by James A. Bacon
More interesting data from WalletHub: In a ranking of 150 metropolitan regions by 16 metrics indicating the degree to which local populations adhere to responsible household budgeting practices, Virginians fare better than their peers in any other Southern state — and that’s not just a reflection of the outsized influence of Northern Virginia, which is wealthier, better educated and culturally distinct from the rest of the state.
Charlottesville ranked 11th nationally, followed by Washington at 23th, Roanoke at 25th, Richmond at 45th and Hampton Roads at 56th.
WalletHub’s metrics encompass average credit scores, non-mortgage indebtedness, foreclosure rates, percentage of population paying only the minimum on credit cards, percentage of the population spending more than they make, delinquency rates on loans, and related measures.
Education and income are important measures of economic well being but I would argue that household thrift is just as important. Social scientific surveys of happiness and well being consistently show that, beyond a certain point, additional income brings only increment gains in happiness. The pleasure gained from the acquisition of a flashier car, a bigger house or a newer big-screen TV is fleeting. The anxiety that stems from economic insecurity and the risk of losing one’s possessions is enduring. Households that live within their means and set aside some savings, I would hypothesize, tend to experience greater life satisfaction (or conversely, less anxiety) than households that spend money carelessly on frivolous or passing pleasures — even if they accumulate fewer material possessions.
This perspective is almost entirely lacking in the public policy debate in the United States today. Economic well being is measured almost exclusively by the rate of economic and income growth and, secondarily, the distribution of income. As a consequence, government policy is geared overwhelmingly toward goosing consumer expenditures. Anything that stimulates consumer spending, even if it means saving less and borrowing more, is regarded as beneficial to “the economy.” Thus, we witness today the revival of policies last seen during the real estate mania of the 2000s designed to lower mortgage borrowing standards and encourage more lending to the poor. The fact that these very same policies induced poor people into buying houses they couldn’t afford to pay for, much less keep up, and unleashed a wave of foreclosures that obliterated what little wealth most of these people possessed seems not to deter policy makers in the least. The idea that people of modest means can live perfectly happy lives without racking up debt seems alien to the American political psyche.
An ability to resist the siren call of excessive indebtedness, I would argue, is a major contributor to happiness and life satisfaction. The most responsible budgeters in the nation, by WalletHub’s standards, are clustered in the upper Midwest — in metropolitan regions centered in and around Minnesota and Iowa. It’s difficult to avoid the conclusion that cultural factors are at work, perhaps related to the Germanic and Scandinavian heritage of the populations. The other large cluster — not quite as thrifty, but more financially responsible than the country as a whole — is the Mid-Atlantic/Northeastern region, of which Virginia is a part. The South and parts of the Southwest are a budgetary disaster zone whose citizens, who are more likely to be poor, have shredded their household budgets. Thrift and frugality were never part of the Southern cultural tradition — either among the Anglo-Saxons or the African-Americans who settled there.
It would be interesting to know how Virginians came to embrace the household budgeting practices of states to the north rather than the south. Are cultural attitudes different here? Has state public policy played a role? Does the school curriculum, which teaches economics and personal finance, make a material contribution?
One last point: While it makes intuitive sense to link personal budgetary responsibility to life satisfaction and happiness, there may, in fact, be little correlation. Compare the map above with the happiness map published previously on Bacon’s Rebellion. The South is one of the happiest regions in the country! Maybe happiness is spending other people’s money.