Time Preference
Time preference tldr: If you have 8 hours to catch fishes, do you use the 8 hours to catch fish or do you use only 6 hours and create a net to catch more fish? If you do the latter you have a low time preference, it means you value your future more than your present
For developers this would be like, do you use part of your development hours to refactor and improve your code?
If you do freelance you value for the present than the future If you work in a company/product/SaaS over a long period of time you prefer future over present
A high time preference values present and immediate future
A low time preference values futher future over present
What’s your time preference?
Time preference (long-term orientation) is an economy concept that measure how an individual values the present over future.
A high time preference means that you value more the present then the future.
And a low time preference means that you value more the future over the present.
A simple example If you have 8 hours to catch fishes, do you use the 8 hours to catch fish or do you use only 6 hours and create a net to catch more fish with the rest of 2 hours? If you do the latter you have a low time preference, it means you value your future more than your present
Money
A sound money turns more people to have a low time preference, as the value of the money increases over time, you would prefer to save money instead of spending. Deferred consumptions.
Our current money model based on inflation make people spend more as the money devalues overtime.
Fitness
The process to get fit takes a “long” time. You only get fit if your time preference for this is low enough.
You choose to spend your time doing exercises that feel hard to you, but you only get the benefits in the long run.
Health
We can apply the same concepts to health, you avoid consuming junk food to have a better life in the future.
Sofware House vs SaaS
Software House usually has a high time preference as it prefer to deliver bad/medium quality code to the customer, deliver the product and get a large chunk of money, and move to the next project.
The problem with this model is that SH always need to do the same work to get the same amount of money.
SaaS product charges a much small subscription per customers, but it earns this amount for long periods of time. This also make sure the SaaS company will keep delivering value to current and new customers to keep them paying for the product, the incentives are aligned, it is a win-win relationship.
Marriage
Marriage is a long term. If you don’t want to spend the rest of your life if the person you are married, you should get a divorce. Marriage gets better in the long run as you get used to each other and trust more each other.
Habits
Habits is what you do in a daily basis
atomic habits, exponential, long run, time preference
- BitcoinSound money sound/hard money is money that it is a good store of value, it does not suffer with inflation, and it can't be easily made proof of work is about creating a…
- Game TheoryGame Theory is the study of games with agents that perform the best action. The classic game is the Prisoner's Dilemma where 2 agents that can't communicate with each other don't…
- InvestingMartin Shkreli buy bonds and stocks as assets to grow in value ads on a website, mobile app, or YouTube channel, courses, ebooks, teach what you know to others, affiliated…
- KeynesEconomics For Keynes, economics mattered because it would ensure people need not organize their lives around the empty chase of money. It would free them, instead, “to live…
- Practical InvestingInvesting pesquisar ações e fundo imobiliarios com yield grande de dividendos mensais bancos, eletricas, seguradoras operadora Clear Toro investimento
- Skin in the GameSkin in the game is when you risk yourself to gain the upside, but also I aware of the downside. Everytime you have more upside then downside (asymmetry), it causes troubles in…
Sign in with GitHub to reply.
Select any passage to quote it.
Comments