What are intertemporal effects?

Intertemporal effects are when something you do now affects your future, like saving up for a toy that you really want.

Imagine you have a piggy bank. Every time you get an allowance, you put some coins in it. That's saving. Now, if you keep doing this every week, eventually you'll have enough money to buy that cool robot toy you've been eyeing. That’s the intertemporal effect, your actions now (saving coins) help you get something good later (the robot toy).

Think of it like having a time machine, but instead of traveling through space, you're traveling through time! When you save money today, it's like giving yourself a present from the future. You’re not just saving coins, you're building up future happiness.

On the flip side, if you spend all your allowance on candy now, you might not have enough for that robot toy later. That’s also an intertemporal effect, but this one is more like a time machine that takes away your future treat! Intertemporal effects are when something you do now affects your future, like saving up for a toy that you really want.

Imagine you have a piggy bank. Every time you get an allowance, you put some coins in it. That's saving. Now, if you keep doing this every week, eventually you'll have enough money to buy that cool robot toy you've been eyeing. That’s the intertemporal effect, your actions now (saving coins) help you get something good later (the robot toy).