There are two societies, A and B, that are alike in every way but one. In society A, people have a high rate of time preference, and in society B, people have a low rate of time preference. It follows that

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A high rate of time preference means that individuals in society A prefer current consumption over future consumption more than individuals in society B do. This implies that people in society A are less likely to save and more likely to borrow for current consumption, leading to higher interest rates due to higher demand for loans. In contrast, society B, with a low rate of time preference, would save more and borrow less, leading to lower interest rates.

There Are Two Societies, a and B, That Are Alike