2022: Creating a Lexicon of Future

Field Guide to Flourishing: M is for Multiplier Effect

What is the Multiplier Effect?

The local multiplier effect refers to the increased wealth creation that occurs when money is spent locally and recirculates within the local economy.

Easy to measure in the domain of hard capital…

Investopedia: Multiplier Effect

Some economists also like to factor in estimates for savings and consumption. This involves a slightly different type of multiplier. When looking at savings and consumption, economists might measure how much of the added economic income consumers are saving versus spending. If consumers save 20% of new income and spend 80% of new income then their marginal propensity to consume (MPC) is 0.8. Using an MPC multiplier, the equation would be:

Investopedia: Multiplier Effect

…but what about soft capital?

Forms of Soft Capital © 2021, Ruth Glendinning Future Story Lab

We have been entrained to reduce our interactions with each other to…