Utility and Intertemporal Theory

These include anticipatory feelings. When anticipating feelings towards an individual's salary or remuneration are good, there is a possibility of low savings in the subject household. Fundamentally, the higher an individual's allowable or probable income, the higher their consumption rates and hence smaller savings. If price expectations are accompanied by negative anticipatory feelings (likelihood of an inflation),individuals tend to consume more and save less to avoid the high costs in the future (Rick & Loewenstein, 2008, p.3815). The intertemporal choice does not take into account the marketing efforts of the business organizations and agencies that offer the given products and services to the community. Often times, consumers tend to engage larger volumes of services and products that are offered by aggressively marketing organizations. The initiative then leads to low house savings. As they buy more, given the success of the business organizations, they will be likely to save less.

The utility framework is predicated on the belief that the price that one is willing to pay for a product, provides a succinct reflection of the utility that the client or purchaser is going to derive from the sue of the product. For instance, in purchasing a leather shoe, I will need to assess whether they will last long, the quality of the leather used, and the prestige that they accord me before paying for the price. Some of the assumptions that I will make in the process include the validity of my behavior and the assertion to my current consumption reflecting my current income (Kari, n.d.). Therefore, in purchasing the product, I will be hoping to derive maximum happiness from the initiative.


Kari, D. (n.d.). Intertemporal Choice and Budget Constraint (With Diagram): Consumption Function. [Online] Available at: [Accessed 29th October, 2017)

Rick, S., & Loewenstein, G. (2008). Intangibility in intertemporal choice. Philosophical Transactions, 363(1511), 3813-3824.

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