Marginal Intertemporal Rate of Substitution


Health Economics

  • The rate at which a person will trade present consumption for a small increase in future consumption. It is the slope of an intertemporal indifference curve showing the amounts of consumption in some future period and (usually) the current period, which yield the same utility. It is the ratio of the marginal utilities of current and future consumption as one is substituted for the other such as to leave the individual in question indifferent (ceteris paribus).