Analysis by the Money Anxiety Index shows that the terror act of September 11, 2001 immediately increased the level of money anxiety of people in the U.S. In the month of the attack, September, the Money Anxiety Index jumped 5.1 points from 56.9 in the previous month and continued to climb up nearly 21 points when it peaked at 77.6 on December of 2001.
Research conducted and published by Money Anxiety shows that fear and uncertainty are the main triggers of financial anxiety. When the level of money anxiety increases, people tend to react instinctively by reducing their spending and increasing their savings. This reaction originates in the reptilian part of the brain, which oversees survival and self preservation.
The level of money anxiety is the catalyst between analytical thinking and instinctive reaction. Research in behavioral economics shows that when the level of money anxiety is low, people tend to use their frontal cortex for analytical thinking, also known as “system 2.” Conversely, when the level of money anxiety is elevated, people tend to react more instinctively, using their reptilian brain or so called “system 1.”
The Money Anxiety Index measures the level of consumers' financial worry and stress based on their spending and savings pattern. Historically, the Money Anxiety Index fluctuated from a high of 135.3 during the recession of the early 1980s, to a low of 38.7 in the mid 1960s.
The Money Anxiety Index functions as an early-warning system to shifts in the economy, allowing financial advsors to react in time to changes in the economic cycle. The Money Anxiety Index Is highly preidictive. It predicted the arrival of the Great Recession over a year prior to the official declaration of the recession in December of 2007.