Irving Fisher's conception of interest

Purpose: Evaluate Fisher’s theory of interest in its historical context. Originality: Investigate shifts in Fisher‘s thinking about determinants of the rate of interest. Key Literature/ Theoretical Perspective: Literature tends to refer to the theory in the singular form. Yet it is a composite of three issues. These are The Rate of Interest: Its Determination and Relation to Economic Phenomena (1907), The Impatience Theory of Interest: A Study of the Causes Determining the Rate of Interest (1911), and The Theory of Interest as Determined by Impatience to Spend Income and Opportunity to Invest It (1930). This research considers the theory of interest from its composite perspective. Methodology/ Approach: Historical reconstruction. Analytical techniques applied to published and archival materials include contextual analysis. Study of archival materials can provide insight on motivations that underpin theory inception and restatement; much like adjusting image resolution, to bring into focus an object where at first only contours were visible. Provisional Findings: In each of the three issues, Fisher provides a different set of definitions of the rate of interest. Each set is subtly different. Over a period extending nearly quarter of a century from inception to final restatement, Fisher labelled the theory as ‘time-preference’ or ‘agio’, ‘impatience’, and finally, ‘impatience and opportunity’. What insight can be gained about Fisher’s conception of interest when considering the theory of interest as a composite of three issues? Research Implications: Irving Fisher’s theory of interest occupies the ‘middle-ground’ between the technical and the psychological explanations for the determinants of the rate of interest. This research contributes to further illumination of the territory surrounding this ‘middle-ground’ including its conception of capital and income. Practical and Social implications: Knowledge about episodes in the history of economic thought literature, especially instances where a series of events contribute to a shift in a pattern of thinking, is essential for studying the mechanics of conceptual change. Thereby illuminating patterns that we may anticipate in past, present, and future economic thought.