TIME Money

These Are the States With the Worst Taxes for Average Americans

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In these states, higher income leads to decrease in effective tax rate

While a certain degree of income inequality might be expected, the difference between rich and poor Americans has grown dramatically in recent years. As of 2013, the wealthiest 20% of Americans had more income in aggregate than the bottom 80% combined.

State and local tax systems play a significant role in redistributing income among people. The nationwide average effective tax rate for the poorest 20% of Americans was 10.9%, roughly double the 5.4% rate for the top 1%.

When looking at taxes paid as a share of the income earned, all states have a regressive tax system, which means poorer residents are taxed more than the wealthiest ones. The difference in effective tax rates between income groups, however, varies widely between states. According to “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States,” a report released by the Institute on Taxation and Economic Policy (ITEP), Washington has by far the most regressive tax system nationwide. Based on the index score, a ratio calculated from a range of factors to measure income inequality before and after taxes, these are the states with the most unfair tax systems for the average American.

In fact, the poorest 20% of individuals paid at least 12% of their total incomes in state and local taxes in seven of the 10 states with the most regressive tax systems. In contrast, the wealthiest 1% of residents paid no more than 3% in state and local taxes as a share of income in six of the 10 states. In an interview with 24/7 Wall St., Meg Wiehe, state tax policy director at ITEP, said that in most states, and these 10 especially, “tax distribution looks very much like a staircase going down, where as your income goes up, your effective tax rate goes down.”

State residents earning average incomes also often bore a higher tax burden compared to the richest residents. The middle 60% of earners in all of the 10 states paid at least three times what the wealthiest 1% paid, as a share of income, in state and local taxes — all of these ratios were also among the highest nationwide. Middle earners in Washington and Florida, the two most regressive taxation states, paid as a share of their income more than 400% what the richest 1% of residents paid as a share of their income.

Often, it’s the presence or absence of a particular kind of tax that determines the extent to which state tax systems are regressive. For example, taxing goods and services consumed daily such as food is especially regressive because food makes up a much larger share of poorer Americans’ income. A graduated income tax is far more progressive, on the other hand. Five of the 10 states with unfair tax systems taxed food at the state and local level. Also, all but one of the 10 states had relatively low or flat income tax rates, and four had no personal income tax.

According to Wiehe, these states “rely heavily on taxes that are paid disproportionately by low- and middle-income households, and have very little reliance on taxes that the top 1% or top 5% would be responsible for paying.” In other words, states have to make up for that revenue in one way or another. Nationwide, personal and corporate income taxes accounted for an average of nearly 18% of state revenue. Yet in five of the 10 states, the contribution to revenue from income taxes was less than 5%. And while sales and excise taxes accounted for less than one quarter of state revenue on average across the nation, they accounted for more than 30% of revenue in six of the 10 states with the most regressive tax policies.

While it is difficult to know the exact degree that these tax policies impact income inequality, the states with the most regressive tax systems also had relatively uneven income distribution even before taxes were applied. In six of the 10 states, the 2013 Gini coefficient — which has values between zero and one, where one means all income belongs to a single person and zero means uniform income distribution — was higher than in the majority of states.

To identify the 10 states with the worst tax systems for average Americans, 24/7 Wall St. reviewed ITEP’s Tax Inequality Index scores for the 50 states. The index incorporated effective tax rates for the poorest 20%, middle 60%, top 1%, as well as ratios comparing these rates, among other measures. Effective tax rates were based on total state and local taxes as a share of family income for non-elderly taxpayers in all 50 states. ITEP’s model used 2012 income figures, and considered tax laws from 2014 and 2015. Contributions to state revenue by tax type were also provided by ITEP. We reviewed the Gini coefficient from 2013 — which is based on pre-tax income — as well as additional economic data from the Census Bureau’s 2013 American Community Survey.

These are the states with the worst taxes for the average American.

10. Indiana
> ITEP index score: -6.6%
> Effective tax rate lowest 20%: 12.0% (8th highest)
> Effective tax rate top 1%: 5.2% (23rd highest)
> 2013 Gini coefficient (pre-tax): 0.46 (17th lowest)

A negative score on the ITEP index means state residents’ incomes were less equal after taxes than they were before taxes. With a score of -6.6%, Indiana’s tax system was the 10th most regressive among all states. While what makes a tax code fair is a contentious issue, middle class families are often among the hardest-hit by regressive tax policies. Indiana households who earned between $34,000 and $56,000 paid 10.8% of their combined income in state and local taxes, the fourth highest tax burden among that income group nationwide. Indiana’s taxation policies may have had an effect on income inequality in the state. Indiana’s Gini coefficient in 2013 had grown at nearly the fastest pace from 2009.

9. Kansas
> ITEP index score: -6.9%
> Effective tax rate lowest 20%: 11.1% (13th highest)
> Effective tax rate top 1%: 3.6% (11th lowest)
> 2013 Gini coefficient (pre-tax): 0.46 (20th lowest)

While Kansas has a graduated income tax structure — widely regarded as a progressive feature in a tax code — the state has no corporate income tax. This means that the vast majority of businesses in the state are exempt from paying state taxes. Since business owners tend to have relatively high incomes, wealthier Kansas residents have likely benefited from this arrangement. As a share of income, the poorest families in Kansas paid 310% what the wealthiest 1% of families paid in state and local taxes, the ninth highest such ratio nationwide. As in many states, incomes among the wealthiest Kansas residents grew between 2009 and 2013, while incomes among poorer residents shrank. The tax code in Kansas will likely remain relatively unfair to poorer residents. The state’s aggressive income tax cuts of 2012 and 2013 resulted in a budget shortfall. To address the shortfall, Governor Sam Brownback proposed earlier this year to raise several excise taxes.

8. Arizona
> ITEP index score: -7.1%
> Effective tax rate lowest 20%: 12.5% (5th highest)
> Effective tax rate top 1%: 4.6% (19th lowest)
> 2013 Gini coefficient (pre-tax): 0.47 (20th highest)

Families in Arizona earning $22,000 or less in 2012 paid 12.5% of their incomes in state and local taxes, the fifth highest rate for that income group in the country. The wealthiest 1% of Arizona households were subject to an effective tax rate of only 4.6%, which was also smaller than the average tax rate for the wealthiest people across the nation of 5.4%. As in most states ITEP found to have unfair tax systems, sales and excise taxes were considered particularly regressive. The poorest Arizona residents paid more than 8% of their incomes in general sales and excise taxes, while the wealthiest 1% paid just 1% of their incomes in such taxes. States identified as having regressive tax codes did not necessarily have dramatic income inequality. Arizona, however, had a higher Gini coefficient than that of most states, and 18.6% of residents lived in poverty in 2013, among the highest poverty rates nationwide.

7. Tennessee
> ITEP index score: -7.3%
> Effective tax rate lowest 20%: 10.9% (14th highest)
> Effective tax rate top 1%: 3.0% (10th lowest)
> 2013 Gini coefficient (pre-tax): 0.48 (12th highest)

Like in several other states reviewed, Tennessee does not have an individual state income tax on earnings, although residents are required to pay a 6% tax on dividends and interest payments. While the lack of an income tax lowers tax burdens on all residents, it does not do so equally. As a share of income, Tennessee’s poorest 20% of households paid 366% what the state’s wealthiest 1% paid in state and local taxes, the seventh largest such discrepancy nationwide. The income group earning close to average incomes was also disproportionately taxed. The middle 60% of earners in the state paid 280% what the wealthiest 1% paid as a share of income, also the seventh highest such percentage in the country. Incomes among Tennessee’s wealthiest households grew by nearly 3% between 2009 and 2013, versus the comparable national growth rate of 0.4%. Among the nation’s less wealthy earners, including those in Tennessee, incomes shrank.

6. Pennsylvania
> ITEP index score: -7.3%
> Effective tax rate lowest 20%: 12.0% (8th highest)
> Effective tax rate top 1%: 4.2% (14th lowest)
> 2013 Gini coefficient (pre-tax): 0.47 (18th highest)

General sales and excise taxes on everyday goods such as gas are considered regressive because while everyone consumes very similar quantities, not everyone has similar incomes. Pennsylvania, which has a long-term plan to raise taxes to repair its transportation infrastructure, levies a tax of 41.8 cents per gallon of gasoline, the fifth highest rate in the nation. Residents with the lowest 20% of incomes paid 5.8% of their incomes on sales and excise taxes like these, versus the comparable rate of 0.6% for the state’s wealthiest residents. Similarly, while property taxes tend to be levied more proportionately across the nation, Pennsylvania’s poorest households paid nearly 4% of their income on their homes, while the wealthiest 1% paid just 1.6%. This was a relatively large gap compared to other states. Since the bulk of school funding comes from property taxes, such disparity has prompted some to argue that Pennsylvania children receive an “education by zip code.”

5. Illinois
> ITEP index score: -8.1%
> Effective tax rate lowest 20%: 13.2% (3rd highest)
> Effective tax rate top 1%: 4.6% (19th lowest)
> 2013 Gini coefficient (pre-tax): 0.48 (8th highest)

The poorest 20% of Illinois households paid 13.2% of their incomes in state and local taxes, and the middle 60% of earners paid 10.9% of their incomes, both nearly the highest effective tax rates respectively. Meanwhile, the state’s wealthiest residents paid 4.6% of their incomes in state and local taxes, one of the lower effective tax rates. Looking just at income tax, the wealthiest 1% paid a slightly higher effective income tax rate than the poorest 20% of state households. However, Illinois uses a flat income tax rate, which is widely considered to be a regressive feature. The state’s wealthiest residents had especially high incomes. A typical Illinois household in the top quintile earned more than $200,000 in 2013, the ninth highest compared to the wealthiest households in other states.

For the rest of the list, please go to 24/7WallStreet.com.

MONEY stocks

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As the Eurozone continues to face the Greek economic crisis and slow growth overall for the continent, many investors are wondering if buying international stocks is worth the risk.

TIME Money

This Chart Shows What Walmart’s Pay Raises Mean for the Minimum Wage

Protestors outside of the Watertown Walmart on Black Friday, Nov. 28, 2014 in Watertown, Wis.
Darren Hauck—Getty Images Protestors outside of the Watertown Walmart on Black Friday, Nov. 28, 2014 in Watertown, Wis.

In a move set to reignite the debate over increasing the federal minimum wage, Walmart said Thursday it’s giving half a million of its employees a raise.

Here’s what’s in store for the 500,000 employees who are paid the company’s baseline wages (which are highly contested numbers), according to a statement:

Current and future associates will benefit from this initiative, which ensures that Walmart hourly associates earn at least $1.75 above today’s federal minimum wage, or $9.00 per hour, in April. The following year, by Feb. 1, 2016, current associates will earn at least $10.00 per hour.

What do Walmart’s raises really mean in context of the minimum wage debate?

As the world’s largest retailer, Walmart’s actions will likely provide a boost to those who want to bump up the federal minimum wage from $7.25 per hour to $10. Those efforts have repeatedly been blocked by some lawmakers in Congress, leading many states to pass their own laws establishing minimum wages above the federal level.

But supporters of a higher federal minimum wage have also called for the rate to be tied to inflation. Why? As inflation increases, the same amount of money buys less stuff — so that $7.25 could feel more like $6.50 or $5.75.

Take a look at the chart above: The federal minimum wage, shown in blue, has been increasing since 1938. But the purchasing power of that wage, shown in orange, has mostly been falling since 1968.

You might notice a slight uptick in the minimum wage’s purchasing power in recent years. That’s because inflation rates were unusually low in the wake of the Great Recession. But as the economy continues returning to normal, expect the minimum wage to lose purchasing power once again.

To bring it back to Walmart: The company isn’t going so far as to tie its baseline wages to inflation. And while any pay raise is certainly better for workers than no raise at all, it’s important to remember that inflation’s impact means raises aren’t always as big as they seem at first.

TIME White House

Here Are the 10 Richest Presidents in American History

Who brought the most green to the White House?

You may know a lot about our 44 commanders-in-chief, but do you know how big their bank accounts were?

Watch the video above to see which presidents brought the most green to the White House.

TIME Smartphones

You Can Soon Use Apple Pay at National Parks

Apple CEO Tim Cook speaks during the White House Summit on Cybersecurity and Consumer Protection in Stanford, Calif. on Feb. 13, 2015.
Justin Sullivan—Getty Images Apple CEO Tim Cook speaks during the White House Summit on Cybersecurity and Consumer Protection in Stanford, Calif. on Feb. 13, 2015.

Apple CEO Tim Cook said that the service is likely to take off in September

Heading to Yosemite National Park? According to Apple CEO Tim Cook, you’ll soon be able to use Apple Pay for entry at the gate.

The tech titan’s CEO was one of many big names to take the stage at Friday’s White House summit on cybersecurity and consumer protection, held at Stanford University in Palo Alto, Calif. Other leaders, from both public and private sectors, included the secretaries of Homeland Security and Department of Commerce and the CEOs American Express, Kaiser Permanente, AIG and Pacific Gas & Electric, to name a few. (President Barack Obama himself spoke later on Friday to announce his next cybersecurity-related executive action.)

The goal of the summit? To get corporations, tech vendors, law enforcement, consumer and privacy advocates, government and others to collaborate and share information in an effort to better prevent and respond to cyberattacks. The White House purposely chose to hold the summit in the heart of Silicon Valley, where much of the innovation in next-generation cybersecurity tools is taking place.

Indeed, much of the discussion at the event centered on how the public and private sectors can best work together to fight cyberattacks and the need for more nimble tools. Apple’s Cook, however, chose to dedicate his time on stage to pitching Apple Pay, talking up the fact that the company doesn’t sell information about its customers, and making an impassioned appeal for the importance of privacy–not just for security purposes but for the purposes of human rights.

According to Cook, Apple never sells consumer information to other businesses–that is not part of its business model.

“We have a straightforward business model” that does not include selling personal data, Cook told the audience.

Cook then went on to say that Apple Pay, the company’s mobile payments system, is safer than the traditional “plastic” credit cards. He also announced that, come September, Apple Pay would be available for “government transactions.”

Apple’s CEO ended his talk with an impassioned plea for privacy and freedom of expression across the world.

“History has shown us that sacrificing our right to privacy can have dire consequences,” said Cook. “We still live in a world where all people are not treated equally, [where] too many people do not feel free to practice their religion or express their opinion or love who they choose, a world in which that information can make the difference between life and death. If those of us in positions of responsibility fail to do everything in our power to protect the right of privacy we risk something far more valuable than money: we risk our way of life.”

This article originally appeared on Fortune.com.

TIME Family

Why I Finally Combined Money With My Spouse

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xoJane.com is where women go to be their unabashed selves, and where their unabashed selves are applauded

Doing so may result in a cleaner vision of your financial future, and an opportunity to really get to know your significant other


Before I got married, I was financially independent for years. Not that I was in a position to give financial advice, as occasionally I lived lavish and other times I hunkered down to save. But I loved the freedom of being able to spend half my salary on oversize international fashion magazines, or homeopathic aromatherapy facials, or a gold-plated Pac-Man necklace (impulse buy!).

I lived with my husband for years before we were engaged, and we dutifully split the bills and rent right down the middle. We would send two checks each month to our landlord, go dutch at pricey restaurants, and keep track of whose turn it was to pay the housecleaner. When we got engaged, I never dreamed that financial arrangement would change. Why would it?

Let me start by saying there is no perfect way to combine money. What works for one couple is not going to work at all for another. Each person’s financial philosophy is going to be different and affected by their childhood, income levels, and current economy. Some people believe money should be scrimped and saved and only trotted out for large purchases like a house or a yearly vacation. Others feel that money is well spent if you can bring a tiny bit of joy into your everyday life. Your husband may have champagne tastes, while you want to stay on a beer budget.

Hopefully by the time you’re married, you’ve realized that you are somewhat compatible in spending habits with your spouse and you won’t be caught off guard by their secret spending or squirrely saving habits. Regardless, money seems to be a hot-button issue and the reason behind why a majority of couples fight.

Last year, a researcher confirmed that arguing about money was a good indication of divorce. So one way of dealing with that would be to keep finances private in order to alleviate those arguments. Out of sight, out of mind. With separate bank accounts, no one is in charge of the money, and this alleviates power struggles within the relationship.

When my husband and I first got married, we chose to combine a savings account where we would pop in the monthly expenses, but kept our other checking accounts separate. I didn’t want to know how much money my husband was spending on rare Brazilian funk records, and he definitely wouldn’t agree with the cost of my shoe collection. This definitely helped keep a sense of fairness in the relationship, and I know many couples who live blissfully unaware of what their other half is spending.

Additionally, if one partner has outstanding school loans, credit card debt, or bad credit, it might not be the best idea to merge. Adjusting to life as part of a couple is hard enough, and keeping separate accounts probably helps with that partnership. We might have lived happily ever after in that scenario, but all that freedom came to a screeching halt when we had a child.

The arrival of our precious baby was priceless. Well, not exactly “priceless,” as our son came with an exorbitant cost that added a layer of complexity into our freewheeling financial schema.

All of a sudden we needed to rethink and revise our money plan, as one of us (me) cut down on our hours, and one of us (my husband) became the higher earner. As we watched my bank account drain down to a gurgle, we knew we needed a financial makeover. The birth of children, a death in the family, or a job layoff can be common circumstances where revamping your riches and covering your assets are necessary.

It was a bleak winter day when we finally bundled up our newborn and dragged our feet to the bank branch to open our new combined checking account. We couldn’t agree on the color choice of our checks; how would we manage our cash flow? I can’t say it was an easy step in our marriage, but starting the conversation about money did not necessarily spell out divorce.

Putting our money together forced us to talk to each other about what we thought were important goals for our family, what expenses were important, and where we wanted our cash to flow. We ended up putting together a monthly budget for the first time, including a savings goal. And lo and behold, we had a good idea of what we paid in bills and where we could make cutbacks if necessary.

I’m sure that many responsible people will marvel at how we lived without a firm grasp on our finances for so long, but even for those money-minded folk, a life-altering event will always give an opportunity for new levels of communication (even if you’re already obsessively tracking all your receipts).

We learned to compromise on certain things, and realized gleefully that we wholeheartedly agree on specific ways we spend (i.e., vacations are expensive and worthwhile!). We started to look at our finances as more of a team resource; for now, there were three of us under the umbrella of one bank account.

Budgeting was a success, but we also missed the spontaneity of our previous financial life. Plus, tracking every morsel of dough that was spent didn’t leave room for buying surprise presents or impulse splurges. This is when we inserted our “play money” column on our spreadsheets, where we each got a sort of allowance that can be used freely without judgment from the rest of the team. Kobe beef burger for lunch? It’s your money. Overpriced baby shoes for a human who can’t walk yet? Why not? This alleviates the anxiety about what we’re spending and gives us all a little more freedom in our daily lives while still feeling secure that our joint goals will be met.

It’s been five years with one bank account and I can’t say that we never argue about money, because that would be a lie. But I can say that I don’t think that arguing about money is actually such a bad thing anymore. Bringing finances out into the open, and being forced to communicate and come clean on our spending habits has been an opportunity for honest discussion.

Arguing about money may lead to divorce a lot of times, but really a dollar is just a piece of paper. It might give you a paper cut, but in and of itself, it can’t break up your marriage!

Instead, the topic of money is a symbol for other issues: dependence, control, dreams, and power. Sweeping up this dust with joint accounts can feel messy, and often results in fighting, but once the debris has settled, it may result in a cleaner vision of your financial future, and an opportunity to really get to know who you’re sharing that DWR or IKEA bed with.

Meredith Craig de Pietro wrote this article for xoJane.

TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME psychology

8 Ways That Money Can Buy Happiness

dollar bill
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Eric Barker writes Barking Up the Wrong Tree.

Another paper from Harvard happiness expert Daniel Gilbert (author of the bestseller Stumbling on Happiness) spells out 8 ways we can spend our money to increase happiness:

1) “Buy more experiences and fewer material goods.”

This means more amusement parks and vacations. Fewer cars and new TV’s:

Asked which of the two purchases made them happier, fully 57% of respondents reported that they had derived greater happiness from their experiential purchase, while only 34% reported greater happiness from their material purchase. Source: “If Money Doesn’t Make You Happy Then You Probably Aren’t Spending It Right” from Journal of Consumer Psychology

Why? We quickly take material goods for granted. Research shows this happens more slowly with experiences. Also, we anticipate and remember experiences more, savoring them for longer and squeezing more enjoyment from them.

2) “Use their money to benefit others rather than themselves”

Yup, giving is better than receiving:

Dunn, Aknin, and Norton (2008) asked a nationally representative sample of Americans to rate their happiness and to report how much money they spent in a typical month on (1) bills and expenses, (2) gifts for themselves, (3) gifts for others, and (4) donations to charity. The first two categories were summed to create a personal spending composite, and the latter two categories were summed to create a prosocial spending composite. Although personal spending was unrelated to happiness, people who devoted more money to prosocial spending were happier, even after controlling for their income.


Researchers approached individuals on the University of British Columbia (UBC) campus, handed them a $5 or $20 bill, and then randomly assigned them to spend the money on themselves or on others by the end of the day. When participants were contacted that evening, individuals who had been assigned to spend their windfall on others were happier than those who had been assigned to spend the money on themselves.


The benefits of prosocial spending appear to be cross- cultural. Over 600 students attending universities in Canada and in the East African nation of Uganda were randomly assigned to reflect on a time they had spent money on themselves or on others (Aknin et al., 2010). Participants felt significantly happier when they reflected on a time they had spent money on others, and this effect emerged consistently across these vastly different cultural contexts—even though the specific ways in which participants spent their money varied dramatically between cultures.

Why? Giving improves social relationships and our relationships are key to happiness. Giving makes us feel the relationships will continue, which bolsters well-being.

3) “Buy many small pleasures rather than fewer large ones”

When it comes to happiness, frequency beats intensity:

Indeed, across many different domains, happiness is more strongly associated with the frequency than the intensity of people’s positive affective experiences (Diener, Sandvik, & Pavot, 1991). For example, no one finds it surprising that people who have sex are happier than people who don’t (Blanchflower & Oswald, 2004), but some do find it surprising that the optimal number of sexual partners to have in a twelve-month period is one. Why would people who have one partner be happier than people who have many? One reason is that multiple partners are occasionally thrilling, but regular partners are regularly enjoyable. A bi-weekly ride on a merry-go-round may be better than an annual ride on a roller coaster.

Why? One reason is that we’re less likely to adapt and take for granted all these little things regularly affecting us than we are the one, big rare event:

One reason why small frequent pleasures beat infrequent large ones is that we are less likely to adapt to the former. The more easily people can understand and explain an event, the quicker they adapt to it (Wilson & Gilbert, 2008), and thus anything that makes a pleasurable event more difficult to understand and explain will delay adaptation. These variables include novelty (we’ve never experienced the event before), surprise (we didn’t expect it to happen), uncertainty (we’re not entirely sure what the event is), and variability (the event keeps changing). Each of these variables makes an event harder to understand and as a result we pay more attention to it and adapt more slowly.

4) “Eschew extended warranties and other forms of overpriced insurance”

Research shows we deal with bad events much more effectively than we think. Often we buy insurance to make us feel better, not because we couldn’t actually afford to replace the item.

Warranties are acknowledged to be a poor investment:

With price tags reaching as high as 50% of a product’s original cost, extended warranties sold by retailers and manufacturers provide huge benefits to the seller and are widely acknowledged to be bad bets for the buyer (Berner, 2004; Chen, Kalra, & Sun, 2009).

5) “Delay consumption”

Anticipating pleasure can sometimes be more enjoyable than the event itself. By delaying good things we increase happiness:

But there is a second reason why consume now, pay later is a bad idea: it eliminates anticipation, and anticipation is a source of free happiness. The person who buys a cookie and eats it right away may get X units of pleasure from it, but the person who saves the cookie until later gets X units of pleasure when it is eventually eaten plus all the additional pleasure of looking forward to the event. Research shows that people can reap substantial enjoyment from anticipating an upcoming event even if the event itself is not entirely enjoyable. Examining three different vacations ranging from a trip to Europe to a bicycle trip through California, Mitchell et al (1997) found that people viewed the vacation in a more positive light before the experience than during the experience, suggesting that anticipation may sometimes provide more pleasure than consumption simply because it is unsullied by reality. Not surprisingly, then, people who devote time to anticipating enjoyable experiences report being happier in general (Bryant, 2003).

6) “Consider how peripheral features of their purchases may affect their day-to-day lives”

The farther things are in the future, the more abstractly we view them. Buying a summer cottage seems great — because at a distance we don’t think about repairs, a leaky roof, and mosquitoes.

We do better when we consider how our purchases will affect our future use of time and our day-to-day lives:

Thus, in thinking about how to spend our money, it is worthwhile to consider how purchases will affect the ways in which we spend our time. For example, consider the choice between a small, well-kept cottage and a larger ―fixer upper‖ that have similar prices. The bigger home may seem like a better deal, but if the fixer upper requires trading Saturday afternoons with friends for Saturday afternoons with plumbers, it may not be such a good deal after all.

7) “Beware of comparison shopping”

Looking at lots of different options can mislead us as to the importance of various features. We end up thinking small differences may have a big impact when the truth is that most of the options will end up having no difference in our enjoyment of the item six months from now:

From this perspective, comparison shopping may focus consumers’ attention on differences between available options, leading them to overestimate the hedonic impact of selecting a more versus less desirable option. To the extent that the process of comparison shopping focuses attention on hedonically irrelevant attributes, comparison shopping may even lead people to choose a less desirable option over a more desirable option.

8) “Pay close attention to the happiness of others.”

You’re not the unique snowflake you think you are. Popular things are often popular for a reason and we do ourselves a disservice by ignoring what brings others pleasure because, very likely, we may enjoy it too:

Research suggests that the best way to predict how much we will enjoy an experience is to see how much someone else enjoyed it. In one study, Gilbert, Killingsworth, Eyre, and Wilson (2009) asked women to predict how much they would enjoy a speed date with a particular man. Some of the women were shown the man’s photograph and autobiography, while others were shown only a rating of how much a previous women had enjoyed a speed date with the same man a few minutes earlier. Although the vast majority of the participants expected that those who were shown the photograph and autobiography would make more accurate predictions than those who were shown the rating, precisely the opposite was the case. Indeed, relative to seeing the photograph and autobiography, seeing the rating reduced inaccuracy by about 50%.

This piece originally appeared on Barking Up the Wrong Tree.

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TIME Ideas hosts the world's leading voices, providing commentary and expertise on the most compelling events in news, society, and culture. We welcome outside contributions. To submit a piece, email ideas@time.com.

TIME Money

Powerball Jackpot Reaches Nearly Half a Billion Dollars

425 Million Jackpot Draws Hopeful Lottery Ticket Buyers
Scott Olson—Getty Images

It could be you

The multi-state Powerball lottery jackpot has reached nearly $500 million ahead of Wednesday night’s drawing.

That’s a cash option of $337.8 million after taxes, reports a local ABC affiliate, a nearly record-breaking jackpot. The current Powerball jackpot is the third largest ever and the fifth largest out of all lottery games across the country. It will be drawn at 10.59pm eastern time Wednesday, with tickets on sale until 10pm.

No jackpot winner was selected in Saturday’s drawing, lottery officials say, which was worth $380 million. The Powerball numbers drawn Saturday night were 34-58-5-21-10 with the Powerball number 33.

One Long Island, New York resident missed out on the prize after missing just the Powerball number. “Unbelievable, that’s really unbelievable. I thought it would be me but no it wasn’t. It was not at all,” said Coram resident Ben Pietri.

The last major Powerball jackpot was in February 2014, when it was $425 million.


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