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Wealth effect

How the paper "wealth effect" influences real-life spending

by Sabri Ben-Achour
Jun 5, 2024
Consumers enjoying a buoyant stock market and high house prices may feel inclined to spend more, but how much more is uncertain.
Paper wealth pumps you up, according to the wealth effect. If you feel good financially, you'll spend more, regardless of how much actual money you have.
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As stocks flag and home prices dip, consumers spend less, spend different

by Matt Levin
Sep 27, 2022
It's called the wealth effect: Household spending decisions tend to be influenced by the ups and downs of asset prices.
Research suggests that feeling pinched financially shifts spending from services to goods, says Stephanie Tully at the University of Southern California.
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How feeling rich helps the economy: An explainer

by Paddy Hirsch
Mar 14, 2014
When we feel wealthy, we spend more. It’s called the wealth effect.
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