Inflation vs Pay Cut: Which Would You Chose? See the Fascinating Research
Here's some fascinating research that discuss how we think about inflation vs a pay cut. If you had to choose between a 3% pay cut or 3% inflation which would you choose? The answer lies deep inside your brain.
I could be completely wrong but the pay raise with the inflation actually is a better deal, right? True, a person is not making any more money than before, he is just keeping his previous buying power/salary. But when you take a pay decrease, this change is not pegged to inflation and therefore a person's buying power actually decreases as well? Soo....somebody explain it to me.
Three percent inflation would negatively affect countless numbers of people, but a 3 percent pay cut would primarily affect only me and my household. So, if forced to choose, I would opt for the pay cut---why spread the pain further than necessary?
I could be completely wrong but the pay raise with the inflation actually is a better deal, right? True, a person is not making any more money than before, he is just keeping his previous buying power/salary. But when you take a pay decrease, this change is not pegged to inflation and therefore a person's buying power actually decreases as well? Soo....somebody explain it to me.
ReplyDeleteThree percent inflation would negatively affect countless numbers of people, but a 3 percent pay cut would primarily affect only me and my household. So, if forced to choose, I would opt for the pay cut---why spread the pain further than necessary?
ReplyDeleteI would go for the paycut as it would avoid the rate creep. Funny, how Social Security benefits are indexed for inflation, but tax rates aren't.
ReplyDelete