1 Jacob Adjusted For Inflation (JAFI)

[Laura Ingalls]

I just tallied our 2018 expenditures. In at about 1.34 JAFI per human. Considering we had year with some international travel We went to Cape Cod in August with a known lobster addict(DH). We insure a teen driver . We drink too much craft beer .. All in all mindful/reasonably frugal but not particularly restrictive.

[jacob]

I'm thinking maybe this metric should be rescaled using the modified OECD scale. In that case 1JAFI (2019) = 8432*2/sqrt(2) = $11924/yr baseline. That way it can be used and account fairly for all size households, like, if it's a 3 person household, 1 JAFI would be 11924*sqrt(3) = $20652/yr total. (If this does not make sense, click the link.)

PS: I spend about 0.85 JAFI.

Add: It just occurred to me that if the original JAFI is based on a pre-2005 number when I was living alone, then it should not be corrected with sqrt(2).

[Laura Ingalls]

So we are at 1.34 if you just multiple JAFI by 4.
We are at 1.69 using the modified OECD.

[iopsi]

I think for someone who is ERE, expenses shouldn't increase linearly with inflation, but less (infact jacob has 0.85 JAFI). Since many needs would be satisfied by DIY (gardening, building instead of buying), physical abilities (bike instead of car) and social capital.

[cbinn]

Regarding spending money flowing into the general economy: it seems to me that if you make money and you do anything with it outside of putting it under your mattress, it would flow into the economy.

Let's say I make 10k and now I need to decide what to do with it. I can:

1) Invest it. The money can either go to a) the business I'm investing in, or b) another investor selling their shares. In the case of a), the business then spends the 10k, injecting it into the economy and eventually becoming "average consumer" spending. In the case of b), the investor who just sold their shares now has 10k, and starts at step 1 again. Eventually, the money "leaks" into the economy, either through a business (option 1a) or a person using the money for non-investments (options 2-4), becoming "average consumer" spending.
2) Save it (by putting it in a bank). Due to the fractional banking system, the bank can now loan (let's say) 10x that money out. So now I've amplified my 10k into 100k of actual "average consumer" spending.
3) Spend it. As has been discussed, this becomes "average consumer"-type spending eventually.
4) Save it (by putting it under my mattress). The money is now out of the economy.

My conclusion from this is that by simply exchanging your goods/services for money results in a cash flow into the generic economy, thus impacting the environment as an average consumer spending $10000 would. Unless you put it in a bank, in which case it becomes even worse. The only way to not [edit: excessively] impact the environment is to a) only generate the amount of money you need to live and not any extra, or b) remove your money from the economy, e.g., by putting it in a safe deposit box.

Is my logic sound here?