Thursday, 3 July 2014

Generational conflict

Some years ago it was fashionable among some British baby-boomers to argue that their excesses in the 1960s had been enjoyed at the cost of the prosperity of later generations. The basic argument was: we have so much money now and today the young  are poor, have no jobs and will be burdened with debts for the rest of their lives, and we “pinched” their futures from them.

Although this was a silly argument it provides a teaching point: in looking at the effects of ageing you have to distinguish between biological and historical effects. You, dear reader, whatever your age, will be showing effects of age, and potentially also the effects of the times in which you lived. For example, if you are a bright young thing and applied for a job with Lehman Brothers on 14 September 2008 you would have received an unpleasant surprise the following day, and may not be currently employed as a banker. You will still be full of wit and energy, well employed, but not yet a wage millionaire. Conversely, if you applied for any job in the USA in 1929 you may have been unemployed for several years, and possibly badly fed, and almost certainly denied educational opportunities.

So, in deciding how to distinguish between biological ageing and historical cohort effects one looks at cross-lagged comparisons. For example, starting in any particular year you look at the intellectual capacities of 20 year olds, 40 year olds, and 60 year olds. Then, 10 years later, you re-test your former subjects, who are now 30, 50 and 70 and also test some new 20 year old. Repeat as required. Warner Schaie changed the view of ageing from very pessimistic to much more optimistic, showing that much of apparent cognitive decline was a cohort effect and not a true biological ageing effect.

So, as anyone ought to be able to see, if you are doing generational comparisons of intellect, or earnings, or wealth, you need long data series which allow cross-lagged comparisons. You compare 20 year olds of the 60’s with 20 year olds of 2010, and adjust for inflation before launching any rhetorically fireworks. The Office of National Statistics has looked at the earnings of those who entered the UK labour market in 1975, 2009 and 2013 and inflation adjusted all of them. Those who entered in 1975 had the hardest time. If you want to pick a generational fight you can say that the generation of 1975 slaved to provide luxury for the generation of 2009.


By the way, these earning comparisons are fine, and probably the best ones to do and could well look a bit different after another 5 years of economic growth, if that happens. Accumulated wealth in Britain is largely based on the value of property, and that is currently inflated in London for global reasons. Student debt may never be paid off, and is probably less burdensome for higher earners than the very high tax rates of the 70s and 80s. Furthermore, wealth comparisons now need to be done not only at 60 but also at 80 when the costs of nursing care usually write off a large chunk of accumulated wealth for many older people.

Methods, you see, are to be preferred over assertions, and sometimes social scientists develop methods which can contribute to economic debates.


  1. "For example, if you are a bright young thing and applied for a job with Lehman Brothers on 14 September 2008 you would have received an unpleasant surprise the following day,"

    That was the first scene in the now canceled sit-com "Don't Trust the Bitch in Apartment 23." Nice, determined June from the Midwest shows up with her MBA for her first day at her dream job on Wall Street, but after 30 seconds the feds break in and haul the CEO, Bernie Madoff, away in chains while underlings set fire to files and her now unemployed supervisor advises her "Switch to Looting mode!"

  2. Dear Steve, That made me laugh! I should see more movies and sitcoms. As to Madoff, astounding how easy it was for him to defraud people, just by making himself appear hard to invest with, and by suggesting, not particularly subtly, that he had some sort of unfair and possibly illegal insider knowledge of the American exchanges. All this of course shows my great superiority as an investor, if only I can forget the Equitable Assurance Society going bust with a large chunk of my pension, and then years later the Royal Bank of Scotland going bust with a large chunk of what remained of my pension.