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Time in Economics

Editors of special issue: John Davis (Marquette University and University of Amsterdam), Annie L. Cot (Université Paris 1 Panthéon-Sorbonne), Pedro Garcia Duarte (Universidade de São Paulo), Cyril Hédoin (Université de Reims Champagne-Ardenne)

Expression of interest: July 20th 2015.

Deadline for submission: January 30th 2016.

Planned publication of the issue: 2017.

This call for papers invites original contributions on the subject of time in economics not only from specialists in economic philosophy, methodology and in history of economic thought, but also from theoreticians and applied economists. Contributors are encouraged to confront the particular questions of modeling and representation of time in debates regarding the treatment of time in their own field of specialization.

Time is a perplexing issue in economics. There is the opposition between an economic theory that takes into account historical time, and dynamic models in which economic processes are captured through a uniform objective time. There is the difference between flow concepts and through-time measures and stock concepts and point-in-time measures. Though it has received uneven attention throughout the history of economics, the question of how to take time into account has fostered continual reflections in many areas of economics in theoretical or applied macroeconomics and microeconomics and from both positive and normative perspectives.

Thinking about the role of time in economics can come either from theoretical developments in the discipline and its main transformations or from historical and political necessities facing economies. For example, in the past twenty years, the development of behavioral economics has produced new insights about the perception of time and its likely consequences for economic rationality. During the same time, the pressing issues of global warming in the not-so-long term have stimulated new reflections on intergenerational equity.

It is well known also that time has long been a subject of debate and a major source of division among economists. From the marginalist revolution in the 19th century onwards—and its confrontation with the German historical school—there has been a persistent opposition between economists advocating making historical time central to the understanding of the development of capitalism and those who have favored the use of logical time in the modeling of economic development (with the Mitchell/Vining-Koopmans debate constituting one key climax of this debate). Later neoclassical models of growth and macroeconomic dynamics have been criticized by economists such as Georgescu-Roegen (1971), Shackle (1967), and Joan Robinson (1980) for being based on logical time and being unable to provide an adequate representation of capital and economic processes.

This strand of criticism relates back to earlier thinking about the concept of capital from Böhm-Bawerk (1888), who developed the notion of time preference, which in turn paved the way to the modern treatment of time-discounting (Samuelson, 1937) and impatience (Koopmans, 1960). From the outset, it was strongly opposed by the Austrian economists, who have always made time a key element of their understanding of market behavior (through time preferences, information seeking and innovations).

In fact, the opposition between logical and historical time dates back to the economics of Quesnay’s Tableau économique cyclical representation of the calendar time, through avances and produit net. Later theories of cyclical movements provide a representation of capitalist development based on a periodic movement of booms and recession—sometimes linked with recurring natural phenomena (such as in the works of Herschel, Moore and Jevons)—thus replacing crises with cycles (cf. Morgan, 1990, chs. 1-4; Klein, 1997).

Time is also central to many subfields of applied economics, many of which are linked with cost-benefit analysis and thus make assumptions about time rates of discount. Consider for instance the valuation of years of life saved in health economics or the valuation of time saved in transportation economics. In health economics, economists and health professionals have adopted Health Adjusted Life Years indicators (QALY or DALY) as a criterion for allocating resources in hospitals. This requires different value judgments regarding the meaning and comparability of years to be saved and other trade-offs. In transportation economics, time is a tough issue when it comes to calculating social discount rates to determine the price of saved transportation time (distinguishing between leisure time and labor time, the kind of transportation used, and so forth). These are just two examples when time is given a specific content and meaning. In these and other fields, experimental methods have also been widely used, leading to debates over alternative measurements of the valuation of time (stated preferences, revealed preferences, field experiments, demonstrations, etc.).

A recurring issue, from a methodological perspective, is whether different representations of time are consistent. Beyond measurement issues, time can become a subject of value in itself. Thus in finance theory and within the institutional and technical apparatus that stem directly from it, time has become a subject of value, something to be mastered, for example, through the development of computer-based high-frequency trading (Easley et al., 2012; Jarrow and Protter, 2012).

Discussing time in economic theory leads inevitably to serious and lasting philosophical issues concerning cause and effect and the phenomenology of time perception. The current literature in psychology and behavioral economics also provides new findings on the perception of time and possible distortions in the time consistency on the part of economic agents. Recently, in the wake of alternative theories of choice under uncertainty going beyond the expected utility framework, the issue of time consistency has triggered new insights and analytical developments aimed towards integrating a more descriptively accurate and psychologically grounded representation of time, hence a renewed interest in intertemporal choices and the disparate motives behind them. Notably, it has been argued that hyperbolic discounting is more descriptively accurate than exponential discounting. Consequently, behavioral economists and decision theorists have discussed and debated in detail such concepts as dynamic consistency, impatience, time preference and time discounting (see Frederick, Loewenstein and O Donoghue, 2002; Andreoni and Sprenger, 2012).

From a broader perspective, the intertwining of prescriptive and empirical issues related to time is frequent. One may think first of the different cultural representations of time intimately embedded in different theories of interest in western and non-western traditions (Islamic, Hinduist, Confucian, and so forth), each of which influencing institutional settings and behavioral habits. Another way is to think of a growing body of literature dealing with socio-economic as well as cognitive or emotional parameters influencing time preferences, echoing John Rae’s original insights long ago (Rae, [1834] 1905). Economists have found that time preferences may vary according to socio-economic status, culture, and levels of development, and they have been discussing the impact of emotions and happiness on intertemporal choices. All those elements in turn lead to policy recommendations to nudge people to put more weight on future outcomes or to avoid procrastination.

Lastly, normative issues about time are also central to all reflections on intergenerational equity. It has been revived within the context of the anticipated effects of climate change on future generations and the required mitigation policies that current generation should engage in. Consequently, there has been an increase in time-committed notions such as pure time discounting, growth discounting or opportunity cost discounting, with their respective effects on policy recommendations, thus challenging the possibility to build a simple normative principle to deal with such intergenerational issues (Fleurbaey and Zuber, 2013; 2015).

A non-exhaustive list of potential subjects includes:

  • Flow and stock concepts of time.

  • Time preference and risk.

  • Impatience and time preference in behavioral economics.

  • Representations of time in theories of economic cycles.

  • Time in finance (high-frequency trading, perception of time by traders).

  • The Marshallian device (market period, short run, long run, secular period).

  • Time in applied fields (e.g., health and transportation economics).

  • Happiness and time preference.

  • The social discount rate.

  • Time in Austrian and Neo-Austrian theories of capital and markets.

  • The representation of time in economic cycles.

  • Time in macroeconomics modeling (growth models, overlapping generation models).

  • Time in applied macroeconomic policy modelling.

  • Time and interest in different western and non-western traditions.

  • The modeling of time in evolutionary economics.

  • John Rae’s contributions in context.

  • Hermann Heinrich Gossen on time and marginal utility.

  • The treatment of time within the marginalist revolution.

  • Intergenerational equity.

  • Time consistency and identity in economics.

  • A history of continuous-time econometrics.

  • Nudging intertemporal choices.

  • Separability of times and the scope of distributive justice principles in normative economics and moral philosophy.

  • Procrastination.

Authors are invited to express their interest in participating in the special issue by July 20th 2015 by sending an email to oeconomia@openedition.org indicating the main theme of their contribution with a 100 word abstract. Submission should be done at the Œconomia submission platform: http://journals.sfu.ca/oeconomia/index.php/oeconomia/

Bibliographie

Andreoni, James and Charles Sprenger. 2012. Risk preferences are not time preferences. American Economic Review, 102(7): 3357-3376.

Armatte, Michel. 1992. Conjonctions, conjectures et conjoncture. Les baromètres économiques (1885-1930). Histoire et mesure, 7(1-2): 99-149.

Böhm-Bawerk, Eugen von. 1888. The Positive Theory of Capital. Library of Economics and Liberty, http://www.econlib.org/library/BohmBawerk/bbPTC.html

Broome, John. 1991. Weighing Goods. Blackwell Publisher.

De Serpa, Allan C. 1971. A theory of the economics of time. Economic Journal, 81(324): 828-846.

Easley, David et al. 2012. The Volume Clock: Insights into the High-Frequency Paradigm. Journal of Portfolio Management, 39(1): 19-29.

Fleurbaey, Marc and Stéphane Zuber. 2015. Discounting beyond utilitarianism. Economics: The Open-Access, Open-Assessment E-Journal, 9(12): 1-52.

Fleurbaey, Marc and Stéphane Zuber. 2013. Climate Policies deserve a negative discount rate. Chicago Journal of International Law, 13(2): 565-595.

Hicks, John Richard. 1987. Capital and time. A neo-Austrian theory. Oxford University Press.

Jarrow, Robert A. and Philip Protter. 2012. A dysfunctional role of high frequency trading in electronic markets. International Journal of Theoretical and Applied Finance, 15(3), no page numbering.

Klein, Judy. 1997. Statistical Visions in Time — a history of time series analysis, 1662-1938. Cambridge University Press.

Koopmans, Tjalling C. 1960. Stationary ordinal Utility and Impatience. Econometrica, 28(2): 287- 309.

Morgan, Mary. 1990. The History of Econometric Ideas. Cambridge University Press.

O’Driscoll, Gerald P. and Mario J. Rizzo. 1996. The economics of time and ignorance. Routledge, second edition.

Parfit, Derek. 1984. Reasons and Persons. Oxford University Press.

Prelec, Drazen. 2004. Decreasing impatience: A criterion for non-stationary time preference and ‘hyperbolic’ discounting. Scandinavian Journal of Economics, 106(3): 511-532.

Rae, John [and Charles Whitney Mixter]. [1834] 1905. The sociological theory of capital; being a complete reprint of the New Principles of Political Economy. New York: The MacMillan Company.

Rizzo, Mario J. 1979. Disequilibrium and All That: An Introductory Essay. In M.J. Rizzo (ed.) Time, Uncertainty and Disequilibrium. Exploration of Austrian Themes. Lexington (MA): Lexington Book, 1-18.

Robinson, Joan. 1980. Time in economics. Kyklos, 33(2): 219-229.

Samuelson, Paul Anthony. 1937. A Note on Measurement of Utility. Review of Economic Studies, 4(2): 155-161.

Shackle, George L. S. 1967. Time in economics. Amsterdam: North-Holland Publishing Company.

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