Millennials buy the things their parents did — but they're much poorer
Baby boomers seem to have had an advantage in nearly every financial metric compared to millennials, according to a new study from the Federal Reserve.
- Millennials earn less, own fewer assets and have more debt than previous generations.
- The fact that millennials' spending habits differ from previous generations is best explained by lower earnings and less wealth, rather than changing tastes.
- Some millennials might be too optimistic about their ability to retire early — or on time.
A study published this month from the Federal Reserve suggests the reason millennials are spending money differently compared to previous generations isn't because of their unique tastes, but rather they just don't have much money to spend.
There's a common narrative, according to the study, that says millennials' changing preferences explain why we've seen the recent decline of brick-and-mortar retail stores, home construction and purchases, and new-car sales. But the data indicates that millennials' tastes are pretty much the same as previous generations.
The researchers wrote that "it primarily is the differences in average age and then differences in average income that explain a large and important portion of the consumption wedge between millennials and other cohorts," which included Generation X, baby boomers, the Silent Generation and the Greatest Generation.
In short, millennials show "lower earnings, fewer assets and less wealth" compared to previous generations, and so they're tending to get married and buy cars and homes later in life.
The "lasting impression" of the Great Recession
One distinguishing factor of millennials' coming-of-age story was the recession of 2007, and the weak labor demand that followed. "Millennials appear to have paid a price for coming of age during the Great Recession," the researchers wrote, noting the recession's subsequent weak labor demand.
They added elsewhere: "The severity of the 2007 Global Financial Crisis and the recession that followed may have left a lasting impression on millennials, who were coming of age at that time, much like the Great Depression left a lasting impression on the Greatest Generation."
That lasting impression might manifest in "attitudes toward saving and spending" that could be "more permanent for millennials than for members of generations that were more established in their careers and lives at that time," the researchers wrote.
The study also notes that millennials have about the same levels of debt as Generation X, though more debt than Baby Boomers. However, millennials also have markedly fewer financial assets than Generation X, even though millennials do seem to be saving for retirement more than other generations did at the same ages, a change that likely "reflects, in part, the replacement over time of defined-benefit retirement pensions with defined-contribution retirement accounts."
Do Millennials have realistic expectations about retirement?
It's hard to say for sure, but some data suggests that millennials might be a bit delusional about their future economic standing. A 2018 TD Ameritrade survey, for instance, showed that 53 percent of millennials expect to become millionaires, and they expect to retire, on average, by age 56.
That optimism, as I wrote in July, doesn't seem to reflect the reality forecast by data showing that social security won't be able to pay out full benefits by 2034, the group has a collective student loan debt of more than $1 trillion, and young people are now earning relatively less than previous generations — a difference that's likely explained, in part, by more participation, particularly among women, in the workforce.
Still, millennials don't need to worry too much, as long as they're willing to work hard, save and push back retirement by a few years, as Alicia H. Munnell, director of the Center for Retirement Research at Boston College, wrote in a Politico article on millennial retirement.
... My research shows that the vast majority of millennials will be fine if they work to age 70," Munnell wrote. "And although that might sound old, it's historically normal in another sense: Retiring at 70 leaves the ratio of retirement to working years the same as when Social Security was originally introduced.
Join Radiolab's Latif Nasser at 1pm ET on Monday as he chats with Malcolm Gladwell live on Big Think.
University of Utah research finds that men are especially well suited for fisticuffs.
- With males having more upper-body mass than women, a study looks to find the reason.
- The study is based on the assumption that men have been fighters for so long that evolution has selected those best-equipped for the task.
- If men fought other men, winners would have survived and reproduced, losers not so much.
Built for mayhem<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjY2NDIyMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYxMzk4NTQ2OX0.my6nML12F3fEQu3H4G0BScdqgaMZkRQHxgyj-Cmjmzk/img.jpg?width=980" id="906fc" class="rm-shortcode" data-rm-shortcode-id="dd77af7a881631355ed8972437846394" data-rm-shortcode-name="rebelmouse-image" />
Image source: Ollyy/Shutterstock<p>The researchers are, of course, talking averages here, not stating a rule: There are plenty of accomplished female pugilists, as well as lots of males who have no idea how to throw a punch.</p><p>Even so, says co-author <a href="https://www.wofford.edu/academics/majors-and-programs/biology/faculty-and-staff" target="_blank">Jeremy Morris</a> says, "The general approach to understanding why sexual dimorphism evolves is to measure the actual differences in the muscles or the skeletons of males and females of a given species, and then look at the behaviors that might be driving those differences."</p><p>Carrier has been interested in the idea that millennia of male fighting has shaped certain structures in male bodies. Previous research has reinforced his hunch:</p> <ul> <li><a href="https://jeb.biologists.org/content/216/2/236" target="_blank">When a hand is formed into a fist, its structure is self-protective</a>.</li> <li><a href="https://unews.utah.edu/flat-footed-fighters/" target="_blank">Heels planted firmly on the ground augment upper-body power</a>.</li> <li><a href="https://www.ncbi.nlm.nih.gov/pubmed/24909544" target="_blank">A study examined facial bone structure as being especially well-suited for taking a punch</a>.</li> </ul> <p>(That last one is our favorite. Do you know the German word "<a href="https://www.urbandictionary.com/define.php?term=Backpfeifengesicht" target="_blank">backpfeifengesicht</a>?" It's an adjective describing "a face that badly needs a punching.")</p><p>"One of the predictions that comes out of those," asserts Carrier, "is if we are specialized for punching, you might expect males to be particularly strong in the muscles that are associated with throwing a punch."</p>
Testing the theory<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjY2NDIzMy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwNzMxMTE2MH0.UXJICMy57UPYUWskhK98alctOrPidJL9yxMkz3HDQrM/img.jpg?width=980" id="98718" class="rm-shortcode" data-rm-shortcode-id="b12287684ac3e740b70392e6433a6b8f" data-rm-shortcode-name="rebelmouse-image" />
Image source: Ollyy/Shutterstock<p>The researchers measured the punching — and spear-throwing — force of 20 men and 19 women. The assumption was that early humans were punchers <em>and</em> spear-throwers.</p><p>Prior to testing, each participant had filled out an activity questionnaire so that "we weren't getting couch potatoes, we were getting people that were very fit and active," says Morris.</p><p>For punching, participants operated a hand crank that required movement similar to throwing a haymaker. The purpose of the hand crank was to spare participants any damage that might be inflicted on their fists by throwing actual punches. Subjects were also measured pulling a line forward over their heads to assess their strength at throwing a spear.</p><p>Even though all of the participants, male and female, were routinely fit, the average power of males was assessed as being 162% greater than females. There were no gender differences in throwing strength recorded. Other untested, though presumably likely, hand-to-hand combat activities come to mind including tackling, clubbing, running, kicking, scratching, and biting.</p><p>Carrier's takeaway: "This is a dramatic example of sexual dimorphism that's consistent with males becoming more specialized for fighting, and males fighting in a particular way, which is throwing punches."</p>
Boys will be boys<p>It, er, strikes us as odd that, even in science fiction — hi-tech weaponry notwithstanding — the hero <em>is</em> going to wind up duking it out with some bad guy, or alien, in the climactic battle. What is it about men punching, anyway? Are they more sexually attractive? The study suggests so:</p><p style="margin-left: 20px;"><em>The results of this study add to a set of recently identified characters indicating that sexual selection on male aggressive performance has played a role in the evolution of the human musculoskeletal system and the evolution of sexual dimorphism in hominins.</em></p><p>It's tough to contribute to the gene pool after being killed in battle.</p><p>Also, while the authors aren't <em>quite</em> saying that males' historical fighting role is mandated by biology and not by social expectations, neither are they quite <em>not</em> saying it.</p><p>As Carrier explain to <a href="https://attheu.utah.edu/facultystaff/carrier-punch/" target="_blank">theU</a>: "Human nature is also characterized by avoiding violence and finding ways to be cooperative and work together, to have empathy, to care for each other, right? There are two sides to who we are as a species. If our goal is to minimize all forms of violence in the future, then understanding our tendencies and what our nature really is, is going to help."</p>
Innovators don't ignore risk; they are just better able to analyze it in uncertain situations.
The Labour Economics study suggests two potential reasons for the increase: corruption and increased capacity.
Cool hand rebuke<img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yNDQyMTIyNy9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTY0NjY1NTYyOH0.0MCPKN3If94mYCNf3mMNrnTvJXjXN_bKLhgk9203EXk/img.jpg?width=917&coordinates=0%2C0%2C0%2C0&height=453" id="1627b" class="rm-shortcode" data-rm-shortcode-id="6d76421ba1ea0de4b09956b97e80c384" data-rm-shortcode-name="rebelmouse-image" />
A chart showing prison population rates (per 100,000 people) in 2018. The United States has the highest rate of incarceration in the world.