Expect the Coalition to loosen the purse strings as they chase votes
Published 28/05/2015 | 02:30
It is often said that money doesn't buy happiness. Alas - and no matter how much one might wish it to be true - it simply isn't so. Money matters when it comes to contentment.
Countless surveys the world over show that there is close connection between life satisfaction and income. Even more marked is the effect of losing money. Studies show that losing a given amount of money has a bigger negative effect on how you feel than the positive effect of gaining exactly the same amount (this is known in the jargon as "loss-aversion bias").
All this is to be seen in the world of work and remuneration. Economists have long known that wages are "sticky" to the downside. In other words, people are very hostile to a reduction in their cash remuneration. Employers know this, and in tough times they usually prefer to cut overall wage costs by laying off some employees rather than cutting all workers' pay.