July 13, 2016

iFOREX, The Misery Index -How Happy Are You?-

How Happy Are You?

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This article is originally referred from iForex Blog.

The iFOREX Blog has told you about a few unusual indices and economic theories before.

The Big Mac index was certainly one to remember,

Understanding the Big Mac Index iforex

and so was the Dollar Smile theory. Today though, we bring you a less amusing financial tool called “The Misery Index”. Seriously, we’re not making it up.

The Dollar Smile Theory iforex

The misery index is, in fact, a well-known economic indicator. It was created by economist “Arthur Okun” and has since been adapted and developed. This index attempts to determine how average citizens are doing economically, AKA – how happy they are.

So, how do you calculate misery – or happiness for that matter?

In this case, you add the seasonally adjusted unemployment rate to the annual inflation rate. The reasoning behind this is quite simple: A worsening inflation and a higher rate of unemployment are likely to impact a country negatively, both financially and socially.

For example, high unemployment and inflation is likely to result in lower consumer expenditures, hence contributing to the country’s economic slow-down.

Pretty cool, right? Needless to say, this is only a theory, which may or may not serve as a useful tool for online traders. To learn more about how financial theories and indicators can help you manage your trading portfolio, visit the iFOREX Education Center.

Original Source: iForex Blog

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