Look Ahead, Reason Back (or Not)

I came across this interesting passage in the textbook that accompanies a postgraduate economics course I am currently enrolled:


Individuals with low discount rates invest in more projects because more investments meet their return criteria.  These individuals are more likely to go to college and graduate school, own stocks, and exercise.  The common thread in these activities is that they have current costs and future payoffs, just like investments.


Individuals who require bigger returns, say 20%, place a lower value on future dollars.  They invest only in projects with much higher rates of return, or, if none is available, they borrow money.  These individuals are more likely to smoke, shun exercise, abuse drugs, and commit crime.  The common thread is all of these activities in that they have current payoffs and future costs.


While I am not sure how accurate these characterizations would broadly prove to be across a population of millions, it is still interesting to consider which camp political officials and technocrats tend to fall into – particularly when analogously equating political capital with economic capital.


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