This paper examines the extent of intertemporal substitution in consumption, which refers to how much consumers adjust their consumption over time in response to changes in real interest rates. The author argues that the intertemporal elasticity of substitution, which measures how responsive consumption is to changes in real interest rates, is small. This conclusion is based on postwar data for the United States, where expected real returns from stocks and savings accounts have declined over time, while the growth rate of consumption has remained almost steady. The author concludes that intertemporal substitution is weak, as the growth rate of consumption would have declined if it were strong. The paper develops a theoretical model of consumer behavior under uncertain real interest rates, where consumers maximize expected utility over time. The model shows that the marginal rate of substitution between present and future consumption should equal the ratio of the prices of present and future consumption. However, under uncertainty, the expected value of future marginal utility multiplied by the stochastic return should equal the current value of marginal utility. The author then estimates the intertemporal elasticity of substitution using data on consumption and real interest rates. The results show that the elasticity is small, with most estimates being quite precise and supporting the conclusion that the elasticity is unlikely to be much above 0.1, and may well be zero. The paper also distinguishes between intertemporal substitution and risk aversion, showing that the regression of the rate of change of consumption on the expected real interest rate reveals the intertemporal elasticity of substitution, not the coefficient of relative risk aversion. The paper also discusses the implications of the findings for macroeconomic theory, including the behavior of the national debt and unfunded social security. The author concludes that the evidence suggests that the labor supply side of household preferences is more important in explaining fluctuations in real output than intertemporal substitution in consumption. The paper also notes that the substitution elasticity controls the speed of convergence of the simple general equilibrium model to its steady state, and that the strength of the intergenerational redistribution effects of the national debt or unfunded social security depends on the elasticity of substitution.This paper examines the extent of intertemporal substitution in consumption, which refers to how much consumers adjust their consumption over time in response to changes in real interest rates. The author argues that the intertemporal elasticity of substitution, which measures how responsive consumption is to changes in real interest rates, is small. This conclusion is based on postwar data for the United States, where expected real returns from stocks and savings accounts have declined over time, while the growth rate of consumption has remained almost steady. The author concludes that intertemporal substitution is weak, as the growth rate of consumption would have declined if it were strong. The paper develops a theoretical model of consumer behavior under uncertain real interest rates, where consumers maximize expected utility over time. The model shows that the marginal rate of substitution between present and future consumption should equal the ratio of the prices of present and future consumption. However, under uncertainty, the expected value of future marginal utility multiplied by the stochastic return should equal the current value of marginal utility. The author then estimates the intertemporal elasticity of substitution using data on consumption and real interest rates. The results show that the elasticity is small, with most estimates being quite precise and supporting the conclusion that the elasticity is unlikely to be much above 0.1, and may well be zero. The paper also distinguishes between intertemporal substitution and risk aversion, showing that the regression of the rate of change of consumption on the expected real interest rate reveals the intertemporal elasticity of substitution, not the coefficient of relative risk aversion. The paper also discusses the implications of the findings for macroeconomic theory, including the behavior of the national debt and unfunded social security. The author concludes that the evidence suggests that the labor supply side of household preferences is more important in explaining fluctuations in real output than intertemporal substitution in consumption. The paper also notes that the substitution elasticity controls the speed of convergence of the simple general equilibrium model to its steady state, and that the strength of the intergenerational redistribution effects of the national debt or unfunded social security depends on the elasticity of substitution.