Intrinsic Impatience
Intrinsic impatience refers to the inherent preference for consuming a good in the present rather than in the future, regardless of one's current circumstances. This preference can be identified by determining if an individual, starting with an equal amount of a good in both the present and future, would value an additional unit of that good more highly now than later. [1] For instance, an individual displays intrinsic impatience if, from a state of perfectly balanced consumption, they would need more than one unit of future consumption to make up for losing one unit of present consumption.
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CORE Econ
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
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Situational Impatience
Intrinsic Impatience
Analyze each scenario and match it to the correct legal interpretation based on the principle of equal pay for similar work.
A medical student has very little income now but has accepted a high-paying job that starts in one year. They decide to take out a loan to finance a modest vacation, reasoning that the enjoyment they get from the trip now is worth more than paying back a slightly larger amount from their future high salary. Which economic concept does this decision best illustrate?
Analyzing Economic Impatience in Decision-Making
Analyzing Consumer Behavior
Two individuals, Alex and Ben, are offered a choice: receive $100 today or $110 in one year. Alex, who has very little income now but expects a large salary increase next year, chooses the $100 today. Ben, who has a stable and high income that is not expected to change, also chooses the $100 today. Which statement best analyzes the economic impatience displayed by Alex and Ben?
An individual with a stable income who chooses to receive $100 today over $105 in one year is demonstrating a preference for consumption smoothing.
Differentiating Types of Economic Impatience
Analyze each scenario and match it to the type of economic impatience it best illustrates. If a scenario does not illustrate impatience, match it to 'Neither'.
An economist observes that both recent graduates with low current income but high expected future income, and tenured professors with stable high incomes, frequently use credit to make purchases now rather than waiting. The economist concludes that since the behavior is the same, the underlying reason for their economic impatience must also be the same. Evaluate this conclusion.
Analyzing Motivations for Impatience
Analyzing Consumer Behavior
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Julia's Intrinsic Impatience Illustrated by an Indifference Curve
Quantifying Julia's Intrinsic Impatience via Point B'
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Causes of Intrinsic Impatience: Myopia and Prudence
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An individual has a financial plan that provides them with $1,000 of consumption this year and $1,000 of consumption next year. They are then offered an alternative: they can give up $100 of consumption this year in exchange for an additional $110 of consumption next year. The individual states that they are indifferent between their original plan and this new alternative. Based on this information, what can be concluded about their time preference?
Identifying Intrinsic Impatience in Financial Decisions
An individual who has an equal amount of consumption planned for the present and the future demonstrates intrinsic impatience if they are willing to give up $50 of present consumption in exchange for exactly $50 of future consumption.
An individual who has an equal amount of consumption planned for the present and the future demonstrates intrinsic impatience if they are willing to give up $50 of present consumption in exchange for exactly $50 of future consumption.
Comparing Degrees of Intrinsic Impatience
Differentiating Reasons for Time Preference
Match each scenario describing an individual's consumption choice to the type of time preference it best represents.
An economist observes an individual who has arranged their finances to have exactly the same amount of spending money available this year and next year. Which of the following scenarios would most clearly demonstrate that this individual has an inherent preference for consuming now rather than later?
Analyzing Consumption Preferences
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