Spoons and the social discount rate

Its hard to imagine spoons will exist in their current form in 30 years. What does this tell us about the social discount rate?

That is from the ModeledBehavior hive mind.

Let’s assume an intertemporal equilibrium.  The rate of return on buying consumer durables ought to equal (risk-adjusted) the rate of return on capital.  Spoon improvement means a lower rate of return on holding spoons, which means a lower return on durables, which in turn means a lower rate of return on capital investment.  For a given set of interest rates, that implies a higher rate of social discount.

That said, I find it easy to imagine spoons will exist in their current form in 30 years.  What if I were wrong?  I would be overestimating the MU of money in future periods and thus saving too much.  I ought to buy more non-spoon items, renting my current spoons, knowing that spoon improvements will glide me into a cushy retirement.

Comments

Comments for this post are closed