Sunday, June 14, 2009

Recession and the Happiness Index

With the Sensex back to the 15000+ levels, and analysts already making a U-turn in their predictions to re-pompom the new India growth story (is there anyone speaking about a less than 9% growth?), I decided that one needed to quickly write about the recession before it became history.

If Analysts can be tickling funny with their predictions, the Economists can be dead serious. Alan Greenspan once worked out a corelation between the sale of men's underwear and recession. He predicted that the sales of men's underwear should go down during a recession. His logic - noone sees a guy's undies (seems like the poor guy is not clued into the latest in fashion) so they are the first thing men stop buying when the economy tightens. I am not sure why men have been singled out here in his prediction, but he probably understands a thing or two about women's fashion that I do not! I enjoyed reading about the hemline indicator though. Burton Malkiel explained in 'A random walk down Wall Street' that bull markets tend to be associated with shorter hemlines and bare knees while the bear markets at the stock market would typically mean a bear market for the girl watchers!

I do not have enough data to prove or disprove Greenspan's prediction (if I were the only data point, his theory would have been disproved already - stocked my cupboard with new undies quite recently!), but I wish someone came out with a research project corelating the recession to the happiness index. I have always known that work-life balance was a good part of the index with a significant weightage, but had never managed to work on this balance hard enough to positively influence the value of my index. My professsion hardly provided for room to influence this value in the index. The market downturn has of course changed everything altogether, especially in the broader industry that people say I belong to. Looking at the disinclination of the Private Equity and the Venture Capital Fund Managers to take decisions, I wonder what is so 'risky' about the 'risk capital' that these Fund Managers invest. But quite importantly, I thank them for their absolute lack of appetite for risk as it has given me the opportunity to work on the most critical lever that influences the Happiness Index - work-life balance.

The slow-down has given me the time to re-discover some of the lost relationships, and possibly even re-create the lost energy and fun in the very few that existed. The joy of a good personal life can be so addictive that it makes me smirk at the most important drivers of the American life - 'speed' and 'money' - and the influence that that culture has had on us. It makes me wonder if each one of us are using the wrong parameters to measure ourselves, but that's a separate discussion bordering on economics and philosophy. For now, I can only claim to have seen the immense positive rub-off that the recession has had on my Happiness Index!!

1 comment:

Alka said...

Quiet an interesting post....i found the co-relation between the sale of men's underwear and recession funny though...recession or no recession, seems like this business is quite profitable ;-)
The relation between recession and your happiness index is nicely portrayed ;-)