Tribune. There are two metaphysical puzzles that our greatest thinkers invariably stumble upon. Why is there life before death? And why are interest rates so low? Oddly enough, it could well be that these two puzzles are one.
Our sad condition invites us to plan, but not too much. It is about preventing the days to come, but not eternity. Thus, microeconomics teaches us that we seek to smooth our consumption over time in order to ensure the most stable level of well-being possible, as long as the grim reaper is not summoned.
To prevent tomorrow, we save part of our present income to ensure we have enough to finance our future consumption. We’re even prepared to accept a low return on our savings, if that’s the price to pay for having something in the fridge tomorrow, the day after tomorrow, and until the end.
If interest rates are so low today, it is because we are prepared to pay a very high price to ensure we have enough to use until term. But this certainty of death to come is not the only one that can justify low rates. There is also the anxiety about this death to come, which is quite another thing, and which will justify even lower rates.
Denial, repression
Consciously or not, we fight against this fatal certainty (death, therefore), by removing it from our thought. However, this denial has some undesirable effect on our consumer behavior. Convinced that we will live longer than what nature imposes on us, we imagine that we will be able to consume over a longer period than intended by fate. In good rationality, we are then encouraged to reduce our present consumption in order to save more, which motivates even lower interest rates.
This reflection is not that nebulous, since even the prestigious American institution of the National Bureau of Economic Research has seen fit to tackle the subject, and this well before rates do not reach such low levels (” Denial of Death and Economic Behavior “, Wojciech Kopczuk and Joel Slemrod, Working Paper n ° 11485, NBER, June 2005).
This idea of denial, repression, sorting of information to retain only those deemed useful for well – being, has even become a fashionable subject in economic research; we speak of “rational inattention” (“Rational inattention: a review”, Bartosz Maćkowiak, Filip Matějka, Mirko Wiederholt, ECB Working Paper n ° 2570, European Central Bank, June 2021). If this idea has such resonance today, it is because it tells its time well.
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