*In Time* (spoilers about the macroeconomic model)

by on October 31, 2011 at 6:54 am in Economics, Film | Permalink

It is rare to see a movie with such a perfectly realized economic model, albeit one pulled from such exotic territory.  Imagine a Keynes chapter 17 world where the “own rate of interest” on time — which can be borrowed and lent — rules the roost.  Many people are at or near subsistence in their time endowments, and there are economies of scale in supply, so short rates on these loans are high.  Those high rates choke off other investments and a version of TGS ensues.  Medium-term rates, however, are negative in real terms.  Carry around too much time and it will be stolen and you die.  The economy has a strongly inverted yield curve and that discourages traditional financial intermediation and investment.  Wealth continues to fall, which exacerbates security problems, in turning lowering the negative medium-term real rates even further.  A downward spiral ensues.  The only way to make money is to buy marginal security (for time endowments) and spend less on that security than you earn on short loans of time.  More and more resources go into security, again exacerbating the inverted yield curve.  The economics of producing security are also the fundamental source of market power in the economy.  Market segmentation reigns and the marginal rates of substitution on time loans are not equated across different social classes.

The hero has read Kalecki (1943) and he operates under the assumption that a redistribution will prove isomorphic to an “Operation Twist” and restore full employment equilibrium, and positive economic growth, by fixing the inverted yield curve.  But is that policy commitment credible?  Does he have the support of the heroine?  You have to watch the movie to find out…

In Time also raises questions about why we find time inequality more objectionable than money inequality.  You also can interpret it as a model of a world where health care really works.

This is by no means a flawless film but conceptually it was stronger than I had been expecting.  Kudos again to Andrew Niccol, Gattaca is a worthwhile movie too.

Here is Robin Hanson’s review, he liked it less than I did.

david October 31, 2011 at 7:12 am

Best movie review of the year.

Nancy Lebovitz October 31, 2011 at 9:56 am

Is it plausible that there wouldn’t be a parallel alienable currency system? Having all the currency either in people or in those little time-holders seems inefficient for medium to large enterprises, especially in the black-to-gray markets.

Andrew' October 31, 2011 at 10:05 am

Andrew Niccol! ANDREW!

foobar October 31, 2011 at 10:19 am

Does the movie present a reasonable explanation for why lifetime is scarce, tradeable, and fungible?

Without genuine scarcity there is no economic science.

Marked to Market October 31, 2011 at 10:20 am

A related issue is that whoever decided the system in the movie was necessary was clearly a Malthusian. Perhaps TGS + immortality = Malthus was right?

Urso October 31, 2011 at 10:45 am

There’s an early 20th century (I think) short story by one of the Italian futurists (I think) with a very similar premise. In the story the old lady trades one year of her youth (so she jumps from 24 to 25 immediately) and gets credit for 365 days of youthfulness to use in her old age. However, like Social Security, her “youth” goes to currently old people, and for her to eventually collect she relies on the people who run the program to recruit enough young people willing to make the trade.

At the climax (spoiler!) the old lady has big plans for her final day of youth but it turns out that there are no days left in the “bank,” and she dies. It’s not what I’d call a fully realized economic model, but maybe a parable about investing in Ponzi schemes. And of course the subtext is maybe the lady is crazy and making this all up, though the narrator accepts her at her word.

Sadly, I can neither remember the title nor the author. Help?

Pub Editor October 31, 2011 at 10:54 am

** SPOILER ALERT **

@ foobar,

Basically, “lifetime is scarce, tradeable, and fungible” due to genetic engineering. Everyone is engineered at birth to stop aging at 25, but after that you have only one year of life left, unless you purchase more. So, people are paid in time, and time is a currency. All of this is explained in the first 10 minutes of the film. (Why are people only given 1 year after 25? That is not entirely clear. The film describes the system, but does not go into detail about how the system came into being.)

I saw it last night. Interesting premise, and there were some interesting parts, but the third act disappointed, and I was unconvinced by the plot resolution.

Matrix fans will spot a number of homages.

rpl October 31, 2011 at 12:03 pm

(Why are people only given 1 year after 25? That is not entirely clear. The film describes the system, but does not go into detail about how the system came into being.)

I haven’t had a chance to see the film yet, but this aspect of the scenario seemed not to be thought through all that well. In a nation of 300 million people, say 200 million are over 25. Just by being alive, they are using up time at the rate of 200 million years per calendar year. Of the remaining 100 million people, perhaps 4 million are turning 25 each calendar year, adding 4 million years back to the total time in circulation each calendar year. With time draining away at that rate, you’re on course for a catastrophic population crash, just from the musical chairs effect. Add in the behavioral changes (e.g., unless you start a pregnancy within 3 months of turning 25, it will be a challenge just to survive long enough to give birth), and you’re probably looking at a crash in birth rates too. Under the scenario as given, the civilization would be unlikely to make it through its first year.

In order to make the “time is money” scenario remotely practicable (handwaving the issues of biology and medicine) you would have to give each person coming of age an amount of time comparable to a human lifespan (less the 25 years everyone gets for free). Using the numbers above, giving each person 50 years when they come of age would keep the time supply roughly constant and would give them an expected lifespan of 75 years. Even then it’s not clear it would work, but at least you’ve got a fighting chance.

Raphfrk October 31, 2011 at 12:22 pm

Average life expectancy is forced to 26 years, since every second someone lives beyond that has to be compensated by someone else.

There doesn’t really seem to be much reason to differentiate between the 25 free years and the 1 transferable year. Preventing children from having their years stolen is one thing, but only allowing 4% of a person’s lifetime to be traded seems like an unreasonable restriction.

A better plan would be 18 years for free and then 8 transferable. This means that you can’t take life from a person until they hit adulthood. 25 free and 50 transferable is even better, since you aren’t destroying all the benefits from education.

rpl October 31, 2011 at 12:29 pm

Average life expectancy is forced to 26 years, since every second someone lives beyond that has to be compensated by someone else.

That’s a much better way of explaining it than what I wrote. When you put it that way, you can see immediately how absurd it is.

Laserlight October 31, 2011 at 1:44 pm

As absurd as “every dollar someone makes beyond that has to be compensated by someone else” ?

rpl October 31, 2011 at 2:15 pm

Laserlight,

I’m not exactly sure what you are trying to say. As best I can figure, you’re trying to argue that the calculation of life expectancy above is mistaken, and you’re arguing by analogy to the circulation of money in the economy. If so, then you’re wrong because there is no mechanism in the real-world economy analogous to the ticking-down of life clocks in the movie. A second may be spent as currency any number of times (just like a dollar in the real-world economy); however, it can only be lived once, and then it’s gone forever.

The amount of time placed into circulation is (1 year) X (total population), and the average life expectancy is (25 years) + (total time) / (total population). Putting those two formulae together gives you a life expectancy of 26 years.

anon October 31, 2011 at 7:05 pm

(Why are people only given 1 year after 25? That is not entirely clear. The film describes the system, but does not go into detail about how the system came into being.)

My guess is that everyone gets 1 “free” year after they turn 25, but that many person-years are held by time-wealthy folks beyond that. Perhaps governments and businesses also hold time which they use to pay folks. So average life expectancy could be far above 26.

Norman Pfyster October 31, 2011 at 1:57 pm

If everyone was genetically engineered to die at 25, wouldn’t full redistribution cause everyone to die at…25? In other words, if the economy is engineered to be zero-sum, how do you get growth at all?

JWatts October 31, 2011 at 4:26 pm

This seems similar, though more convoluted, to Logan’s Run. Is it worth seeing at the theater or is it a RedBox affair?

anonymous... October 31, 2011 at 8:01 pm

You should definitely go see it, despite its flaws, for the same reason as Inception: because it’s one of the few movies nowadays that isn’t a sequel, prequel, remake, franchise reboot or reimagining, or yet another movieification of some forgotten-but-not-gone comic book or TV series. The only way we’ll get more original movies is by buying tickets to the few that still get made.

Having said that, there are some roll-your-eyes plot holes (like, did the eighteen bodyguards all go take a long nap or something, instead of raising an alarm). Also, you’d expect a futuristic society to have at least a Minority Report level of real-time surveillance, but instead Bonnie and Clyde circulate with ridiculous ease (the very final closing image of the movie in particular seems absurd). Finally, the sledgehammer subtlety of the didactic and preachy class warfariness is decidedly off-putting.

anonymous... October 31, 2011 at 7:44 pm

It’s interesting that time-as-currency in the movie follows a sort of gold standard: one second of time-currency is fixed to be equivalent to one second of clock time.

Maybe, in a sequel, time-currency might go off the gold standard and experience a kind of inflation similar to what happened in our real world with air miles, where you must spend much more than one air-mile to travel a mile by air.

Nat Almirall November 1, 2011 at 5:37 pm

I was wondering why, given the advances in genetics and the available resources, the rich didn’t fund a project to get rid of their timers.

Bruce B November 2, 2011 at 2:18 pm

Clicking on the link Tyler provided to past posts on Gattaca, we find that in Aug 2005 Tyler refers to “the underrated Gattaca” whereas in Aug 2008 Tyler says “Is Gattaca underrated? I don’t think so, not any more.”

Was this a change in Tyler’s perception of the movie or did Gattaca become much more appreciated during that three year period?

jenny basket November 8, 2011 at 12:55 pm

Good review, I think thats its about Time that I saw it ;)

Luiz Parreiras November 29, 2011 at 3:10 pm

This movie reminds me of Brazil in hyper-inflationary days.
Very similar economic setup!

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