13-10 The law of the diminishing marginal utility of money applies only to the valuations of each individual person

The key assumption here is that only a shift along the time preference schedule happens while his time preference schedule per se remains the same (e.g., the following quote from Rothbard). But in reality, the schedule can and does shift—and what brings about the increased saving is the shift in the time-preference schedule per se.

“Here, one element, a man’s money stock, is varied and his value scale is otherwise assumed to remain constant. It is not his money stock that is relevant to his time preferences, but the real value of his money stock. In the ERE, of course, where the purchasing power of the money unit remains unchanged, the two are identical. Ceteris paribus, an increase in his real income—real additions to his money stock—will lower the time-preference rate on his schedule.” (p. 444)

Next:

• 13-10a Time preference per se doesn’t explain anything

Related:

• 2-1a1a8 ‘Tendency to overestimate consistency of behavior’ - Behavior of others are often not innate-intentional but situational
• 13-1a3.1a Praxeological analysis can supply some truths about time preferences, using ceteris paribus assumptions—i.e., by evoking the multiverse
• We cannot infer a shift in time preference from behavior alone because both along-the-curve and shift-of-curve changes can look the same externally:revisit
  • 10-2g1f3 We can only figure out what they know by what they do (‘performance’), because we can never directly study what people know (‘competence’). To assert that we can is a common error in thinking.
  • 13-6f Praxeology is concerned with that part of value scales that can be ascertained from actions
  • 13-8a2c Value scales are ascertainable from the real actions, not vice versa—because value scales cannot be exhausted
  • The following note needs to be reframed:
    • 13-5b2a0.1 Only demonstrated time-preference schedules can be compared—we can say “A has demonstrated higher time-preference than B” but we cannot say “A has higher time-preference than B”
• Comparing present and future utility is as speculative as comparing the preferences of two strangers—treating time preference as a stable, ordinal ranking across time depends on an assumption of unified, continuous identity:
  • 5-1b3a In particular, we underestimate how much we can change in the future during and after downturns. Things change.
  • 10-2e4 Other times (in ‘our universe’) are just special cases of other universes. There is no demarcation between other times and other universes in the multiverse.
  • 13-6a1 Without knowledge, self-identity is no stronger than the identity between any two people
  • Time preference is not a stable parameter, but an expression of present-self expectations about an imagined future self—because we create knowledge, time preference per se cannot serve as a quantitative foundation for interest, savings, or investment behavior:revisit
    • 13-3a The use of the mathematical concept of function in a science of human action is inappropriate—because it disregards time and knowledge creation (i.e., the multiverse)