Keeping up with the Jones Principle in Canada

Published On January 27, 2014 | By Joseph (Ken) | Debt, Economy

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The Keeping-Up-With-the-Joneses Myth

“They found that poor households didn’t borrow more in high-inequality areas. Instead, poor households borrowed more in poorer areas (i.e.: areas with less overall inequality). In short, it’s the opposite of what the keeping-up-with-the-Joneses effect would predict. Poor households borrowed more when they had poor neighbors, not rich neighbors.”

Something I like to do is look at US news stories and look at them in a Canadian context.  

In the table below I look at income inequality levels in the Canadian provinces in contrast to public debt levels and bankruptcies. Obviously this is not perfectly inline with the premise of the article, as bankruptcies can be minimal in provinces in a boom (ie Alberta) in spite of debt levels.

                   
  Inequality   Public debt   Bankruptcies  
                   
  British Columbia   Quebec     Nova Scotia  
  Ontario     Ontario     New Brunswick  
  Alberta     PEI     Quebec    
  Nova Scotia   Nova Scotia   PEI    
  Saskatchewan   New Brunswick   New Foundland  
  Quebec     Manitoba   Ontario    
  New Foundland   New Foundland   Alberta    
  Manitoba   British Columbia   British Columbia  
  New Brunswick   Saskatchewan   Saskatchewan  
  PEI     Alberta     Manitoba  
                   

It’s interesting to note that the Atlantic provinces are the most income equal provinces but also have the highest level of bankruptcies. Similarly, although British Columbia has the highest income inequality of all the provinces, it has the third lowest in bankruptcies. Both facts imply the argument the article makes applies to Canada as well.

Have a tax question or an interesting new article or tip? Feel free to contact me at info@josephlea.com – Ken @ Joseph Lea and Associates (Public Accountants).

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About The Author

Joseph (Ken)
(Ken) is a Registered Public Accountant with over 25 years of public practice experience in the accounting profession. Ken specializes in accounting information systems, taxation and financial reporting.

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