Tag Archives: money

When Are We Happy?

(Tune in while reading: http://www.youtube.com/watch?v=y6Sxv-sUYtM)
Every person has different answers for this simple question. But we don’t know an exact answer for what makes us happy for what reasons. There are more questions that human kind has been trying to find an answer for like whether being happy is what people seek in life.

The word “happy” is itself very ambiguous. People can describe them happy in two different ways:

-depending on their mental state at the moment; reflecting short term condition

-depending on whether they are living lives they want; reflecting long term condition

Regarding the first sense of the term “happy”, there have been studies and recommendations trying to find out in what condition people feel happiness. In an episode of the TED Radio Hour Show, guest speakers talked about their findings on being happy. Harvard PhD student Matt Killingsworth conducted survey based research on happiness, and his result shows that if we want to be happier, we should live at the exact current moment. In other words, according to his smart-phone app based survey, people in the study answered they are happy when their minds were focused on what they were doing at the exact moment. On the other hand, people answered that they are happy less times when their minds were on something else such as what they are going to do after they finish their current tasks. Simply put, if you want to be happier, enjoy the moment!

Also, on the same show episode, Carl Honore, an author, advises us to slow down our speed of lives to be happier. He argues that today, people speed in their most tasks, and this leads to less happiness, less productivity and less quality of life. Another speaker Graham Hill, a designer, talk about how we are happier when we have less stuff in life! More elaborately, his point is that we are happy when we have simpler stuff in life.

If we can be happier by following above advises, how can we be happier in our whole lives, in general? Even though I don’t want to say this, most people feel pressure and unhappiness by choosing to compare themselves with others. We make ourselves unhappy by envying others. In other words, people choose to be less happy because of other’s fortune, luck and possession. This tendency to compare ourselves with others come just naturally to us. However, people should try to control their happiness by what they possess instead of what others possess.

Also, in addition to comparing what we have with what others have, we seemingly compare what we have with what we thought what we would have. In other words, in some sense, we feel happy whenever we experience somewhat unexpected pleasure giving events. Then again even though I don’t want to say this, we should lower our expectations in life to be happier. Maybe we can expect the worst and hope for the best!

Happiness has been a topic of economic researches for decades. Richard Easterlin’s study on human’s well being during 1970’s has greatly shaped following studies by economists. His main finding, later called Easterling Paradox, was that well-being and happiness are greatly correlated with people’s income, but until income reaches certain point. The latest research on happiness done by University of Michigan professor Justin Wolfers shows how economic and demographic factors play a role in being happy. Even though I don’t believe the title is appropriately given, an article “Money can buy happiness, economist says” pinpoints results of his study. Here are some interesting ones:


• Men in recent decades in America are happier than women. “No one knows exactly why,” Wolfers told the audience. It may be that women have internalized several measures of success, more than the basic “am I popular” focus young women faced growing up in the 1960s, he said.

• In general, not only are the rich happier than the poor, but globally, richer nations are happier than poorer ones, Wolfers noted.

• Among Americans in the lowest 12 percent of income-earners, 21 percent said they were happy. Of those earning more than $150,000 per year (the top 10 percent), 53 percent said they were happy.

Flipping the question, among the lowest-earning 12 percent, 26 percent said they were unhappy in general, based on a set of factors such as enjoyment of meals, depression and feeling respected. Of the top 10 percent, only 2 percent reported feeling unhappy, he said.

The notion that riches are happier than poors isn’t totally groundbreaking news even it wasn’t true. But at the end, most of us seek to get higher salary jobs assuming that it makes us happier. Then from this study, we can advise ourselves that get rich to become happier!


Facebook Continues to Make Moves

Just this afternoon (Monday, April 14th), Facebook announced that it wants to make its own money now. Whether or not this has been in talks for over a year within the company, this is just another move for Facebook to potentially take over the world. What’s next? Will Google, Apple, and Amazon create their own currency too?

According to the Huffington Post, “the company is close to obtaining approval from the Central Bank of Ireland to start a service that would allow users to store money on Facebook and use it to pay and exchange with others.”

Facebook has also talked with companies like TransferWise, Moni Technologies, and Azimo, three London start-ups that offer online and mobile international money transfer services.  While there does not seem to be much more information out to the public, it will be interesting to see the different traits Facebook will have with their money system compared to what Google has to offer with Google Wallet, which is mentioned to be in a revamping stage. Apple has also said in January that their interest in mobile payments was a reason for creating the Touch ID fingerprint sensor in the new iPhone 5s.

Should we be concerned about these new markets that are being broken in to? The answer is yes. The reason for this is because “global mobile transactions are expected to grow at an average 35 percent per year between 2012 and 2017, according to a report by research firm Gartner. The June 2013 report forecast a $721 billion market with more than 450 million users by 2017.” As Google Wallet has been in the picture, Facebook’s commitment to expand by creating their own money is a great possibility at this point.

An article on venture beat talks about how Facebook shows it will take over the rest of the world in 2014. Along with many other aspects within the company, they wanted to become the world leader in the mobile market. “The company now considers itself a 100 percent mobile platform—and it’s paving the way for 100 percent mobile revenue, too.” And “watch the entire mobile web achieve rapid acceleration as Facebook open-sources more tools for building perfect mobile websites.”

With Facebook’s own perfect mobile website, this may give them an edge to gain consumers to use their money in the future. Facebook is truly changing the rules of the game. While Google may have their search engine power, they lack the social media aspect with Google+. As the number of mobile active users continues to increase for Facebook, they are really taking a chance to break the barrier with its’ own money. But with the advantage in this situation, Facebook will potentially allow their own money to be a common use among everyone in the world one day.

M1 Over the Years

The M1 money supply, which is comprised of paper currency and checkable deposits has seen drastic changes since the year 1959. The largest influence on the M1 money supply is undoubtedly the Federal Reserve, or the Fed. By purchasing assets, such as bonds, the Fed is increasing M1. When the Fed sells assets, it is decreasing M1. One effect of increasing the M1 money supply is that interest rates decrease. This can be seen with the Keynesian Liquidity Preference Model.

The Fed can have multiple reasons to increase the M1 money supply. One reason would be to stimulate investment. As previously mentioned, a larger money supply decreases interest rates. A lower interest rate will see more investments. This, in turn, will help increase output because investment is a part of aggregate demand. Increased demand will increase output.

With this graph we can see an increasingly upwards trend in the M1 money supply. The largest spike is in about 2008. The answer for this is very obvious. This was the year of a late financial crisis. At this time, the Fed was purchasing many toxic assets that could not be purchased by anyone else. Furthermore, the economy fell into a recession. The best response for the Fed would be purchase assets, which is a stimulative policy. To this day, the Fed is still using stimulative monetary policies. That is why the slope of the graph is still steeper than it is anywhere else.

This year, the Fed did announce that it would taper monetary policy. This means that it will start to decrease its asset purchases. Therefore, it will put less and less money into the M1 supply. If this were to continue, then the slope of the graph would decrease and it would begin to look like a negative parabola, or like the top of a hill. We can see this a little bit. If one were to look at the very end of the graph closely, there would be a slight decrease in the slope of the graph. However, the slope is still steeper than any slope before 2008. This indicates the beginnings of the Fed’s tapering. This is only done when the Fed is optimistic about the economy’s future. Hopefully, this is the beginning of the end of this recession. It has affected the whole world on so many levels. The world economy suffered a huge blow from it. This could be the light at the end of the tunnel for which the world has been yearning.

Red Flag For Bitcoin

Is this the end for Bitcoin? Have we finally seen a weakness in the new potential “monetary” system? Just today Mt. Gox, the biggest and best-known Bitcoin exchange, was expected to file for Chapter 11 bankruptcy. There have been reports of extreme theft concerns when dealing with the viability of the electronic currency.  Bitcoin prices have fallen below $500 a piece for the first time since November, when prices were as high as $1,200.

So much for all the hype Bitcoin has gone through. I personally thought Bitcoin would see solid growth over the next couple of months leading into the summer and possible reach $1,400. But another side of me also believed that Bitcoin would have its’ dark days. However, I did not (along with many others) expect this to happen so soon. It is estimated that Mt. Gox lost 744,000 Bitcoins, or about 6 percent of the pseudo currency that’s in circulation worldwide. With this whole concept of complete electronic currency, we were bound to run into some type of hackers that would eventually create this downfall.

“With Bitcoin/crypto just recently gaining acceptance in the public eye, the likely damage in public perception to this class of technology could put it back 5-10 years, and cause governments to react swiftly and harshly.” Two-Bit Idiot blog mentioned who also first broke the story.

The unfortunate truth is that this is a serious hinder in the entire Bitcoin concept. But what I am really curious about, is whether or not this is problem that will eventually bring back the commotion, or is it the end of Bitcoin? Many people of the older generations take Bitcoin as some silly currency. They do not understand the full value that it would have especially with our technology driven world. Because of their mindset and with what has happened with Bitcoin, over the next couple of days, weeks, and months, we should expect a tremendous amount of criticism trying to finally take down the whole idea. But why should we do that? Why can’t we learn through our mistakes through these early ages of electronic currency? I could almost guarantee there were flaws when the American dollar first took off. There were flaws, theft, and many other problems with our currency then, and there are still problems today! Although this day in age everyone expects everything to be perfect when it deals with our currency or a new potential one such as Bitcoin. But overall, there will be steps made to ensure Bitcoin does not have a total collapse.

“The wider Bitcoin industry is seeking to both distance itself from Mt. Gox and offer reassurance about the virtual currency’s future. The chief executives of six major Bitcoin exchanges and other businesses pledged in a joint statement to coordinate efforts to assure customers of the security of their funds,” The Wall Street Journal addressed.

Looking at it from a ‘big-picture’ perspective, I do not believe the end of Bitcoin is in sight. Although our world might always have its’ thieves, whether it’s with Bitcoin currency or with each country’s current currency, our world is also just at the beginning ages of our day in technology. Our generation has the intelligent minds to continue to strengthen the Bitcoin system. Although I do believe this is a tremendous fault in the system, Bitcoin will resurrect to gain strength again even in the next couple of months.

Get Ready to Your 90s?

According to the interviews from WSJ, “People grossly underestimate their longevity,” says Steve Sperka, vice president of long-term care at Northwestern Mutual Life Insurance. At least one member of a couple retiring at age 65 today can expect to reach 94. His research shows a mere 35% are financially prepared to live into their 90s. (Are You Ready for a Long Retirement?)

Although life expectancy in the United States ranks 26th out of the 36 member countries of the Organization for Economic Cooperation and Development (OECD), according to a new report from the organization. U.S. expectancy in 2011 was 78.7 years, which is slightly below the OECD average of 80.1. For U.S. men, the average life expectancy is 76, while it’s 81 for U.S. women. (At five years, this gap in life expectancy between men and women is smaller than the OECD average of six years). (U.S. Life Expectancy Ranks 26th In The World, OECD Report Shows)

From the statistics above, we can easily draw a conclusion that Americans are more likely to get to their 90s in the near future. However it seems that they haven’t prepared well to live to their 90s as a long retirement because they don’t have enough money to survive to their 90s – according to the insurance company records.

Experts suggest people remember that their retirement spending isn’t something they can put on autopilot, starting with an initial withdrawal rate and blithely increasing it by inflation without regard to how your nest egg is faring. To avoid running out of money too soon — or ending up with a big stash late in retirement, along with regrets they hadn’t spent more freely early on — they’ve got to remain flexible, cutting back when returns are lean and perhaps spending more if their portfolio’s done especially well.

But why do Americans live so short? And why the life expectancy is increasing?

In the WSJ, for instance, a chief wellness officer in Ohio opined that if Americans exercised more and ate and smoked less, the United States would surely start moving up in the global health rankings. But many epidemiologists — scientists who study health outcomes — have their doubts. They point out that the United States ranked as one of the world’s healthiest nations in the 1950s, a time when Americans smoked heavily, ate a diet that would horrify any 21st-century nutritionist, and hardly ever exercised.

Luckily, life expectancy has been increasing for several reasons especially that improvements in heart disease and stroke mortality have had a big impact. That’s a large proportion of total deaths and that’s where the action really is in terms of improved life expectancy. A recent analysis by the Institute of Medicine suggests that increases in life span in the United States are not matched by increases in “health span” — time spent living in good health. A long life with a high burden of chronic disease — such as diabetes, heart disease and chronic obstructive pulmonary disease (COPD) — means more time living with illness and disability.

Also, life expectancy is greatly influenced by advances in medicine and the public health system, while the health span is most affected by lifestyle practices, in particular the quality of diet, physical activity and avoiding tobacco.

But do prepare enough to live to your 90s before retirement. People are living longer and longer.