Monday, September 21, 2009

Appalachian Trail - Wall Street Journal Article

Being a finance guy I always enjoy tying together my travels with the economic aspects of a location, circumstance or oddity. With that, I took note of an article that appeared in the Wall Street Journal citing a near 50% increase in the number of people attempting to hike the entire Appalachian Trail in 2009. You can check out the article, “Trailing Indicators: Out of a Job, Some Decide to Take a Hike” here.

The play on words in the title calling the increased hiker numbers a “Trailing Indicator” is just that. A trailing, or lagging indicator is simply an economic term for a result that follows an economic event. In this case the indicator is high unemployment; unemployment probably being the most common lagging indicator. In economics there are also leading and coincident indicators, which I don’t think you would have much difficulty determining their placement in an economic cycle.

One area touched upon in the article that prompted further thought was the concept of bartering. While a centuries old tradition it is perhaps receiving resurgence in popularity given the economic climate and certainly made easier in recent years with the proliferation of the internet. In my experience it seemed that about half of the hikers I met on the trail fell in to the authors “athletic hippie” category. These were the folks that would try to hike the trail on $2,000, earning a few bucks along the way or bartering for food and a place to stay.

One thing I tend to think that is overlooked and certainly was in the article, is that bartering is a taxable exchange. According to the IRS, “The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received.”

That might put a damper on some people’s efforts to collect unemployment benefits that too were referenced in the article, not least of which that “the claimant shall be able to work, available for work and actively seeking work”, which probably isn’t the case as they are ambling through the forest.

The problem for the IRS is that the enforcement of reporting barter transactions is a logistical impossibility. Other than the folks the may have outed themselves in the article, how would the government know that a barter transaction had ever taken place? Any resources expended in the enforcement of taxing barter transactions would have little return. Just some food for thought.

As a side note, while out for a weekend hike along the Appalachian Trail in New York I happened to meet “Archaeoptrix” and “Big Camera” who were mentioned in the article. South Carolina Governor Mark Sanford however was nowhere to be found. Oh, and yes, Big Camera was in fact carrying a big camera.

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