TEMPORARY PREFERENCE AND WEALTH
It is often said that what distinguishes the rich and the poor is the mentality. According to this principle, the rich would exclusively make appropriate decisions regarding money while the poor would screw up full time. It is true that this explanation is built on topics, but it is also true that adequate reasoning can help simple people move forward in the economic locomotive.
And that's where the temporary preference is.
What is temporary preference? It is what induces us to enjoy the reward immediately or to postpone it, with the consequent increase in benefits. Translated into the economic language, it could be the tendency shown by the agents towards throwing themselves into spending or giving themselves patiently to saving.
As you may have guessed, who chooses to save will be a winner in the game of prosperity.
The saving, allows to accumulate capital goods, which translated into the current account of an average worker, would be the availability to obtain an interest rate or buy different assets. These are the ones that, in the long term, will grant an extra return that would not be available after having been delivered to the expense.
This behavior is not only individual, but it could also be reflected in the scope of nations. Thus, rich countries are those that accumulate more capital goods, having a more computerized and digitalized economy, and thus achieving greater productivity. However, poor nations do not accumulate these capital goods, so that their productive sectors are behind and cannot match the rich nations in competitiveness.
Well, do you now understand what temporary preference is?