Catastrophes or triumphs can define generations. If you’re part of “The Greatest Generation,” a moniker coined by Tom Brokaw, the Great Depression and World War II molded your early life. And those first 30 years of deprivation and struggle probably influence your decisions now.
Today’s Millennials (roughly, Americans born after 1980) haven’t had a world war to contend with. But as we speak, their worldviews are being shaped by the most severe recession since the 1930s. Where could that lead?
To find out, a professor at UCLA and a researcher from the International Monetary Fund looked at responses to the General Social Survey, a long-running study of Americans’ demographics and attitudinal preferences. Since there wasn’t a good sample of national recessions to study (the survey started in 1972), the researchers turned to regional recessions, where, say, the farm belt suffered while the rest of America did fine. They published the results of their research last month in a paper entitled “Growing Up in a Recession: Beliefs and the Macroeconomy.”
Here’s what they learned: If someone grew up in a region experiencing a recession, he or she was much more likely to express “a stronger preference for government redistribution and tended to believe that success in life was much more a matter of luck than hard work,” according to the researchers. In contrast, the recession didn’t morph the attitudes of respondents older than 25 nearly as strongly.
So what exactly might this recession teach young people? It’s probably teaching them that the stock market doesn’t create wealth, but destroys it. Other studies have confirmed that people who experience losses early in life stay risk-averse even years later. If the government turns to inflation to pay off debt, it will also teach them that the bond market is no better (since bond prices tend to fall when inflation rises).
And how about that conversation so many laid-off fathers and mothers have had with their children? How do you answer your kid’s question of why your job was lost when the reasons have little to do with work ethic and a lot to do with bad decisions made by others? Your kid probably doesn’t walk away thinking that hard work leads to wealth, but that randomness and forces beyond his control play the biggest role.
The result? The researchers theorize we’ll have a generation that’s willing to accept high taxes in return for social welfare and wealth redistribution. What do you think?