This is “End-of-Chapter Material”, section 4.5 from the book Theory and Applications of Microeconomics (v. 1.0).
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Many decisions involve a trade-off between now and the future. Whenever we invest our time or money, we are giving up something today to obtain something in the future. So by saving some of our income, we give up consumption now for consumption in the future. When we go to a university, we give up income and leisure time today to get more consumption (through higher income) in the future.
Once you start thinking about trade-offs over time, it is difficult to avoid the reality that many of these decisions are made in the face of great uncertainty. When we save, we are not certain of the return on our saving. When we go to school, we are not guaranteed a job in the future nor are we guaranteed a specific salary. We have provided some insights into the nature of these uncertainties and how to deal with them. Discounted present value and expected value are techniques that are worthwhile to master, as they will help you make better decisions throughout your life.