September 17, 2014

The Federal Reserve Has Released the 2013 Tri-Annual Survey of Consumer Finances

Federal Reserve Survey of Consumer Finances

The Federal Reserve 2013 data detailing changes in household wealth, income, and other statistics is now public and you can go here to download the spreadsheet files and other resources or read the 41-page summary detailing the changes over the past three years since the last survey was released [PDF]. Here is a paraphrased summary of some of the highlights from the report: In the past 3 years, average family income rose by 4% inflation-adjusted but median family income declined 5% in real … [Read more...]

Why Does the Subsidized Hardware Model Bother Me So Much?

Amazon Kindle Fire HDX 7 inch.jpg

It's no secret I read a lot.  In the past seven days alone, I've finished 4 books totaling 1,067 pages, as well as worked on three other books which, between them, probably account for another 500+ pages finished but not in the tally.  (I only know this because, at least a few times a week, it seems like I get a request for a list of my books or what I'm working through at the time.  Back in June, I began building a spreadsheet to track my content consumption, figuring if I could stick with it lo … [Read more...]

Should Government Benefits Be Tied to Behavior and Decisions?

EBT Card

I don't talk about it very often, but one of the charitable organizations close to my heart are community food banks and soup kitchens.  These non-profits collect groceries for those who can't afford to feed themselves or their children, allowing them to avoid hunger.  They resonate with something very deep in my core, maybe because I love cooking so much, but it strikes me as morally inexcusable for an American child to starve while living among the greatest aggregation of wealth ever amassed by … [Read more...]

The Economics of the Movie Theater Industry Will Be Interesting Over the Next 25 Years

AMC Prime Theater Buildings

The economics of the movie theater industry are interesting.  In many cases, up to 70% of the ticket price goes to the movie studio that created the film and the distributor who sold the rights to it, leaving the remaining 30% for the owners.  This creates a situation where most of the profit comes from concession sales.  Without $8 popcorn and $5 beverages, the doors would close, the staff would be sent home, and you'd no longer have a cinema in your hometown.  (This is one of the reasons that w … [Read more...]

Lies, Damned Lies, and Statistics

Wal-Mart 401(k) Plan Adjustments

As an investor, you can make a lot of money if you are adept with numbers.  This skill can let you see what is really going on and create mathematical models that maximize your earnings.  There is a little known story that Warren Buffett was once in a meeting for Blockbuster, the movie rental chain that is now bankrupt.  During a presentation pitching the merits of the firm's value as an investment, growth rate projections were given.  Buffett was said to have flipped over an envelope, per … [Read more...]

My Quarterly Project: Studying Counter-Evidence in Economics and Sociology

Dow 36,000

During my free time for the next few months, I'm practicing "counter evidence" a la the John Stuart Mill school of thought.  This means reading some texts far outside of the mainstream on a wide range of topics, including a few of the most illogical, discredited, and frankly, unhinged, books, essays, and speeches you'll ever encounter. The purpose is three-fold.  First, it allows me to sift through the mess and find one or two good ideas, which are almost inevitably buried in there somewhere. … [Read more...]

Wedding Rings Are the New Indicator of Social and Economic Class

Wedding Rings New Class Status Symbol

You need to read this magnificent article in The New York Times that breaks down the economic phenomenon we went over several years ago when we looked at the work of Harvard Professor Charles Murray, who demonstrated that a significant driver of income inequality in the United States was caused by a radical shift in the family structure of the lower and middle classes. The wedding ring, along with a college degree, has become the primary social and economic class status indicator.  Namely, th … [Read more...]

Tiger Stone Illustrates the Pressure Labor Faces as a Commodity in the Knowledge Economy

Tiger Stone

We've talked so much about how no one, other than economists, want to discuss what is really driving a significant portion of income inequality - technological advancement - but I came across another perfect illustration of how radical the shift to a knowledge economy away from an industrial one has been for the labor force. Think about the human effort required to lay stones and make paths or side streets.  Up until fairly recently, it took a lot of people, skilled in their line of work, who … [Read more...]

The S&P 500 and U.S. Household Wealth Have Reached Record Highs

United States Net Worth Economy

We've done it again.  Despite our own stupidity, and constant attempts to trip ourselves up with in-fighting, at this exact moment, by nearly every conceivable economic metric, the United States has the largest group of individual people enjoying a higher standard of living, more total wealth, longer median lifespans, and more free time than any other civilization that has ever existed, at any point in recorded human history.  There has never been a point when life is better than it right now.  Y … [Read more...]

The Debt Ceiling 101 – An Explanation for the Average Person

United States Treasury Department Debt Ceiling

It's time we talk about the debt ceiling and what a debt ceiling default would mean for the United States.  I've avoided this conversation because I was hopeful we would never end up here, again, after the last round of stupidity.  I've also avoided discussing the on-going shutdown of the Federal Government, despite some strong implorations from those of you who have written through the contact form asking me to share my thoughts on it.  The shutdown will have to be put off for another day be … [Read more...]