Re: poly: Why interest rates may stay low

In a message dated 3/4/98 12:07:02 PM, hanson@econ.berkeley.edu wrote:

>I had in mind a different meaning of "discount rate". How much you
>value a dollar today vs. a dollar in a year depends on how much you'd
>value a dollar a year from now if you were alive, and what the chances
>are you'll be alive. The issue that you might die can be factored out
>via proper use of annuities, so that you are broke if you die. Once
>you've done this, what remains is the tradeoff between dollars today
>and next year, assuming you're alive. This is the discount rate I've
>been talking about.

My understanding of the theory of consumption allocation over time
was that *that* discount rate was essentially zero. People choose
discount rates that allocate consumption as evenly as possible over
their lives, accounting for investment effects, uncertainty, and
possible death.

The alternative theory would be that consumption gets allocated
in a way to maximize reproductive fitness (the evolutionary
psychology approach). I haven't seen anything on that, but from
what I know about biological evolution indicates that, too, would
be primarily driven by the mortality rate.

>I think you're presuming that discount rates are set in some modular
>component that we can identify, and run at a different speed without
>messing up the whole works.

Yes. In general the brain is pretty modular - knocking out an area
affects pretty specific things, for the most part. Motivation and
temporal perception come from the more modular parts of the brain,
like the temporal lobes.

Obviously any presumptions about uploads by either of us are
necessarily highly speculative. Perhaps we'll just have to agree
to disagree. That wasn't your main point anyway, was it?
Received on Thu Mar 5 04:59:50 1998