The Wealth Effect

I realize that I’m one day behind on this one, but I actually wrote this yesterday and only write this blog in my spare time…

I found some nice words of personal financial wisdom from Well-Heeled. While it may be odd that she was able to come up with exactly 10 rules (I would only have had 9), I found point number 8 to be of significant importance.

Well Heeled didn’t give it a name, but economists call it The Wealth Effect. It happens when people feel richer due to an increase in their asset wealth (e.g. house goes up in price and you buy a maserati, stock market rises 1% in a day and you splurge on that vacation in Aruba).

This effect is pretty real when you act on it and I know many people that have. I’m sure you’re not one of them.

Try to stay that way. It will be easier on your neighbor.

If Mother Day passed (or any “Day”) and your bank account feels half-empty, take consolation in this person’s travails.

Life could be worse.

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This entry was posted on Monday, May 14th, 2007 and is filed under Economy.

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