I was cleaning out my email and found this ‘How Austrian Are You?’ quiz I took on mises.org. The results indicate that the other 6% was deducted because my definition of interest was Chicagoan. I honestly don’t see a functional difference in the Austrian and Chicagoan definitions (of interest)* and I really don’t care; I think THAT is what differentiates me from an Austrian.
*No, I don’t need anyone to explain them to me. I understand marginal cost vs. loss of liquidity; I just don’t think that, ultimately, it matters. At the end of the day, it’s all just utility.
Austrian definition of interest = indicator of time preference and the cost of tapping into the purchasing power of future money for present purposes.
Chicago definition of interest = equilibrium between supply & demand for money
they are indeed different
Welllllllllll, I think they’re only functionally different inasmuch as most Austrian ones (i.e. pure time preference theories of interest) are largely kind of wrong xor pointless. See Robert Murphy, chapter 2. So yes they are indeed different. And of the two, your Chicago definition is the mostly correct and more useful definition of interest. But they’re not mutually exclusive as intertemporal preference can be accounted tidily for in the demand for money under the former.
I’m with cheekylib. I don’t really care whether I’m a pure Austrian by some strict methodological criteria or not. I think most of the excellent stuff from Austrians is complemented by the excellent stuff from other schools within and outside academic economics. It’s about whether it’s excellent or not, really.
Eloquently put! c:
thecheekylibertarian 