Thursday, December 14, 2006

Followup On Online Savings Accounts

As a followup on my earlier posts on online savings accounts, it looks like my forecast on October 2 is still holding true--that online savings accounts from major banks had reached their intermediate-term peak when E-Loan came out their 5.5% account.  Recently, E-Loan lowered their rate to 5.38%.

I had planned on opening up an account there, but after reading on MyMoneyBlog about the many problems people have been having with their accounts at E-Loan, I've decided against it.  I'm still at ING Direct for now, but would really prefer another institution since ING doesn't let me link to my Fidelity brokerage account (via the United Missouri Bank account that serves as the cash account for Fidelity).  I do like ING Direct's system for being able to easily open subaccounts, though.  If there was another bank which allowed links to my Fidelity-affiliated account and easily let me set up subaccounts and had a competitive interest rate, I'd move there.  If you know of any, please let me know.

Wednesday, December 13, 2006

Wal-Mart Deserves the Nobel Peace Prize?

With $330 billion in annual sales, Wal-Mart certainly attracts a lot of shoppers--and unflattering attention. It's often blamed for paying workers poorly, driving small merchants out of business, buying from overseas sweatshops, and killing downtowns. When you read about them in the news, it's usually about how their latest proposed store is being opposed by local civic groups, right?

Well, in an article in the January 2007 edition of Kiplinger's, Jeremy Siegel writes about the flip side of Wal-Mart's impact. He notes that "for millions of people, Wal-Mart is a lifesaver that provides what they want at prices they can afford." He also pointed out that Wal-Mart pays more than $10 an hour, on average, and that when they opened a new store in Chicago, they had 25,000 applications for 325 jobs. Despite that, Chicago City Council had voted to hold have higher minimum wages requirements for Wal-Mart and other big box retailers. Though the bill was vetoed, Siegel noted that it sends the message to prospective employers, that "We will penalize you for being a large, efficiently run company that offers consumers the lowest prices. Would Chicago prefer less-efficient companies with higher prices and fewer jobs?"

Wal-Mart's huge size means that other competitors, such as grocery stores and other merchants, need to be more competitive in price. Siegel cites a study that found that Wal-Mart's growth from 1985-2004 resulted in food-at-home prices that were 9.1% lower and overall prices that were 3.1% lower than they would have otherwise have been. Don't ask me how they figured that out, but that means that if it hadn't been for Wal-Mart, we'd be paying higher prices on most things we buy.

Siegel also addressed the criticism that Wal-Mart encourages sweatshops in the developing world. Here, he cites an editorial by Brian Tierney of the New York Times. Tierney makes the argument that Wal-Mart is as deserving of the Nobel Peace Prize as is Muhammad Yunus, the 2006 prize winner, who founded Grameen Bank. Grameen Bank helped people in poor villages in developing countries through microloans. Tierney makes the point that Wal-Mart is actually responsible for the creation of far more jobs in the developing world than Grameen.

Well, nominating Wal-Mart for the Nobel Peace Prize may be a bit much to swallow, but Siegel's article does point out the positive side of Wal-Mart that is rarely mentioned in the press and gives some food for thought.  I'd be interested in what readers have to say.

Wednesday, December 06, 2006

The Pursuit of Happiness: Experts' Own Advice

Wow, it's been nearly a month since I last posted. Things had been very hectic at work, but hopefully it's slowing down now.

In today's Wall Street Journal, Jonathan Clements wrote about six academics in the field of "happiness research" who took some of their own advice and made changes for the better:

  • Relish the day. The problem is that when we get a raise or promotion, we're thrilled at first, but quickly get used to it. UCSD professor David Schadke's advice is to celebrate the small things, not just save up the celebrations for big occasions. Also, take photos and buy souvenirs to help you to recall the good times long after a vacation or event is over. For example, when his undergrad school, the University of Texas, won the college football championship last year, he bought T-shirts to help him remember.

  • Dodging traffic. Studies have shown that commuting is one of our least favorite activities and one of the main reasons is the lack of predictability. This lack of control is what induces the stress. Warwick University professor Andrew Oswald too his own advice and moved closer to his office, reducing his commute from 60 minutes to 20 minutes.

  • Seeing friends. Chances are you enjoy seeing friends and family more than you enjoy spending extra time at the office. So why do we take the higher-paying job that leaves less time with our loved ones? Part of the answer is that we sometimes don't thing about how things will play out over time. We'll get used to the extra money fairly quickly, but we don't realize the long-term effects on our social lives. Professor Richard Easterlin from USC used to sacrifice family time for research time, but does that much less now and enjoys the extra time with his family.

  • Buying memories. Alan Krueger from Princeton suggests that we may be able to boost our happiness by thinking carefully about how we spend our time. To that end, he suggests "buying memories." For example, he cites taking his dad to the 2001 Superbowl. Even though his Giants lost, he enjoyed the anticipation of the game and the event itself. He even framed his ticket to remind himself of the event.

  • Limiting options. Clements writes about a study by Jane Ebert and Daniel Gilbert where participants were told that they can take home an art poster. Some were told they could exchange it if they didn't like it, others were told that their selection was final. Which participants were happier? The ones that didn't have the option to exchange it. Gilbert says "When options are open, the mind generates debate. When options are closed, the mind generates satisfaction." To that end, Gilbert took his own advice and proposed to his girlfriend, who is now his wife. He says that "sure enough, now that she's my wife, I'm happier."