I’d like to discuss some of Nozick’s comments on time preference in his paper “On Austrian Methodology,” but there is an obstacle to doing so. Nozick is fond of intricate arguments, and the section of the paper on time preference is especially difficult. For that reason, I’m going to concentrate on only a few of the many points he addresses.
Nozick criticizes this passage from Human Action, which he rightly recognizes to be vital for Mises’s argument for time preference:
Time preference is a categorial requisite of human action. No mode of action can be thought of in which satisfaction within a nearer period of the future is not—other things being equal—preferred to that in a later period. The very act of gratifying a desire implies that gratification at the present instant is preferred to that at a later instant. He who consumes a nonperishable good instead of postponing consumption for an indefinite later moment thereby reveals a higher valuation of present satisfaction as compared with later satisfaction. If he were not to prefer satisfaction in a nearer period of the future to that in a remoter period, he would never consume and so satisfy wants. He would always accumulate, he would never consume and enjoy. He would not consume today, but he would not consume tomorrow either, as the morrow would confront him with the same alternative. (p. 796)
Nozick raises three objections to what Mises says. First, “a person might be indifferent between doing some act now and doing it later, and do it now. (‘Why not do it now?’) So action now can show time-(weak) preference, but it need not show time-(strong) preference.” By “weak preference,” Nozick means that if you prefer A to B, either you prefer A to B or you are indifferent between them. This notion is standard in neoclassical economics.
The problem with this objection is straightforward. Mises denies that indifference can be demonstrated in action. According to him, if you choose A over B, then your choice shows that you prefer A to B. Your “preference scale” exists only at the moment of choice. Your “demonstrated preference” is just what you do in fact choose on a given occasion. Nozick is well aware that Mises holds this view but nevertheless criticizes him on the basis of a view that Mises explicitly rejects.
And Mises is right to do so. We have a commonsense understanding of choosing something because you would rather have it than any available alternative of which you are aware. If you don’t have this understanding, you are clearly missing something, and it turns out that Nozick’s concept of preference doesn’t allow him to articulate this understanding. This best he can offer is “strong preference,” where you strongly prefer A to B if and only if you weakly prefer A to B and it’s not the case that you weakly prefer B to A. But “strong preference” doesn’t tell us what it means to prefer something. Indeed, “weak preference” is parasitic on that very notion, since you have to understand what it means to prefer A to B in order to understand the definition: you weakly prefer A to B if you prefer A to B or are indifferent between them.
Nozick’s next point fares no better. He says:
A person might act now to get a particular satisfaction, not caring whether it comes sooner or later. He acts now because the option of getting the satisfaction is a fleeting one which will not be available later. Thus, a person can have a reason, other than time preference, to act now; to prefer something sooner rather than later is not necessary in order to act now.
Here the problem lies in a simple oversight. Mises is talking about “nonperishable goods,” which in this context means goods that the actor has a choice of consuming now or at a later time. Satisfactions that are either “now or never” are outside the scope of the argument.
Nozick’s final point rests on a more fundamental misunderstanding. He says:
The fact that we act constantly cannot show that we always have time-preference for all goods, At most, it shows that when a person acts (and the option also is available later) he has time-preference then for the particular good that he then acts to get. This is compatible with an alternation of periods of time-preference for good G, and periods of no time-preference for good G. The person acts to get G during one of the periods of time-preference for G. This is considerably weaker than general time preference.” (Emphasis in original.)
Nozick is of course right that when you prefer getting a good now to later, you are demonstrating time preference only for that particular good now. But for Austrians preferences exist only for actions that occur at particular times. When Nozick says that we prefer G now to G in the future when we act, but maybe we have no time preference for G when we don’t act, this is from the Austrian perspective vacuous. We don’t have preferences when we aren’t acting.
Nozick has more to say about time preference. He offers an evolutionary account of how time preference might have arisen and uses this account to raise a problem of “double discounting” for the standard Austrian position. I hope to address these points in another article, but I ought to issue a warning. Nozick’s discussion is even more convoluted than what I’ve been talking about in this article.
I’d like to conclude by underlining a basic difference between Nozick, on the one hand, and Mises and Rothbard, on the other. Nozick is usually concerned with counterfactuals. Preference, for example, involves not just what you do choose but what you would choose in various hypothetical circumstances. For Mises and Rothbard, by contrast, it is the individual act that matters. As Goethe says, “Im Anfang war die Tat!” (In the beginning was the deed.)
