Sunday, May 22, 2005

Decisions, decisions

The economic decisions that households in various straits make are hard to fathom (or predict). That's the nature of the beast. U.S. households save very little (per BEA which compares incomes [not from all sources] with spending) or they have been adding to net worth at a fast clip -- even when the accounting excludes home appreciation, according to the NY Times' Daniel Gross ("Is It a Savings Crisis Or a Math Error?").

The discussion should prompt economists to consider the weights to be attached to the two measures,ones that would best predict consumption, work, more saving, etc. All that we now know is that these weights are not likely to be zeroes and ones.

Untill we know more, I prefer 50-50 -- and an end to the idea that it is the one or the other that matters.