Rules of Thumb


A simplified financial training based on “rules of thumb” improved business practices and outcomes among microentrepreneurs in the Dominican Republic, while standard, fundamentals-based accounting training produced no significant effect.

Individuals and business owners have to make many financial decisions that are critical for their success and well- being. Yet in both developed and developing countries, research has shown that a large fraction of the population is unprepared to make these decisions. A good understanding of simple financial concepts can potentially lead to better business decisions and, ultimately, greater household welfare. The challenge is to determine not only whether training programs can improve financial practices and outcomes, but also how to teach financial literacy more effectively.

A randomized evaluation implemented by ideas42 and conducted by J-PAL affiliates Greg Fischer and Antoinette Schoar, along with Alejandro Drexler, tested the impact of financial training on both firm-level and individual outcomes1. The researchers also investigated how the content and complexity of training influence its effectiveness.

Specifically, the researchers tested two distinct types of financial training offered to existing clients of a microfinance institution in the Dominican Republic: (1) a standard approach, similar to what is currently in use by many large development organizations, which teaches the fundamentals of financial accounting; and (2) a simplified training based on financial rules of thumb.

• The rule-of-thumb training produced significant improvements in financial practices.

Microentrepreneurs in the Dominican Republic who learned the rules of thumb were more likely to report separating business and personal accounts, keeping accounting records, and calculating revenues than those in the comparison group who received no training.

• The rule-of-thumb training had positive impacts on business outcomes. In particular, it led to increases in the level of sales during self-reported bad weeks, suggesting that training helped participants to better manage negative shocks.

• On the other hand, a standard, fundamentals-based accounting training produced no significant impact along these same dimensions. Results from the evaluation and follow-up visits to the clients suggest that the accounting training was harder to understand and to incorporate into the everyday running of a business.


Depression and Unemployment

August 23, 2013

In U.S., Employment Most Linked to Being Depression-Free

One in 10 Americans say they currently have or are being treated for depression

by Alyssa Brown and Kyley McGeeney

WASHINGTON, D.C. — For Americans, being unemployed, being out of the workforce, or working part time — but wanting full-time work — are the strongest predictor of having depression. Unemployed adults and those not working as much as they would like are about twice as likely as Americans who are employed full time to be depressed.

Depression Rates, by Employment Status

Americans who are not in the workforce are the most likely to be depressed, at 16.6%. It is possible that there is something about employment contributes to lower depression rates, or it could be that those who have depression are less able to seek out and retain employment.

These findings are from surveys with more than 100,000 Americans, conducted as part of the Gallup-Healthways Well-Being Index from Jan. 1-July 25, 2013. Gallup asks Americans if they have even been diagnosed with depression and, if so, whether they currently have it. Overall, 10% of U.S. adults say they have been diagnosed with and currently have depression, which is consistent with the U.S. Centers for Disease Control and Prevention’s estimated depression rate.

Gallup uncovered the employment-depression connection by conducting an analysis of the correlates of depression. The analysis looked at Americans who currently have depression, while simultaneously controlling for 12 variables: age, gender, income, education, race and ethnicity, marital status, having children, region, employment status, obesity, having health insurance, and being a caregiver. This means that Gallup could examine each factor independently to find out which is most strongly linked to depression.

Beyond employment, the factors most related to having depression are being aged 22 to 64 years, earning less than $36,000 per year, being white, and being female. Conversely, those who are very young, older, black, Hispanic, male, or who earn at least $90,000 per year are less likely to have depression after taking all other factors into account.

The Factors Most Related to Having Depression

The analysis also shows that being obese, a caregiver, living in the West, and not having kids are moderate predictors of depression among Americans.

On the other hand, lacking a college degree; being separated, divorced, or widowed; and being uninsured are not strongly or moderately related to having depression once other factors are taken into account.

Depression Peaks in Middle Age

Young adults aged 18 to 21 years, at 5.4%, are among the least likely be depressed. The depression rate generally rises as Americans age, peaking in the 57-60-year and 61-64-year age groups, at 14.4% and 14.2%, respectively. Thereafter, depression falls off, lessening dramatically by age 76 to 8.6%.

Depression Rate, by Age

Depression Decreases as Income Rises

Americans who earn less than $36,000 annually are nearly three times more likely to be depressed than those who earn more than $90,000 per year.

Separately, women are twice as likely as men to say they have depression and whites are slightly more likely than blacks and Hispanics to say they are depressed.

Depression Rates, by Key Subgroups


While one in 10 Americans currently have depression, this analysis shows that certain segments of the population are more likely to suffer from the illness than others. Americans who are unemployed, underemployed, and not in the workforce are more likely to report having depression than those who are employed full time or who are content with being employed part time. Thus, the stubborn unemployment and underemployment rates may have more than just a negative impact on the nation’s economic recovery, they also may present a significant threat to Americans’ mental health and wellbeing.

Additionally, depression among the employed has significant costs to individuals, businesses, and the overall economy. Gallup has found that depression costs U.S. employers $23 billion per year in lost productivity due to absenteeism.

Health providers, community groups, and public health officials can target depression interventions at the groups most likely to be depressed. At the same time, however, leaders can also raise awareness about depression and reduce the stigma of seeking treatment for the illness among groups who are less likely to have depression — possibly because these groups are less willing to acknowledge having depression and to seek professional help for it.

Under the Affordable Care Act, all adults with an insurance policy beginning on or after Sept. 23, 2010, are entitled to a depression screening at no cost. Ensuring all Americans — particularly the jobless and low-income Americans who are more likely to have depression — are aware of this provision may be key to identifying and treating the many who suffer from this illness.

About the Gallup-Healthways Well-Being Index

The Gallup-Healthways Well-Being Index tracks wellbeing in the U.S. and provides best-in-class solutions for a healthier world. To learn more, please visit

Survey Methods
Results are based on telephone interviews conducted as part of the Gallup-Healthways Well-Being Index survey Jan. 1-July 25, 2013, with a random sample of 101,195 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.

For results based on the total sample of national adults, one can say with 95% confidence that the margin of sampling error is ±1 percentage points.

Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample of national adults includes a minimum quota of 50% cell phone respondents and 50% landline respondents, with additional minimum quotas by region. Landline and cell phone numbers are selected using random digit dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.

Samples are weighted to correct for unequal selection probability, nonresponse, and double coverage of landline and cell users in the two sampling frames. They are also weighted to match the national demographics of gender, age, race, Hispanic ethnicity, education, region, population density, and phone status (cellphone only/landline only/both, and being cellphone mostly). Demographic weighting targets are based on the March 2012 Current Population Survey figures for the aged 18 and older U.S. population. Phone status targets are based on the July-December 2011 National Health Interview Survey. Population density targets are based on the 2010 census. All reported margins of sampling error include the computed design effects for weighting.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more details on Gallup’s polling methodology, visit

Money and Self Esteem

Your Money or Your Self-Esteem: Threatened Egotism Promotes Costly Entrapment in Losing Endeavors

  1. Liqing Zhang Carnegie Mellon University
  1. Roy F. Baumeister Florida State University


The present research explored egotism—maintaining favorable views of the self—as a motivation underlying entrapment in losing endeavors. Four studies suggested that threatened selfesteem would cause decision makers to invest and lose more money in a previously chosen course of action. Ego-threatened participants consistently lost more money than nonthreatened participants across diverse entrapping situations regardless of whether the outcome was ostensibly determined by luck (Experiments 1 and 4), ability (Experiment 2), or interpersonal competition (Experiment 3). Thus, pursuing favorable views of the self could be costly to decision makers’ financial well-being and may produce self-defeating behaviors.

The Symbolic Power of Money

The Symbolic Power of Money

Reminders of Money Alter Social Distress and Physical Pain

  1. Xinyue Zhou,
  2. Kathleen D. Vohs and
  3. Roy F. Baumeister
  1. Xinyue Zhou, Department of Psychology, Sun Yat-Sen University, Guangzhou 510275, China, e-mail:
  2. Kathleen Vohs, 3-150 321 19th Ave. S., Marketing Department, University of Minnesota, Minneapolis, MN 55455, e-mail:


People often get what they want from the social system, and that process is aided by social popularity or by having money. Money can thus possibly substitute for social acceptance in conferring the ability to obtain benefits from the social system. Moreover, past work has suggested that responses to physical pain and social distress share common underlying mechanisms. Six studies tested relationships among reminders of money, social exclusion, and physical pain. Interpersonal rejection and physical pain caused desire for money to increase. Handling money (compared with handling paper) reduced distress over social exclusion and diminished the physical pain of immersion in hot water. Being reminded of having spent money, however, intensified both social distress and physical pain.

  • Received July 18, 2008.
  • Accepted October 29, 2008.

Making Your Twenties Roar

20 Things 20-Year-Olds Don’t Get By Jason Nazar

Forbes Magazine 7/23/2013

 I startedDocstoc in my 20’s, made the cover of one of those cliché “20 Under 20” lists, and today I employ an amazing group of 20-somethings.  Call me a curmudgeon, but at 34, how I came up seems so different from what this millennial generation expects.  I made a lot of mistakes along the way, and I see this generation making their own.  In response, here are my 20 Things 20-Year-Olds Don’t Get.

Time is Not a Limitless Commodity – I so rarely find young professionals that have a heightened sense of urgency to get to the next level.  In our 20s we think we have all the time in the world to A) figure it out and B) get what we want.  Time is the only treasure we start off with in abundance, and can never get back.  Make the most of the opportunities you have today, because there will be a time when you have no more of it.

You’re Talented, But Talent is Overrated – Congratulations, you may be the most capable, creative, knowledgeable & multi-tasking generation yet.  As my father says, “I’ll Give You a Sh-t Medal.”  Unrefined raw materials (no matter how valuable) are simply wasted potential.  There’s no prize for talent, just results.  Even the most seemingly gifted folks methodically and painfully worked their way to success.  (Tip: read “Talent is Overrated”)

We’re More Productive in the Morning – During my first 2 years at Docstoc (while I was still in my 20’s) I prided myself on staying at the office until 3am on a regular basis.  I thought I got so much work done in those hours long after everyone else was gone.  But in retrospect I got more menial, task-based items done, not the more complicated strategic planning, phone calls or meetings that needed to happen during business hours.  Now I stress an office-wide early start time because I know, for the most part, we’re more productive as a team in those early hours of the day.

Social Media is Not a Career – These job titles won’t exist in 5 years. Social media is simply a function of marketing; it helps support branding, ROI or both.  Social media is a means to get more awareness, more users or more revenue.  It’s not an end in itself.  I’d strongly caution against pegging your career trajectory solely to a social media job title.

Pick Up the Phone – Stop hiding behind your computer. Business gets done on the phone and in person.  It should be your first instinct, not last, to talk to a real person and source business opportunities.  And when the Internet goes down… stop looking so befuddled and don’t ask to go home.  Don’t be a pansy, pick up the phone.

Be the First In & Last to Leave ­– I give this advice to everyone starting a new job or still in the formative stages of their professional career.  You have more ground to make up than everyone else around you, and you do have something to prove.  There’s only one sure-fire way to get ahead, and that’s to work harder than all of your peers.

Don’t Wait to Be Told What to Do – You can’t have a sense of entitlement without a sense of responsibility.  You’ll never get ahead by waiting for someone to tell you what to do.  Saying “nobody asked me to do this” is a guaranteed recipe for failure.  Err on the side of doing too much, not too little.  (Watch: Millennials in the Workplace Training Video)

Take Responsibility for Your Mistakes – You should be making lots of mistakes when you’re early on in your career.  But you shouldn’t be defensive about errors in judgment or execution.  Stop trying to justify your F-ups.  You’re only going to grow by embracing the lessons learned from your mistakes, and committing to learn from those experiences.

You Should Be Getting Your Butt Kicked –Meryl Streep in “The Devil Wears Prada” would be the most valuable boss you could possibly have.  This is the most impressionable, malleable and formative stage of your professional career.  Working for someone that demands excellence andpushes your limits every day will build the most solid foundation for your ongoing professional success.

A New Job a Year Isn’t a Good Thing ­­– 1-year stints don’t tell me that you’re so talented that you keep outgrowing your company.  It tells me that you don’t have the discipline to see your own learning curve through to completion.  It takes about 2-3 years to master any new critical skill, give yourself at least that much time before you jump ship.  Otherwise your resume reads as a series of red flags on why not to be hired.

People Matter More Than Perks – It’s so trendy to pick the company that offers the most flex time, unlimited meals, company massages, game rooms and team outings.  Those should all matter, but not as much as the character of your founders and managers. Great leaders will mentor you and will be a loyal source of employment long after you’ve left.  Make a conscious bet on the folks you’re going to work for and your commitment to them will pay off much more than those fluffy perks.

Map Effort to Your Professional Gain – You’re going to be asked to do things you don’t like to do.  Keep your eye on the prize.   Connect what you’re doing today, with where you want to be tomorrow.  That should be all the incentive you need.  If you can’t map your future success to your current responsibilities, then it’s time to find a new opportunity.

Speak Up, Not Out – We’re raising a generation of sh-t talkers.  In your workplace this is a cancer.  If you have issues with management, culture or your role & responsibilities, SPEAK UP.  Don’t take those complaints and trash-talk the company or co-workers on lunch breaks and anonymous chat boards.  If you can effectively communicate what needs to be improved, you have the ability to shape your surroundings and professional destiny.

You HAVE to Build Your Technical Chops – Adding “Proficient in Microsoft Office” at the bottom of your resume under Skills, is not going to cut it anymore.  I immediately give preference to candidates who are ninjas in: Photoshop, HTML/CSS, iOS, WordPress, Adwords, MySQL, Balsamiq, advanced Excel, Final Cut Pro – regardless of their job position.  If you plan to stay gainfully employed, you better complement that humanities degree with some applicable technical chops.

Both the Size and Quality of Your Network Matter – It’s who you know more than what you know, that gets you ahead in business.  Knowing a small group of folks very well, or a huge smattering of contacts superficially, just won’t cut it.  Meet and stay connected to lots of folks, and invest your time developing as many of those relationships as possible. (TIP: Here is myNetworking Advice)

You Need At Least 3 Professional Mentors – The most guaranteed path to success is to emulate those who’ve achieved what you seek.  You should always have at least 3 people you call mentors who are where you want to be.  Their free guidance and counsel will be the most priceless gift you can receive.  (TIP:  “The Secret to Finding and Keeping Mentors”)

Pick an Idol & Act “As If” – You may not know what to do, but your professional idol does.  I often coach my employees to pick the businessperson they most admire, and act “as if.”  If you were (fill in the blank) how would he or she carry themselves, make decisions, organize his/her day, accomplish goals?  You’ve got to fake it until you make it, so it’s better to fake it as the most accomplished person you could imagine.   (Shout out to Tony Robbinsfor the tip)

Read More Books, Fewer Tweets/Texts – Your generation consumes information in headlines and 140 characters:  all breadth and no depth.  Creativity, thoughtfulness and thinking skills are freed when you’re forced to read a full book cover to cover.  All the keys to your future success, lay in the past experience of others.  Make sure to read a book a month  (fiction or non-fiction) and your career will blossom.

Spend 25% Less Than You Make – When your material needs meet or exceed your income, you’re sabotaging your ability to really make it big.  Don’t shackle yourself with golden handcuffs (a fancy car or an expensive apartment).  Be willing and able to take 20% less in the short term, if it could mean 200% more earning potential.  You’re nothing more than penny wise and pound-foolish if you pass up an amazing new career opportunity to keep an extra little bit of income.  No matter how much money you make, spend 25% less to support your life.  It’s a guaranteed formula to be less stressed and to always have the flexibility to pursue your dreams.

Your Reputation is Priceless, Don’t Damage It – Over time, your reputation is the most valuable currency you have in business.  It’s the invisible key that either opens or closes doors of professional opportunity.  Especially in an age where everything is forever recorded and accessible, your reputation has to be guarded like the most sacred treasure.  It’s the one item that, once lost, you can never get back.

Single Parents

July 17, 2013

In U.S., Single-Parent Households Struggle More to Buy Food

Younger parents also have greater difficulty affording food at times

by Jessica Stutzman and Elizabeth Mendes

WASHINGTON, D.C. — In the U.S., 31% of single-parent households report times in the past 12 months when they struggled to afford food, much more than the 19% of two-parent households who say the same, according to an analysis of adults aged 18 to 50. Single-parent households also report greater difficulty affording food than do unmarried and single adults who do not have children. But, in households with two adults, the percentage who struggled at times to afford food is the same — 19% — regardless of the presence of children in the home.

Percentage Who STruggled to Afford Food, by Marital Status and Children in the Home

These data are based on more than 36,000 interviews conducted as part of the Gallup-Healthways Well-Being Index with adults aged 18 to 50 from Jan. 1-June 27, 2013. Over this time period, 23% of all Americans aged 18 to 50 reported struggling to afford food. However, the large majority of all Americans do not report struggling to afford food.

Having a child present in the home does not, by itself, make a household more likely to report struggling to afford food. Rather, having a child compounds the difficulty single-adult households already face.

Food Insecurity Increases With Three or More Children in the Household

Among all households, those with three or more children are significantly more likely than those with two or fewer children to say the family struggled to afford food in the past 12 months. This jumps from 21% to 22% of those with up to two children to 27% of those with three children and to 30% of those with four or more children.

Percentage Who Struggled to Afford Food, by Number of Children in the Home

Having three or more children in a household increases food insecurity, regardless of whether there are one or two adults in the home.

Younger Parents Struggle More to Afford Food at Times

Regardless of how many adults are in a household, younger parents are more likely to report struggling to afford food than their older counterparts. Nearly three in 10 adults aged 18 to 30 with at least one child in the household struggled to afford food in the past 12 months, compared with 21% of adults in the same age group who do not have a child in the home.

Percentage Who Struggled to Afford Food, by Age and Children in the Home

One age group does not follow this pattern: adults aged 41 to 50. Among this group, 23% of those who do not have children report struggling to afford food, compared with 19% of those with at least one child at home. Adults aged 41 to 50 who have children are more likely to be in a two-adult household than are those the same age who have no children, which may be part of the reason they are less likely to struggle to afford food.

Bottom Line

As the U.S. continues to recover from the recent recession, some groups are facing more challenges than others. Single-parent households, young parents, and parents with three or more children are struggling more than others to afford food. Although slightly improved from 2009 and 2010, unemployment remains high, making it harder for those of less means or with less of a support system to begin with to provide for their families.

For children especially, proper nutrition is crucial. Hunger among children can affect their overall health and impair their growth and development. Hunger can also stifle children’s ability to learn and can cause general behavioral issues. With more than a third of single-parent households struggling to afford food, addressing these high-risk families’ needs is vital to ensuring that the children in these homes have what they need to succeed.

Risky Business


Social Isolation May Make Some People More Susceptible to Unfair Marketing Practices

HONOLULU – People who feel isolated are more inclined to make risker financial decisions for bigger payoffs, according to new research presented at the American Psychological Association’s 121st Annual Convention.In a presentation entitled “Effects of Social Exclusion on Financial Risk-Taking,” Rod Duclos, PhD, assistant professor of marketing at the Hong Kong University of Science and Technology, described several experiments and a field survey that found the more often people felt excluded, the more they chose the longer odds for bigger lottery payoffs, took greater risks with their finances, bet on horse races and gambled in casinos.

“In the absence of social support, forlorn consumers apparently place more value on the power of money to secure what they want socially,” he said.

In one experiment, 59 students played an online ball-tossing game designed to make them feel socially included or excluded. In a separate setting, they chose between two hypothetical gambles with very different odds, Duclos said. The socially excluded participants favored the riskier option more strongly than their included counterparts.

A second experiment used essay writing to make 168 students feel either excluded or included and found that the socially excluded participants were twice as likely to gamble as the students who felt included, he said. Another experiment with 35 students ruled out lower self-esteem as a trigger for risk-taking, through essay writing and a choice of lotteries. In a fourth experiment with 128 students, researchers found those who felt isolated did not take more risks than others if they were told that having more money would no longer result in social benefits.

For a real-world demonstration, a team of trained research assistants interviewed individuals at malls, parks and subway stations, according to Duclos. They asked participants to choose between two lotteries, one that offered an 80 percent chance to win $200 and a 20 percent chance to win nothing and another that offered a 20 percent chance to win $800 and an 80 percent chance to win nothing. The research assistants then asked participants what proportion of their disposable income they had in low versus high-risk investments, how often they bet on horse racing, how often they gambled in casinos, and how often on a scale of 1-4 (1 = never, 4 = often) they felt socially excluded. There were clear positive relationships between the degree to which participants felt socially excluded and how much risk they took, Duclos said.

“Some marketers with questionable ethics may target demographic groups likely to suffer from social exclusion, such as the elderly, divorcees, and widows or widowers,” Duclos said. “Others may be tempted to isolate, physically or psychologically, prospective clients during financial negotiations since doing so may result in larger commissions. By illustrating how common experiences such as feeling rejected or accepted can affect consumers’ financial decisions, our research can help people make more informed decisions.”

The presentation was based on research described in an article entitled, “Show Me the Honey! Effects of Social Exclusion on Financial Risk-Taking” by Duclos and co-authors Echo Wen Wan, PhD, and Yuwei Jiang, PhD, accepted for publication by the Journal of Consumer Research.