Money CAN Buy Happiness

You have probably heard the very common phrase, "Money Can't Buy Happiness." However, according to a study by psychologists from Purdue University and the University of Virginia, it can, to an extent.

By cross-referencing the earnings and life satisfaction of 1.7 million people across the world, they believe they have found the ideal income for life satisfaction. This number is $95,000 a year. For just emotional well-being, this number is only $60-75,000. Of course, if you have children this number goes up.

Just because you make this amount of money doesn't necessarily mean you will be happy. There is a  reason that there is a threshold. Basically, money can get us access to better homes, health care, and nutrition, which of course will better our well beings. However, once you reach a point where you have everything you need, these positive effects are offset by negative ones. To keep making money, people will work long hours at more stressful jobs.

There are ways to use the money you have to actually contribute to your happiness once you have covered your basic needs. One is to spend it on experiences instead of material goods. New items give us temporary happiness, and then just become a normal thing. Most of us have experienced this. For example, when you buy a new phone, it is super exciting at first and makes you very happy, and then after about a week, that feeling fades away. Experiences, however, will continue to make you happy for much longer Another is to spend your money on other people. Many studies show that donating money makes people much happier than just spending it on themselves.

https://www.marketwatch.com/story/this-is-exactly-how-much-money-you-need-to-be-truly-happy-earning-more-wont-help-2018-02-14
https://psychology.unl.edu/can-money-buy-happiness

Buying in Bulk

Due to Coronavirus restrictions, shopping has become a very unusual experience. We need to think a lot harder about how we shop and what we buy, as we cannot go to the store as much as we used to. One strategy that has become very popular is buying in bulk. I wanted to find out if in general, this is a good tactic, even outside of a pandemic. 

There are many advantages of buying in bulk.

1. You are almost always spending less per use of that product. In other words, it is cheaper per unit.
2. When you have that much of a product, you are unlikely to run out all of a sudden. This reduces the amount of impulse buys you make.
3. Buying in bulk is environmentally friendly. There is much less packaging used on each product. For example, buying several small boxes of cereal uses much more plastic and cardboard than buying one huge box of cereal.
4. If you buy essentials in bulk, you will be very prepared for emergencies. This is especially relevant right now, as people who did not buy in bulk realized that they did not have nearly enough to last them and started panic buying everything.
5. Buying in bulk also means you won't have to take as many trips. This is another huge advantage at a time like this since every trip to the store is risky. It is also helpful in many other ways, including fewer opportunities to impulse buy and less money spent on gas.

However, there are also several disadvantages.

1. It is an upfront expense. Spending $50 all at once rather than $10 at 5 different times can be difficult for some. It is especially hard if you are living paycheck to paycheck, as you are unlikely to have enough in your account at one time to do that.
2. When you buy that much of a product at once, you can be prone to overusing that product. This is especially apparent with food, as many of us will eat more of a food item as long as we know we have more of it for later. 
3. It takes up a lot of storage space. You need a relatively large space to store things if you are planning to buy in bulk.
4. What you buy will lack variety. Again, this is especially apparent with food. It can be an issue because you are likely to get sick of that food after eating too much of it and waste the rest.
5. The most obvious disadvantage is that things can expire. Of course, this is easy to avoid by only bulk buying things that don't expire or you know you will use in time. However, if you don't do that, it can be very wasteful.

It seems to me that the best way to shop is a mixture of bulk buying and smaller purchases. However, during a time like this, the advantages of bulk buying make it the better option.

https://money.usnews.com/money/blogs/my-money/articles/when-buying-in-bulk-is-really-worth-it

Unemployment During COVID-19

Since March 15, over 26 million people have filed for unemployment in the US; however, not all of these workers are receiving their unemployment benefits. Trump signed a $2.2 trillion emergency relief bill in March that expanded eligibility to receive benefits to part-time and self-employed workers and adds an extra $600 in benefits a week for individuals (in addition to what the state would offer). However, many people aren't receiving this money; states have seen delays in issuing the additional money. As companies continue to close and lay off their workers, the unemployment rate continues to rise. States have already spent billions of dollars in unemployment insurance benefits due to the coronavirus, and that amount is only going to increase.

Sources:
https://www.nytimes.com/2020/04/09/business/economy/unemployment-claim-numbers-coronavirus.html
https://www.cnet.com/news/coronavirus-testing-what-you-need-to-know-about-antibody-tests-antigens-and-serology/
https://abcnews.go.com/Business/americans-wait-unemployment-checks-month-pandemic/story?id=70292528

Expensive Prescription Drugs

The costs of prescription specialty drugs, drugs that require special storage, handling, administration, or monitoring and are used to treat cancer and other rare conditions, including HIV and hemophilia, have been rising. Compared to healthy people, cancer patients are 2.5 times more likely to declare bankruptcy. Furthermore, going bankrupt increases patients’ risk of dying by 80 percent. This “financial toxicity” of cancer results from the high costs of cancer treatment and the side effects of being treated, such as not being able to work for extended periods of time. Costs of cancer drugs have been steadily increasing – about 18% after adjusting for inflation between 1996 and 2012, and some treatments even cost over $100,000 per year. This is due to the R&D costs, wayward practices of pharmacy benefit managers (PBMs), health insurance companies, and "financially tainted medicine." As a result, pharmaceutical companies are making huge profit margins at the expense of patients.

Sources:
www.aarp.org/money/credit-loans-debt/info-2018/the-high-cost-of-cancer-treatment.html
www.investopedia.com/ask/answers/060115/how-much-drug-companys-spending-allocated-research-and-development-average.asp
www.statnews.com/2018/08/27/pharmacy-benefit-managers-good-or-bad/
www.cancer.org/latest-news/study-shows-us-cancer-drug-costs-increasing-despite-competition.html

Trust-busting with Disruption

“Disruption” gets thrown around a lot in Silicon Valley circles. Every new company wants to position themselves as a “disruptor”--the bringer of a paradigm shift that will change markets and put themselves on top. Though this line gets the VC money flowing, “disruption” is actually an established theory of innovation with a very specific meaning.

Take, for example, Uber. Though they were near first to market with a gig-economy taxi service, they entered the market by offering lower prices for an established service. Most customers were likely already taxi users.[1] If anything, they created increased demand by increasing ease of use. They didn’t technically disrupt the taxi market.

Disruption, as coined by Clayton Christensen, refers to a new firm creating new market segments or catering to low-end customers, and then capitalizing on their advantage to pivot into the higher-end customers that incumbents have been exploiting for higher profits[2]. This strategy entices big players to cede unprofitable segments of the market, only to subsequently lose the profitable segments because of it.

The classic example of this is personal computers. Before the PC revolution, computer companies were focused on charging huge sums to enterprise customers for mainframe systems. They willingly ceded the consumer market to new entrants, as it was opened up by low-cost integrated circuits made by the likes of Intel. These new entrants then created business applications for their products and drove mainframes to price obsolescence. Though IBM once held 70 percent of the computer market[3]--where economies of scale definitely affect production--their market share dropped precipitously due to this disruption.

History has also shown that firms that don’t “disrupt” and immediately target higher-end market segments tend to get bought-out or out-competed by incumbents[1].

Despite the many false claims to disruption in modern business, there are a few interesting companies poised to end pseudo-monopolies via disruption. As the internet grows in importance, the effective monopoly of internet service providers has come under the political spotlight[4]. Lobbying efforts, faulty-data collection, and local government deals have ensured they fly under the antitrust radar while pushing out competitors[5]. Elon Musk is planning to circumnavigate local restrictions, however, by going into space. SpaceX’s Starlink satellite constellation is posed to create a new market segment as well as take over the low end. The low-earth-orbit satellites are planned to deliver higher internet speeds to rural customers at competitive prices.[6][7] Many rural areas are too remote to make financial sense for traditional ISPs. Further expansion could provide internet services to developing countries as well and could eventually replace wired internet entirely for certain classes of customers.


[1] https://hbr.org/2015/12/what-is-disruptive-innovation
[2] http://claytonchristensen.com/key-concepts/
[3] https://cs.stanford.edu/people/eroberts/cs181/projects/corporate-monopolies/government_ibm.html
[4] https://www.eff.org/deeplinks/2019/05/broadband-monopolies-are-acting-old-phone-monopolies-good-thing-solutions-problem
[5] https://tlpc.colorado.edu/tlpc-releases-white-paper-for-eff-reevaluating-sharing-obligations-for-the-modern-u-s-wireline-broadband-market/
[6] https://www.starlink.com/
[7] https://www.businessinsider.com/elon-musk-spacex-starlink-will-launch-beta-test-six-months-2020-4

How Covid-19 is killing Social Security

Amidst the Coronavirus pandemic, many government agencies are still running and trying to provide help and relief to its citizens. One of the largest and oldest agencies running, the Social Security Administration (SSA), is still providing financial aid. However, people are concerned with how much longer Social Security will be able to last in its given form. This Wednesday, the Social Security Board of Trustees released a report that detailed the current state of the SSA. One of the notable pieces of data was that Social Security will likely only last until 2035. While this is consistent with last year's previous estimate of the longevity of Social Security, it fails to take into account the recent effects of Covid-19.

Social Security is a buy-in program where, “workers pay Social Security taxes into the program and money flows back out as monthly income to beneficiaries”(National Academy of Social Insurance). This tax however is calculated based on a person's earnings. The problem with this is that the recent stay at home orders and closure of nonessential businesses has created mass employment across the nation. While Social Security will continue to give out their monthly benefits, expending their money, they won’t be earning as much from taxes as they won’t be able to tax as many people's earnings.

Social Security has seen the effects of an economic downturn affect longevity. From the 2008 financial crisis, Social Security had an expected lifetime of 33 years, but after another estimate in 2012, the lifetime was down to 21 years. During that time, the SSA saw, “the claims for Social Security Disability Insurance could rise and more older workers could also retire and begin to claim benefits”(Yahoo Finance). We could see a sharp decrease in the expected lifetime of the Social Security program if changes aren’t made. With less money flowing in, and most likely more people applying to get Social Security payments, the program could soon collapse.

Sources:
https://www.washingtonpost.com/opinions/2020/04/23/covid-19-threatens-yet-another-victim-social-security/
https://www.nasi.org/learn/socialsecurity/who-pays
https://www.ssa.gov/coronavirus/
https://finance.yahoo.com/news/coronavirus-could-deplete-social-security-as-early-as-this-decade-analysis-220347671.html

Sean Parker

        After being kicked out of Napster for sending an incriminating email of copyright infringement, Sean Parker started his first venture called Plaxo in 2002. Plaxo was essentially an online address book and social networking service that was a precursor to companies like LinkedIn, Zynga, and Facebook. Two years after its founding, Parker was ousted by the companies financiers. In 2004, Parker joined Facebook in its early stages and became its president. In 2005, he was pressured to resign from his position of president after policed raided a vacation home he was renting and found cocaine, but he remained involved. In 2006, he became a managing partner in the Venture Capital fund called Founders Fund. In 2010, still while working for Founders Fund, he invested $15 million in Spotify, as he'd always hoped to legally further what Napster started. And in 2014, Parker backed a new initiative with $9.3 million called Brigade, an online civic engagement platform saying he felt that politics were the most impacted thing by the web.