Don’t Quit Your Day Job – Personal Finance, Economics and Investing

Substitution and Income Effect: These two terms are very familiar to anybody who has taken an intermediate course in macroeconomics. With the recent articles regarding volunteerism and labor statistics, I thought that it was very timely to write on these two very important concepts.

Let’s start with a thought experiment: if you were to receive a 10% increase in your hourly wage, would you increase, decrease, or maintain your hours worked? Believe it or not, any answer is correct, despite many assumptions regarding the positive slope of labor supply curves. The reason that any answer is correct lies in an understanding of substitution and income effects.

I hope I convinced you in my earlier article you’ll soon be dealing with higher taxes. I’ve got some more slightly depressing news for you… you might be dealing with a reduction in the amount you can contribute to your 401(k) in the near future.

Yes, as Robert Powell says in this MarketWatch article, to go along with retirees not getting an increase in their Social Security payments, you may be losing some of your ability to sock away money in your 401(k). Nice.

First for some good news: the United States still has a debt rating of AAA, according to Moody’s. However, it’s probably in the country’s best interest to keep an eye on increasing deficits before they get too large. That’s what the site I’m linking you today helps you do – keep an eye on the real time US deficit, and some of the unfunded liabilities on the books. I present: the U.S. Debt Clock.

What can be said about this book that hasn’t already been said? Even if you disagree with Rand’s philosophy of Objectivism, her book Atlas Shrugged, published in 1957, predicted a great number of the extraordinary economic events that have occurred in recent months.

This article will share with you a few quotes from the book which hopefully will inspire thought – either for or against – her philosophies. Enjoy.