The second life of a dollar
Follow a purchase through rounds of local re-spending and see why where you shop shapes the island economy.
$192
of local economic activity from $100 spent at a locally owned shop, if about 48% of each dollar is re-spent on the island in every round. That is a multiplier of 1.92×.
Follow the dollar, round by round
Each round, the owner pays local workers and suppliers, who spend part of it here again. The rest leaves the island.
- You spend$100
- Round 2$48
- Round 3$23
- Round 4$11
- Round 5$5.31
- Round 6$2.55
Same $100, four places to spend it
- Locally owned shop$192
- Hawaiʻi-based chain$147
- Mainland big box store$116
- Online, shipped in$103
Shifting a $150 weekly shop from online orders to a locally owned shop would keep roughly $6,959 more circulating on the island each year, under these assumptions.
Why this hits harder on an island
Hawaiʻi ships in most of what it consumes, including about 90% of its food. Money that pays for imports leaves on the next container ship. Every dollar that stays to pay a local worker, farmer or landlord has a second life here. That idea is the heart of the Saving Paradise episode on where you spend.
Listen to the episode›How this is calculated
If a share r of every dollar is re-spent locally each round, the total activity is the sum of a shrinking series: amount × (1 + r + r² + …) = amount ÷ (1 − r).
The re-spending shares are illustrative teaching assumptions inspired by local-multiplier studies, such as Civic Economics' finding that independent retailers recirculate roughly 48% of revenue locally against about 14% for national chains. They are not measurements of any Hawaiʻi business, and real multipliers depend on wages, rent, suppliers and who owns the business.
For learning only. Kuleana Finance explains how money works. It does not tell anyone what to buy or sell.
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