Connect with us

Market Insider

The U.S. Is Getting Richer But Americans Are Unhappier




How happy do you feel today? How worthwhile do you think you are? How meaningful is your job? How hopeful do you feel? How angry? How does this compare with other people in your community, your city and your country? 

These are big questions that a group of economists says governments should ask their citizens to better understand what makes a good life and to feed that into public policies. This is especially important, they say, at a time when we are seeing economic success accompanied by increasingly fractured societies. 

The U.S. is one of the richest countries on earth. The economy has been barreling along at a fast clip and unemployment lies near record lows. But these economic good times aren’t translating into happier lives for a big swath of Americans.

A report released by the World Economic Forum on Wednesday found that, while the U.S. economy is the most competitive in the world, it has come at the expense of a “weakening social fabric.” Life expectancy is falling, driven in part by increases in “deaths of despair” ― people dying from suicide and substance abuse. This particularly affects white men without a college education who are falling between the cracks and dropping out of the workforce ― about 15 percent of men ages 25 to 54 are not working.

It’s not just an American issue, either. China’s economic growth has been phenomenal. Between 1990 and 2009, its gross domestic product increased by at least four times and life expectancy increased from 67 to 74 years, yet life satisfaction has tumbled. India too, another economic success story, has seen life satisfaction levels drop by 10 percent between 2006 and 2017.

Basically, as countries get richer, many of the people living in them seem to be getting unhappier.

It’s a phenomenon that Carol Graham, economics professor and senior fellow at the Brookings Institution, calls the “progress paradox,” where unprecedented economic growth and improvements in areas like health and literacy coexist with the bad stuff: climate change, pockets of persistent poverty, increased income inequality and unhappiness.

A woman and a child wearing masks to protect against pollution in Ritan Park, Beijing. Despite it's huge economic growth, Chi


A woman and a child wearing masks to protect against pollution in Ritan Park, Beijing. Despite it’s huge economic growth, China is facing enormous environmental problems.

In an article published on Thursday in the journal Science, Graham, along with co-authors Kate Laffan of the London School of Economics and Sergio Pinto of the University of Maryland, say to overcome this paradox it’s vital to measure people’s happiness and well-being.  

“We need to rethink how we think about success in society more generally, so it’s not just about people’s economic activity,” Laffan says, “but things like social connectedness that really matter about how people feel about their lives, that don’t show up in GDP or any other economic measure.”

This idea for including well-being and happiness in economic evaluations has been bubbling away for a few decades and it’s been steadily gaining traction.  

“When I started working on happiness with a very small group of other economists and some psychologists in the early 2000s, people thought we were nuts,” Graham says. “I mean really! ‘You’re working on what?! No one’s going to take you seriously.’”

But the team got bigger, at one point including Daniel Kahneman, the first psychologist to win the Nobel Prize in economics. Then the financial crisis happened, creating and exposing social fault lines. People started to see that the metrics worked, revealing consistent patterns in countries across the world, says Graham. 

“We got much more sophisticated about measuring not just open-ended happiness but also life satisfaction,” she says.

She makes clear that she’s not advocating for replacing income-based measurements or the GDP, just that these leave out a big chunk of the story.

“There’s something else going on that the income-based metrics aren’t telling us,” she adds.

Some places are already trying to slot happiness factors into policymaking. Bhutan is the most famous example. The kingdom of nearly 800,000 people, nestled in the Eastern Himalayas, created a Gross National Happiness Index in 1998. Every five years, a survey is taken of households across the country to track traditional indicators like living standards and health, along with nontraditional indicators like psychological well-being, time use, ecological diversity and connection to the community.

The approach has been picked over by nongovernmental organizations, think tanks and national governments for ideas about how to implement similar projects elsewhere. Dorji Penjore, head of the research division of the Centre for Bhutan & Gross National Happiness Studies, told NPR that, following the 2008 financial crisis, “People started to question the viability of Western liberal capitalism, the corporate world, and we were bombarded [with questions].”

Young schoolgirls in traditional dress pose for their picture by the road in Talo, Bhutan.

VW Pics via Getty Images

Young schoolgirls in traditional dress pose for their picture by the road in Talo, Bhutan.

Other countries are now adopting these ideas. The U.K. has measured national happiness since 2011 by surveying people 16 and older on life satisfaction, anxiety and how worthwhile they feel. And Costa Rica, which consistently ranks as one of the happiest places to live, is one of several countries, including Scotland and Slovenia, that joined together last October to commit to championing a well-being economy.

But it’s by zooming in to the local level that you can really see how measuring well-being and using the findings to inform policy can affect people’s quality of life, says John Helliwell, a University of British Columbia economist and editor of the United Nations World Happiness Report.

A good example, he says, is a 4-year-old scheme in Canada, which sees sixth-graders attend school in a Saskatoon retirement home, which houses 263 high-needs residents. The aim is to break down intergenerational barriers and tackle loneliness and isolation. One of the residents, speaking to CBC, said of the project: “If we didn’t see the kids, we would just be a bunch of old people in this building, and that is stark and it’s ugly. Without the kids, I just feel that a part of me dies.”

This kind of project is being replicated in different ways around the world. Young music students live with seniors in a retirement home in Cleveland, getting free housing in exchange for performing for the residents. And in Helsinki, Finland, as part of a city-funded initiative aiming to tackle youth homelessness and social isolation among the elderly, students live cheaply in a retirement home and spend time socializing with residents. 

These local initiatives, using measures to inform how to help deprived communities in ways that aren’t simply giving them more income or jobs but are much more about community, make a huge difference in the quality of people’s lives, says Graham.

She mentions a project in Santa Monica, California, which introduced a Wellbeing Index in 2013. The city asked art students to come up with campaigns to tackle social isolation ― a problem identified in city-wide well-being surveys. In one, students visited a farmers market and asked random people to pose with other strangers for “family portraits,” specifically choosing people of different ages and races.

“By the end of it, half of them become friends,” says Graham, “and it’s a silly little thing but it shows how breaking down barriers can make a big difference when people are isolated, lonely and depressed.”

There are challenges to using well-being metrics. Happiness and well-being can be slippery things for us to define. Women in very deprived circumstances, for example, will sometimes say they are happier than they are because they have low expectations or have learned to live with their circumstances, says Graham.

But, she says, there are ways of questioning to tease out these problems and she dismisses broad criticisms that well-being data is unreliable or subjective. 

“There is an amazing consistency in the patterns in terms of the way people answer,” she says. “If it was that biased and weird, why would the same factors matter to people’s well-being scores across countries and over time?”

“I don’t think we have an obvious solution to a lot of this despair,” she adds, “so we need to look not just at the causes of despair but also look at the communities able to thrive in the face of adversity.” 

For more content and to be part of the “This New World” community, follow our Facebook page. 

HuffPost’s “This New World” series is funded by Partners for a New Economy and the Kendeda Fund. All content is editorially independent, with no influence or input from the foundations. If you have an idea or tip for the editorial series, send an email to


Source link

قالب وردپرس

Market Insider

4 things kids need to know about money




(NC) Responsible spending includes knowing the difference between wants and needs. Back-to-school season, with added expenses and expectations around spending, is the perfect time to not only build your own budget for the year ahead, but also to introduce your own children to the concept of budgeting.

The experts at Capital One break down four basic things that every child should know about money, along with tips for bringing real-life examples into the conversation.

What money is. There’s no need for a full economic lesson,but knowing that money can be exchanged for goods and services, and that the government backs its value, is a great start.
How to earn money. Once your child understands what money is, use this foundational knowledge to connect the concepts of money and work. Start with the simple concept that people go to work in exchange for an income, and explain how it may take time (and work) to save for that new pair of sneakers or backpack. This can help kids develop patience and alleviate the pressure to purchase new items right away that might not be in your budget.
The many ways to pay. While there is a myriad of methods to pay for something in today’s digital age, you can start by explaining the difference between cash, debit and credit. When teaching your kids about credit, real examples help. For instance, if your child insists on a grocery store treat, offer to buy it for them as long as they pay you back from their allowance in a timely manner. If you need a refresher, tools like Capital One’s Credit Keeper can help you better understand your own credit score and the importance of that score to overall financial health.
How to build and follow a budget. This is where earning, spending, saving and sharing all come together. Build a budget that is realistic based on your income and spending needs and take advantage of banking apps to keep tabs on your spending in real-time. Have your kids think about how they might split their allowance into saving, spending and giving back to help them better understand money management.

Continue Reading

Market Insider

20 Percent Of Americans In Relationships Are Committing Financial Infidelity




Nearly 30 million Americans are hiding a checking, savings, or credit card account from their spouse or live in partner, according to a new survey from That’s roughly 1 in 5 that currently have a live in partner or a spouse.

Around 5 million people — or 3 percent — used to commit “financial infidelity,” but no longer do.

Of all the respondents, millennials were more likely than other age groups to hide financial information from their partner. While 15 percent of older generations hid accounts from their partner, 28 percent of millennials were financially dishonest.

Regionally, Americans living in the South and the West were more likely to financially “cheat” than those living in the Northeast and Midwest.

Insecurity about earning and spending could drive some of this infidelity, according to industry analyst Ted Rossman.

When it comes to millennials, witnessing divorce could have caused those aged 18-37 to try and squirrel away from Rossman calls a “freedom fund”.

“They’ve got this safety net,” Rossman said. They’re asking: “What if this relationship doesn’t work out?”

As bad as physical infidelity

More than half (55 percent) of those surveyed believed that financial infidelity was just as bad as physically cheating. That’s including some 20 percent who believed that financially cheating was worse.

But despite this, most didn’t find this to be a deal breaker.

Over 80 percent surveyed said they would be upset, but wouldn’t end the relationship. Only 2 percent of those asked would end the relationship if they discovered their spouse or partner was hiding $5,000 or more in credit card debt. That number however is highest among those lower middle class households ($30,000-$49,999 income bracket): Nearly 10 percent would break things off as a result.

Roughly 15 percent said they wouldn’t care at all. Studies do show however that money troubles is the leading cause of stress in a relationship.

That’s why, Rossman says, it’s important to share that information with your partner.

“Talking about money with your spouse isn’t always easy, but it has to be done,” he said. “You can still maintain some privacy over your finances, and even keep separate accounts if you and your spouse agree, but you need to get on the same page regarding your general direction, otherwise your financial union is doomed to fail.”

With credit card rates hovering at an average of 19.24 percent APR, hiding financial information from a partner could be financially devastating.

But, Rossman adds, it’s not just about the economic impact but also the erosion of trust.

“More than the dollars and cents is that trust factor,” he said. “I think losing that trust is so hard to regain. That could be a long lasting wedge.”

Kristin Myers is a reporter at Yahoo Finance. Follow her on Twitter.

Source link

قالب وردپرس

Continue Reading

Market Insider

7 Examples Of Terrible Financial Advice We’ve Heard




Between television, radio, the internet and well-meaning but presumptuous friends and family, we’re inundated with unsolicited advice on a daily basis. And when it comes to money, there’s a ton of terrible advice out there. Even so-called experts can lead us astray sometimes.

Have you been duped? Here are a few examples of the worst money advice advisers, bloggers and other personal finance pros have heard.

1. Carry a balance to increase your credit score.

Ben Luthi, a money and travel writer, said that a friend once told him that his mortgage loan officer advised him to carry a balance on his credit card in order to improve his credit score. In fact, the loan officer recommended keeping the balance at around 50 percent of his credit limit.

“This is the absolute worst financial advice I’ve ever heard for several reasons,” Luthi said. For one, carrying a credit card balance doesn’t have any effect on your credit at all. “What it does do is ensure that you pay a high interest rate on your balance every month, neutralizing any other benefits you might get from the card,” Luthi explained. “Also, keeping a 50 percent credit utilization is a surefire way to hurt your credit score, not help it.”

Some credit experts recommend keeping your balance below 30 percent of the card limit, but even that’s not a hard-and-fast rule. Keeping your balance as low as possible and paying the bill on time each month is how you improve your score.

2. Avoid credit cards ― period.

Credit cards can be a slippery slope for some people; overspending can lead to a cycle of debt that’s tough to escape.

But avoiding credit cards on principle, something personal finance gurus like Dave Ramsey push hard, robs you of all their potential benefits.

“Credit cards are a good tool for building credit and earning rewards,” explained personal finance writer Kim Porter. “Plus, there are lots of ways to avoid debt, like using the card only for monthly bills, paying off the card every month and tracking your spending.”

If you struggle with debt, a credit card is probably not for you. At least not right now. But if you are on top of your finances and want to leverage debt in a strategic way, a credit card can help you do just that.

3. The mortgage you’re approved for is what you can afford.

“The worst financial advice I hear is to buy as much house as you can afford,” said R.J. Weiss, a certified financial planner who founded the blog The Ways to Wealth. He explained that most lenders use the 28/36 rule to determine how much you can afford to borrow: Up to 28 percent of your monthly gross income can go toward your home, as long as the payments don’t exceed 36 percent of your total monthly debt payments. For example, if you had a credit card, student loan and car loan payment that together totaled $640 a month, your mortgage payment should be no more than $360 (36 percent of $1,000 in total debt payments).

“What homeowners don’t realize is this rule was invented by banks to maximize their bottom line ― not the homeowner’s financial well-being,” Weiss said. “Banks have figured out that this is the largest amount of debt one can take on with a reasonable chance of paying it back, even if that means you have to forego saving for retirement, college or short-term goals.”

4. An expensive house is worth it because of the tax write-off.

Scott Vance, owner of, said a real estate agent told him when he was younger that it made sense to buy a more expensive house because he had the advantage of writing off the mortgage interest on his taxes.

But let’s stop and think about that for a moment. A deduction simply decreases your taxable income ― it’s not a dollar-for-dollar reduction of your tax bill. So committing to a larger mortgage payment to take a bigger tax deduction still means paying more in the long run. And if that high mortgage payment compromises your ability to keep up on other bills or save money, it’s definitely not worth it.

“Now, as a financial planner focusing on taxes, I see the folly in such advice,” he said, noting that he always advises his client to consider the source of advice before following it. ”Taking tax advice from a Realtor is … like taking medical procedure advice from your hairdresser.”

5. You need a six-month emergency fund.

One thing is true: You need an emergency fund. But when it comes to how much you should save in that fund, it’s different for each person. There’s no cookie-cutter answer that applies to everyone. And yet many experts claim that six months’ worth of expenses is exactly how much you should have socked away in a savings account.

“I work with a lot of Hollywood actors, and six months won’t cut it for these folks,” said Eric D. Matthews, CEO and wealth adviser at EDM Capital. “I also work with executives in the same industry where six months is overkill. You need to strike a balance for your work, industry and craft.”

If you have too little saved, a major financial blow can leave you in debt regardless. And if you set aside too much, you lose returns by leaving the money in a liquid, low-interest savings account. “The generic six months is a nice catch-all, but nowhere near the specific need of the individual’s unique situation… and aren’t we all unique?”

6. You should accept your entire student loan package.

Aside from a house, a college education is often one of the biggest purchases people make in their lifetimes. Often loans are needed to bridge the gap between college savings and that final tuition bill. But just because you’re offered a certain amount doesn’t mean you need to take it all.

“The worst financial advice I received was that I had to accept my entire student loan package and that I had no other options,” said Gina Zakaria, founder of The Frugal Convert. “It cost me a lot in student loan debt. Now I tell everyone that you never have to accept any part of a college financial package that you don’t want to accept.” There are always other options, she said.

7. Only invest in what you know.

Even the great Warren Buffett, considered by many to be the best investor of all time, gets it wrong sometimes. One of his most famous pieces of advice is to only invest in what you know, but that might not be the right guidance for the average investor.

In theory, it makes sense. After all, you don’t want to tie up your money in overly complicated investments you don’t understand. The problem is, most of us are not business experts, and it’s nearly impossible to have deep knowledge of hundreds of securities. “Diversification is key to a good portfolio, and investing in what you know leads to a very un-diversified portfolio,” said Britton Gregory, a certified financial planner and principal of Seaborn Financial. “Instead, invest in a well-diversified portfolio that includes many companies, even ones you’ve never heard of.”

That might mean enlisting the help of a professional, so make sure it’s one who has your best interests at heart.

Source link

قالب وردپرس

Continue Reading