09 April 2012
We wish you all a happy and safe holiday weekend. Here are several recent articles we have come across that are particularly interesting and relevant to our financial lives. Enjoy!
How America Spends its Money (Derek Thompson, The Atlantic)
A fascinating exploration of the spending patterns of Americans over time. In 1900, Americans spent 80% of their household income on food, clothing and housing. In the 2000's, that percentage has slipped to 50%, yet on the whole, we feel every bit as poor (if not poorer) than our ancestors did a century ago. Each generation has gradually converted "wants" into "needs" as production has become more efficient, technology has improved and access to "luxury items" has extended to the masses (ie. having one car was a luxury for the first half of the 1900's, but having two cars is a need in a typical household today). Within the context of planning our financial lives, human beings have proven to be very poor predictors of future needs.
Take the Overnight Test (Carl Richards, Behavior Gap)
In this brief article and video, Carl Richards explains that when faced with a difficult or uncertain decision, the easiest and most common approach people take is to do nothing...and that decision often costs us more than we realize.
Congress Plays, the Public Pays (Jason Zweig, Wall Street Journal)
In this video, Jason Zweig highlights some of the main elements of the STOCK Act, which places restrictions on Congressional trading. The intention of this act is to (finally) ban insider trading within the halls of Congress. Yes, you are reading this right. Until now, insider trading was not illegal (and was quite common) for our elected officials.
How Much Do Higher Oil Prices Hurt? (Polina Vlasenko, PhD, American Institute for Economic Research)
The author suggests that "the United States economy is much more energy efficient than it was 40 or even five years ago. An increase in the price of oil today would be much less damaging to the economy’s ability to produce goods and services than it was during the first oil price shock of 1973-74. Nor will a spike in gasoline prices hurt consumers as much as it has in the past." Vlasenko suggests that while total energy consumption is, indeed, far greater than the last oil shock, "what really matters is energy efficiency: how much energy it takes to produce a given level of output."
Intelligent Decisions. Simplification. Peace of Mind.