Time preference describes how much we value a benefit now compared with the same benefit later. Most of us place a premium on the present, which makes long-term thinking difficult.
It was the idea that stayed with me most after reading Saifedean Ammous's The Bitcoin Standard. Lower time preference means giving more weight to future well-being.
Delaying gratification is difficult in a world built for convenience. Yet comfort can get in the way of achievement.
Someone with high time preference is focused on their well-being in the present relative to the average person.
Someone with low time preference places more emphasis than average on their well-being in the future.
Because present rewards are so tempting, I see a low time preference as a powerful habit.
Some examples:
- Personal finance. Instead of buying the newest gadget for short term satisfaction, spend less and invest for later.
- Career. Instead of accepting a job you actually don't like to have short term income, invest time in acquiring skills for future employment.
- Investing. Instead of day trading for short term gains, invest in index funds for long term returns.
- Food. Instead of eating junk food for instant gratification, cook whole foods yourself for long term health.
- Real estate. Instead of buying an expensive house with a mortgage for short term happiness, rent and buy real estate to rent out for long term profit.
- Learning. Instead of binging a Netflix series for short term entertainment, read a book to learn something valuable for later.
- Side projects. Instead of going out to party with friends, work on your side projects for future passive income.
These examples overlap with the quick-reward habits I have written about before.
It sounds simple, but choosing the future repeatedly is hard in a world full of distractions and consumerism.
Time preference shapes many of my choices. Once I started noticing it, I saw it everywhere.