Psychic Income: Irving Fisher and the Economics of Time at the Turn of the Twentieth Century

In the early years of the twentieth century, the American economist Irving Fisher set out to place the science of economics on sounder footing by redefining some of the field’s most fundamental categories, including capital, income, value, and interest. At the center of this project was a dramatic rethinking of the nature of economic value and its relationship to time. Fisher concluded that the economic value of anything ultimately derived from the subjective satisfaction (or dissatisfaction) it brought to the individuals who used or consumed it, what Fisher called “psychic income.” These psychic benefits were not a static quantity, but were always realized over some space of time, whatever the item—a financial asset, an item of food, a house, a piece of furniture, a piano. Psychic income flowed. All economic decisions, Fisher argued, entailed translating this future flow of benefits into present time. Fisher described this process mathematically through a technique called “exponential discounting,” which would become one of the rudiments of neoclassical economics in the ensuing century. How did Fisher come to comprehend the relationship between time, value, and economic subjectivity in this way? And how did he come to see a relatively esoteric calculation, discounting, as the key to understanding the economic self? This paper—drawn from a book-length historical “biography” of exponential discounting—recovers an essential and overlooked influence on Fisher’s thinking: the highly popular spiritual and self-help movement known as “New Thought” or “mind cure.” The story of Fisher’s metaphysical moment offers new insight into the spiritual and psychological underpinnings of American neoclassical economics—and a vivid case study of how highly technical ideas in the sciences (like discounting) refract seemingly distant cultural trends.