choice clearly involves time preference. Purposive striving after want-satisfaction must needs be guided by a preference for satisfaction in the nearer future over that in a remoter future.
The conditions under which modern man of the capitalist West must act are different from those under which his primitive ancestors lived and acted. As a result of the providential care of our forebears we have at our disposal an ample stock of intermediate products (capital goods or produced factors of production) and of consumers' goods. Our activities are designed for a longer period of provision because we are the lucky heirs of a past which has lengthened, step by step, the period of provision and has bequeathed to us the means to expand the waiting period. In acting we are concerned with longer periods and are aiming at an even satisfaction in all parts of the period chosen as the period of provision. We are in a position to rely upon a continuing influx of consumers' goods and have at our disposal not only stocks of goods ready for consumption but also stocks of producers' goods out of which our continuous efforts again and again make new consumers' goods mature. In our dealing with this increasing "stream of income," says the superficial observer, there is no heed paid to any considerations related to a different valuation of present and of future goods. We synchronize, he asserts, and thus the time element loses any importance for the conduct of [p. 485] affairs. It is, therefore, pointless, he continues, in the interpretation of modern conditions to resort to time preference.
The fundamental error involved in this popular objection is caused, like so many other errors, by a lamentable misapprehension of the imaginary construction of the evenly rotating economy. In the frame of this imaginary construction no change occurs; their prevails an unvarying course of all affairs. In the evenly rotating economy consequently nothing is altered in the allocation of goods for the satisfaction of wants in nearer and in remoter periods of the future. No one plans any change because--according to our assumptions--the prevailing allocation best serves him and because he does not believe that any possible rearrangement could improve his condition. No one wants to increase his consumption in a nearer period of the future at the expense of his consumption in a more distant period or vice versa because the existing mode of allocation pleases him better than any other thinkable and feasible mode.
The praxeological distinction between capital and income is a category of thought based on a different valuation of want-satisfaction in various periods of the future. In the imaginary construction of the evenly rotating economy it is implied that the whole income but not more than the income is consumed and that therefore the capital remains unchanged. An equilibrium is reached in the allocation of goods for want-satisfaction in different periods of the future. It is permissible to describe this state of affairs by asserting that nobody wants to consume tomorrow's income today. We have precisely designed the imaginary construction of the evenly rotating economy in such a way as to make it fit just this condition. But it is necessary to realize that we can assert with the same apodictic assurance that, in the evenly rotating economy, nobody wants to have more of any commodity than he really has. These statements are true with regard to the evenly rotating economy because they are implied in our definition of this imaginary construction. They are nonsensical when asserted with regard to a changing economy which is the only real economy. as soon as a change in the data occurs, the individuals are faced anew with the necessity of choosing both between various modes of want-satisfaction in the same period and between want-satisfaction in different periods. An increment can be either employed for immediate consumption or invested for further production. No matter how the actors employ it, their choice must needs be the result of a weighing of the advantages expected from want-satisfaction in different periods of the future. In the world of reality, in the living and changing universe, each individual in each of his actions is forced [p. 486] to choose between satisfaction in various periods of time. Some people consume all that they earn, others consume a part of their capital, others save a part of their income.
Those contesting the universal validity of time preference fail to explain why a man does not always invest a sum of 100 dollars available today, although these 100 dollars would increase to 104 dollars within a year's time. It is obvious that this man in consuming this sum today is determined by a judgment of value which values 100 present dollars higher than 104 dollars available a year later. But even in case he chooses to invest these 100 dollars, the meaning is not that he prefers satisfaction in a later period to that of today. It means that he values 100 dollars today less than 104 dollars a year later. Every penny spent today is, precisely under the conditions of a capitalist economy in which institutions make it possible to invest even the smallest sums, a proof of the higher valuation of present satisfaction as compared with later satisfaction.
The theorem of time preference must be demonstrated in a double way. first for the case of plain saving in which people must choose between the immediate consumption of a quantity of goods and the later consumption of the same quantity. Second for the case of capitalist saving in which the choice is to be made between the immediate consumption of a quantity of goods and the later consumption either of a greater quantity or of goods which are fit to provide a satisfaction which--except for the difference in time--is valued more highly. The proof has been given for both cases. No other case is thinkable.
It is possible to search for a psychological understanding of the problem of time preference. Impatience and the pains caused by waiting are certainly psychological phenomena. One may approach their elucidation by referring to the temporal limitations of human life, to the individual's coming into existence, his growth and maturing, and his inevitable decay and passing away. There is in the course of a man's life a right moment for everything as well as a too early and to late. However, the praxeological problem is in no way related to psychological issues. We must conceive, not merely understand. We must conceive that a man who does not prefer satisfaction within a nearer period of the future to that in a remoter period would never achieve consumption and enjoyment at all.
Neither must the praxeological problem be confused with the physiological. He who wants to live to see the later day, must first of all care for the preservation of his life in the intermediate period. Survival and appeasement of vital needs are thus requirements for the satisfaction of any wants in the remoter future. This makes us understand [p. 487] why in all those situations in which bare life in the strict sense of the term is at stake satisfaction in the nearer future is preferred to that in later periods. But we are dealing with action as such, not with the motives directing its course. In the same way in which as economists we do not ask why albumin, carbohydrates, and fat are demanded by man, we do not inquire why the satisfaction of vital needs appears imperative and does not brook any delay. We must conceive that consumption and enjoyment of any kind presuppose a preference for present satisfaction to later satisfaction. The knowledge provided by this insight far exceeds the orbit for which the physiological facts concerned provide explanation. It refers to every kind of want-satisfaction, not only to the satisfaction of the vital necessities of mere survival.
It is important to stress this point because the term "supply of subsistence, available
for advances of subsistence," as used by Bohm-Bawerk, can easily be misinterpreted. It is
certainly one of the tasks of this stock to provide the means for a satisfaction of the bare
necessities of life and thus to secure survival. But besides it must be large enough to satisfy,
beyond the requirements of necessary maintenance for the waiting time, all those wants and
desires which-apart from mere survival-are considered more urgent than the harvesting of
the physically more abundant fruits of production processes consuming more time.
Bohm-Bawerk declared that every lengthening of the period of production depends on the condition that "a sufficient quantity of present goods is available to make it possible to overbridge the lengthened average interval between the starting of preparatory work and the harvesting of its product." The expression "sufficient quantity" needs elucidation. It does not mean a quantity sufficient for necessary sustenance. The quantity in question must be large enough to secure the satisfaction of all those wants the satisfaction of which during the waiting time is considered more urgent than the advantages which a still greater lengthening of the period of production would provide. If the quantity in question were smaller, a shortening of the period of production would appear advantageous; the increase in the quantity of products or the improvement of their quality to be expected from the preservation of the longer period of production would no longer be considered a sufficient remuneration for the restriction of consumption enjoined during the waiting time. Whether or not the supply of subsistence is sufficient, does not depend on any [p. 488] physiological or other facts open to objective determination by the methods of technology and physiology. The metaphorical term "overbridge," suggesting a body of water the breadth of which poses to bridge builder an objectively determined task, is misleading. The quantity in question is valued by men, and their subjective judgments decide whether or not it is sufficient.
Even in a hypothetical world in which nature provides every man with the means for the preservation of biological survival (in the strict sense of the term), in which the most important foodstuffs are not scarce and action is not concerned with the provision for bare life, the phenomenon of time preference would be present and direct all actions. 
Observations on the Evolution of the Time-Preference Theory
It seems plausible to assume that the mere fact that interest is graduated in reference to periods of time should have directed the attention of the economists, intent upon developing a theory of interest, upon the role played by time. However, the classical economists were prevented by their faulty theory of value and their misconstruction of the cost concept from recognizing the significance of the time element.
Economics owes the time-preference theory to William Stanley Jevons and its elaboration, most of all, to Eugen von Bohm-Bawerk. Bohm-Bawerk was the first to formulate correctly the problem to be solved, the first to unmask the fallacies implied in the productivity theories of interest, and the first to stress the role played by the period of production. But he did not entirely succeed in avoiding the pitfalls in the elucidation of the interest problem. His demonstration of the universal validity of time preference is inadequate because it is based on psychological considerations. However, psychology can never demonstrate the validity of a praxeological theorem. It may show that some people or many people let themselves be influenced by certain motives. It can never make evident that all human action is necessarily dominated by a definite categorial element which, without any exception, is operative in every instance of action. 
The second shortcoming of Bohm-bawerk's reasoning was his misconstruction of the concept of the period of production. He was not fully aware of the fact that the period of production is a praxeological category and that the role it plays in action consists entirely in the choices acting man makes between periods of production of different [p. 489] length. The length of time expended in the past for the production of capital goods available today does not count at all. These capital goods are valued only with regard to their usefulness for future want-satisfaction. The "average period of production" is an empty concept. What determines action is the fact that in choosing among various ways which can remove future uneasiness the length of the waiting time in each case is a necessary element.
It was an outcome of these two errors that Bohm-Bawerk in the elaboration of his theory did not entirely avoid the productivity approach which he himself had so brilliantly refuted in his critical history of the doctrines of capital and interest.
These observations do not detract at all from the imperishable merits of Bohm-Bawerk's contributions. It was on the foundation laid by him that later economists--foremost among them Knut Wicksell, Frank Albert Fetter and Irving Fisher--were successful in perfecting the time-preference theory.
It is customary to express the essence of the time-preference theory by saying that there prevails a preference for present over future goods. In dealing with this mode of expression some economists have been puzzled by the fact that in some cases present uses are worth less than future uses. However, the problem raised by the apparent exceptions is caused merely by a misapprehension of the true state of affairs.
There are enjoyments which cannot be had at the same time. A man cannot on the same evening attend performances of Carmen and of Hamlet. In buying a ticket he must choose between the two performances. If tickets to both theaters for the same evening are presented to him as a gift, he must likewise choose. He may think with regard to the ticket which he refuses: "I don't care for it just now," or "If only it had been later." However, this does not mean that he prefers future goods to present goods. He does not have to choose between future goods and present goods. He must choose between two enjoyments both of which he cannot have together. This is the dilemma in every instance of choosing. In the present state of his affairs he may prefer
Hamlet to Carmen. The different conditions of a later date may possibly result in another decision.
The second seeming exception is presented by the case of perishable goods. They may be available in abundance in one season of the year and may be scarce in other seasons. However, the difference between ice in winter and ice in summer is not that between a present good and a future good. It is the difference between a good that loses its specific usefulness even if not consumed and another good which requires a different process of production. Ice available in winter can only be used in summer when subjected to a special process of conservation. It is, in respect to ice utilizable in summer, at best one of [p. 490] the complementary factors required for production. It is impossible to increase the quantity of ice available in summer simply by restricting the consumption of ice in winter. The two things are for all practical purposes different commodities.
The case of the miser does not contradict the universal validity of time preference. The miser too, in spending some of his means for a scanty livelihood, prefers some amount of satisfaction in the nearer future to that in the remoter [p. 491] future. Extreme instances in which the miser denies himself even the indispensable minimum of food represent a pathological withering away of vital energy, as is the case with the man who abstains from eating out of fear of morbific germs, the man who commits suicide rather than meet a dangerous situation, and the man who cannot sleep because he is afraid of undetermined accidents which could befall him while asleep.
. Bohm-Bawerk. Kleinere Abhandlungen uber Kapital und Zins,
vol. II in Gesammelte Schriften, ed. F. X. Weiss (Vienna, 1926), p. 169.
. Time preference is not specifically human. It is an inherent
feature of the behavior of all living things. The distinction of man consists in the very
fact that with him time preference is not inexorable and the lengthening of the period
of provision not merely instinctive as with certain animals that store food, but the result
of a process of valuation.
. For a detailed critical analysis of this part of Bohm-Bawerk's
reasoning the reader is referred to Mises, Nationalokonomie, pp. 439-443.
. Cf. F. A. Fetter, Economic Principles (New York, 1923), I,