Means Test

A means test is any requirement that takes a person's income or wealth into account. Very different from a Mean Girls test, which would probably just make you cry, like the little girl that you are.

A lot of other social programs have a means test. If you make more than a certain amount, you can’t get food stamps. Also, many college scholarships take family finances into account and disqualify applicants with too much money.

Meanwhile, your level of wealth doesn’t matter when it comes to Social Security. Warren Buffett and your uncle who lives in a tent and subsists on expired cat food both get the same Social Security checks. Or, to put it another way, there is no means test.

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Econ: What is the Wealth Effect?0 Views

00:00

and finance Allah shmoop What is the wealth effect All

00:08

right people when your stock portfolio is climbing like that

00:11

little mountain climber guy on the price is right you

00:13

just might feel like yodeling for joy Or maybe you

00:18

just dance a little either way that happy feeling is

00:21

caused by the wealth effect with wealth Effect is in

00:24

economic theory which states that people spending habits correlate with

00:27

the ups and downs of their unrealized well like stocks

00:31

and investments in real estate In you know owning your

00:34

own home When your stocks are on the upswing you

00:36

might find yourself spending thanks to a newfound economic confidence

00:40

a new appliance here you know a new TV there

00:43

Yamagata It also means that when economic doom and gloom

00:45

arise from the ashes of ah burst housing bubble for

00:49

example causing your house's value to tumble down words well

00:52

then you'LL start spending less Maybe you'LL start eating at

00:55

home for lunch more often and maybe we'LL postpone that

00:58

trip Teo Tasmania wherever people go in an aggregate sense

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the wealth effect suggests that consumers are spend happy during

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bull markets and that they go into defense of savings

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mode during bear markets right kind of makes sense Well

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Wealth of act might affect us mere mortals but it

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wouldn't affect *** economicas The theoretical perfectly rational economic agent

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Po Mo Economicas would see that because this wealth is

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yet to be realized it's no reason to change spending

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habits Stock prices that went might fall again before you

01:29

cash them in and it's likely that the housing bubble

01:32

won't keep housing prices down forever Yet we real humans

01:36

with our monkey brains can't help feel the excitement that

01:38

comes with rising investments in the fear that comes with

01:42

falling investments Of course if an investor was living off

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of well his or her dividends while those dividends would

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be the source of their income right the cash the

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Levant which is more of an income effect thing than

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a wealth effect thing Either way the wealth effect is

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wound Just a theory some economists point to It is

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a way to explain some peculiar economic event For instance

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a ten percent tax increase in the late nineteen sixties

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did not stop consumers from spending like it was payday

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every day grabbing That's a stock portfolio bull by the

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horns while politicians and economists like we're baffled and they

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ruffled Well that's not how this was supposed to go

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another economist shout here say calling the wealth effect a

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bunch of hooey Like a bad theory it doesn't mean

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anything They say that the wealth effect is upside down

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That increased spending probably leads to asset or investment appreciation

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not vice versa Still other economists say that even if

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the wealth effect is a really thing well it has

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such a teeny tiny effect on the economy That is

02:39

kind of a moot point in the aggregate To spend

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or not to spend That is the question to check

02:44

your portfolio or not That is another question Well what

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would *** economicas dio Yeah let's do what he does

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