How Does The Misery Index Effect You?

misery_index

The misery index is a way of measuring a nation’s average misery from a financial standpoint. It takes two main components that contribute to misery, along with a few minor factors, and creates an average number to show how miserable citizens are. While some criticize this practice, it has proven effective.

What is the Misery Index?

People often feel miserable when there are financial problems. The economist Arthur Okun found that misery increased whenever inflation and unemployment increased. Not only that, but he also found that the nation had to spend more money to keep these problems from getting worse, which led to other problems.

The two biggest factors are inflation and unemployment rates. Other minor factors include the national interest rate and GDP change.

America’s Misery Index

While the misery index is constantly fluctuating, it’s commonly around seven to 10 in America. It was the worst when Jimmy Carter was president. The misery index was about 16.2 on average, but it came close to 22 in 1980 at the end of his presidency. At the same time, it wasn’t much better when Gerald Ford was president because the average was 16.

Things are better now, but they are still at the higher end of average. The current misery index is about 10.75.

High and Low

The most miserable state in 2012 was Nevada with a misery index of 11. At the other end of the spectrum, North Dakota was the least miserable with an average index of 4.5. Economic misery is often the worst on the two coasts, and it’s better in the middle of the country.

Misery and Revolution

Not only does the misery index measure how miserable the nation is in terms of its financial situation, but this index can also be used to measure revolutions. When the misery index gets very high in the Middle East, revolutions become common.

For example, the misery index in Jordan was about 38 in 2005, which led to a revolution. Egypt had a revolution in 2007, which was also when their misery index spiked to 35.

If there is a large spike in the misery index, experts can expect that a revolution is coming.

Misery Index
Source: FinanceDegreeCenter.com

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