tag:theconversation.com,2011:/africa/topics/whats-next-for-the-baby-boomers-20118/articlesWhat's next for the baby boomers – The Conversation2015-09-10T11:47:35Ztag:theconversation.com,2011:article/471142015-09-10T11:47:35Z2015-09-10T11:47:35ZBlaming the baby boomers for the housing crisis ignores the real issue: a lack of supply<p>Baby boomers have a greater share of the UK’s wealth than any previous generation in the modern era. And unlike their parents and grandparents, the boomer generation also holds a much <a href="http://visual.ons.gov.uk/uk-perspectives-housing-and-home-ownership-in-the-uk/">higher share of this wealth in housing</a>. Meanwhile, with house prices high relative to their incomes, many younger people and families are are unwilling or unable to accrue wealth through home ownership. Increasingly, <a href="http://www.theguardian.com/money/2015/jul/22/pwc-report-generation-rent-to-grow-over-next-decade">25 to 34-year-olds rent</a>.</p>
<p>This housing wealth inequality between the generations seems unfair. But can we blame the housing wealth of the boomers for preventing younger generations from getting on the property ladder? While baby boomers have generally profited from rising property values, the real reason for the UK’s housing problem is a lack of supply.</p>
<h2>Boomer beneficiaries</h2>
<p>The boomer generation mostly owned their homes already <a href="http://www.ifs.org.uk/comms/r89.pdf">before the housing boom started around 2001</a>, as shown in the chart below. So they got to enjoy the wild ride in house values with relatively little debt to pay off. Meanwhile, wealth inequality across generations <a href="http://www.ifs.org.uk/comms/r89.pdf">increased during this period</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=504&fit=crop&dpr=1 754w, https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=504&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/94184/original/image-20150908-4365-cl1qld.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=504&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Home ownership rates by age and birth cohort.</span>
<span class="attribution"><a class="source" href="http://www.ifs.org.uk/comms/r89.pdf">IFS calculations using Family Expenditure and Family Resources surveys.</a></span>
</figcaption>
</figure>
<p>Younger households either managed to buy when prices were high with the help of large mortgages only to see their house value drop, perhaps, during the subsequent bust that <a href="http://www.theguardian.com/business/2009/jan/02/halifax-house-prices">began in 2008</a>. Or, if they hadn’t got on the ladder yet, the falling earnings and rising credit standards <a href="http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q203.pdf">of the post-financial crisis years</a> meant they were then unable to climb onto the ladder at all.</p>
<h2>Not the boomers’ fault</h2>
<p>Now, with house values again rising <a href="http://www.ifs.org.uk/budgets/gb2014/gb2014_ch5.pdf">faster than earnings around London</a>, it is perhaps irritating to some that so many older households sit in underused homes, while younger generations struggle to find affordable housing. The Intergenerational Foundation is <a href="http://www.if.org.uk/wp-content/uploads/2011/10/IF_Housing_Defin_Report_19oct.pdf">particularly upset</a>. But for the most part, this isn’t the boomers’ fault. </p>
<p>The relatively large climb in home values is mostly the result of a restricted supply of housing combined with demand factors that are largely unrelated to the ageing of Britain’s population. While older households have benefited from this confluence, they share only perhaps some indirect blame for it.</p>
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<p>House prices rose sharply across England <a href="http://www.lloydsbankinggroup.com/media/economic-insight/halifax-house-price-index/">from 1996 to 2005</a>, hugely benefiting the many boomers that had bought their homes during the previous decade. This turn of the millennium boom was the result of rising demand for a limited supply of housing stock. This was in turn fuelled by a number of smaller national trends including relaxed lending standards, increased immigration and, at least initially, widespread growth in household incomes and wealth. Perhaps underneath all this were “exuberant expectations” of continued out-sized capital gains. Changing demographics, a much lower-frequency phenomenon, probably contributed little to the demand-side push on house prices.</p>
<h2>Geographic evidence</h2>
<p>Since the subsequent housing bust, London has claimed the lion’s share of the increase in English house prices. Much of England north of London has seen relatively little – if any – increase in prices <a href="http://www.ifs.org.uk/budgets/gb2014/gb2014_ch5.pdf">since then</a>. This does not match up with where the majority of baby boomers are – they have been ageing in the wrong place to be the cause of this southerly tilt in the housing recovery. </p>
<p>Outside of London, England and Wales <a href="http://www.ons.gov.uk/ons/rel/pop-estimate/population-estimates-for-uk--england-and-wales--scotland-and-northern-ireland/index.html">are getting older</a>:</p>
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<p>The young are moving in droves to London. If anything, those grandparents with all their superfluous bedrooms in the villages in the north are the only ones keeping the lights on (and keeping house values from collapsing). Instead, the London-based recovery in house values relies on youth and foreigners. The young want to live in London <a href="http://www.ifs.org.uk/budgets/gb2014/gb2014_ch5.pdf">and foreigners want to invest in it</a>.</p>
<p>All the above factors have been shifting housing demand. If Britain would simply build more houses, prices needn’t have responded so drastically to this rising demand. Of course, the British housing supply problem has <a href="http://news.bbc.co.uk/nol/shared/bsp/hi/pdfs/17_03_04_barker_review.pdf">long been known</a>.</p>
<p>Moreover, if Britain built more houses, it could build them in the places most needed and with the specifications most demanded. Supply should expand more rapidly in London and the south-east, where demand is highest. Plus, Britain’s ageing population and shifting social norms has created an ever larger demand for housing <a href="http://www.cih.org/resources/PDF/Policy%20free%20download%20pdfs/New%20approaches%20to%20delivering%20better%20housing%20options%20for%20older%20people.pdf">better suited to the needs of older households</a>. Older households would be far more likely to downsize <a href="http://www.housinglin.org.uk/_library/Resources/Housing/Support_materials/Other_reports_and_guidance/Housing_our_Ageing_Population_Plan_for_Implementation.pdf">if this kind of retirement housing were built</a>.</p>
<h2>Supply blockers</h2>
<p>Of course, older households, who are more likely to vote as well as to own, probably do bear some responsibility politically for blocking supply. Voting homeowners, and disproportionately so older homeowners, tend to disapprove of politicians that approve new building in their neighbourhoods. This has led to <a href="http://www.ft.com/intl/cms/s/0/2ac19576-d948-11e4-b907-00144feab7de.html#axzz3hDGrNa3K">brazen political cycles in construction</a>, which perverts the planning process, misallocates housing and raising prices.</p>
<p>Picture a retired couple in their mid-60’s, with children who’ve long since moved out and grandchildren who may just be old enough to visit the odd week during the summer, an empty bedroom or two still furnished with their parents’ childhoods dustily waiting for them. Barring a large change in circumstance, this couple will likely stay in their family home for many years. They know their neighbourhood. The furniture they’ve collected over the years fits just so in their present space. And if they own the average house in England, its value has grown a bit under 4% (in real, inflation adjusted, terms) <a href="http://www.lloydsbankinggroup.com/media/economic-insight/halifax-house-price-index/">on average for the last 20 years</a>.</p>
<p>Over the next decade, as the boomer generation slowly ages into its golden years, the UK will have more and more of these households. Given the many risks they face and the relatively few housing choices available to them, clinging on to a house that is too large for their everyday needs is mostly rational. </p>
<p>Besides their pension, a house is far and away the largest store of wealth for those in their 60’s and beyond. Releasing equity by downsizing to a smaller home in a new location may be attractive in theory but there are high transaction and psychological costs in these moves. And, besides, with house prices generally growing again, the returns to be had from staying are too tempting.</p>
<p>Rather than using economic incentives (such as capital gains and stamp taxes) to lever boomers into smaller houses, Britain should look to correct the misaligned political and economic incentives that local councils have to block new housing from being built. </p>
<p>A healthy housing market with the right policies would channel the huge foreign desire to invest in English housing towards building homes for younger (and older) households. House prices would be less buoyant. Retirees with “too much house” would downsize of their own volition, in turn releasing equity for their own consumption and putting a family home back into the market for a new generation to enjoy.</p>
<hr>
<p><em>This article is part of a series on <a href="https://theconversation.com/uk/topics/whats-next-for-the-baby-boomers">What’s next for the baby boomers</a>.</em></p><img src="https://counter.theconversation.com/content/47114/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jonathan Halket serves on the advisory board of ArDe. He receives funding from UK Economic and Social Research Council through the Centre for Microdata Methods and Practice (CeMMAP grant number ES/I034021/1) and through an ESRC Transformative research grant, grant number ES/M000486/1.</span></em></p>We can’t blame them outright for the housing crisis but baby boomers play a role as supply blockers.Jonathan Halket, Lecturer in Economics, University of EssexLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/450082015-09-10T05:32:54Z2015-09-10T05:32:54ZWhy baby boomers will be the last generation to have good pensions<figure><img src="https://images.theconversation.com/files/94280/original/image-20150909-18658-8mesx9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">shutterstock.com</span></span></figcaption></figure><p>Baby boomers will be the last generation to have good pensions. Having started work between around 1960 and the mid-1980s, older members of this group are mostly retired and even the youngest are in their 50s and likely to retire in the near future. Their well-off position is no thanks to their own doing, however. But – critics will be sad to hear – a result of good fortune.</p>
<p>Boomers are often accused of being a <a href="https://theconversation.com/the-generation-game-how-society-loads-the-dice-against-the-young-45524">pampered generation</a> which has been favourably treated throughout their lives compared to the preceding and subsequent ones. They have not had to fight in wars like their predecessors and they have enjoyed the benefits of the welfare state, access to free education and rising house prices. While it is wise to be cautious about making sweeping generalisations, it can be argued that many among this cohort of people have benefited from an extremely favourable pensions environment that will almost certainly never return.</p>
<p>In the immediate post-war period British employers increasingly took a <a href="https://books.google.co.uk/books?id=hoGJAgAAQBAJ&dq=post+war+paternalism+UK&source=gbs_navlinks_s">paternalistic attitude to their employees</a>. This reflected wider social attitudes with the solidarity shown between different classes and backgrounds during the war, which made a marked contrast with the economic hardships and conflicts of the 1930s. A relatively stable economic and business environment during this period gave fertile ground for this paternalism.</p>
<p>The treatment of retired workers was an important aspect of this approach. A common ideal was that in return for many years of loyal service an employee should be able to enjoy a comfortable retirement with a standard of living not dissimilar to that they enjoyed while working. The provision of pension schemes by organisations soared. Only 2.6m employees were in pension schemes in 1936 but this figure had increased to 11.1m by 1963 and subsequently remained at roughly this level <a href="https://www.tuc.org.uk/economic-issues/cbi-pensions-conference-companies-have-broken-their-pensions-promise">throughout the rest of the 1970s and early 1980s</a>. Consequently, most baby boomers who started work for medium and large organisations, as well as many small ones, will have entered an occupational pension scheme. </p>
<p>Naturally most young people will have taken little interest in their pension plan but the baby boomers generally benefited from excellent schemes. A typical arrangement between the 1960s and 1990s was for the employee to receive a pension of two thirds of their final salary on retirement after 40 years service. This would be in exchange for a modest employee’s contribution, often of the order of 5% of their salary. The benefits were underwritten by employers who generally paid a much larger contribution than the employees and took all the investment risk involved. The contributions were pooled and invested for the long term largely in the stock market. </p>
<p>Generally the system of providing these defined schemes thrived until the 1990s to the extent that the British pension system was often said to be <a href="http://www.bbc.co.uk/history/british/modern/field_01.shtml">the envy of the world</a>. Stock market booms in the 1980s and 1990s allowed companies to easily invest employees’ pensions and afford these schemes. Indeed, some ceased contributing to them at all as a result. This became so common in the 1990s that the phase <a href="http://lexicon.ft.com/Term?term=contribution-holiday">“taking a contribution holiday”</a> went into fairly common usage.</p>
<h2>Changing climate</h2>
<p>But these kind conditions were not to last and things started to go very wrong from the late 1990s for a number of reasons. The Blair government substantially increased tax on the dividends being made by pension schemes, new accountancy rules started to show them in a much more adverse light in company accounts, the general burden of regulation and government interference in schemes greatly increased and investment returns in the years after the millennium <a href="http://www.emeraldinsight.com/doi/abs/10.1108/13581980810888831?journalCode=jfrc">were very poor</a>.</p>
<p>Many organisations started to conclude that these schemes were a luxury they could no longer afford. Organisations initially tended to close the existing schemes to people joining the organisation and instead directed new entrants into inferior ones where company contributions were much lower and the employees had to take all the investment risk. </p>
<p>By 2007 less than a third of schemes were <a href="http://www.emeraldinsight.com/doi/abs/10.1108/13581980810888840">still open to new entrants</a>. By 2014 only 13% of schemes <a href="http://www.pensionprotectionfund.org.uk/Pages/ThePurpleBook.aspx">were still open</a>. High quality organisational schemes have now rapidly become unavailable to people joining the workforce or changing jobs. Given that this is <a href="http://www.palgrave.com/page/detail/labour-market-trends-volume-111-no-11-november-2003-/?isb=9780116216151">much more common among younger people</a>, it is clear that the generations following the baby boomers are also much less likely to be in high quality schemes.</p>
<h2>Declining returns</h2>
<p>Another trend is the <a href="https://www.barnett-waddingham.co.uk/finance-directors-guide-pensions/benefit-redesign-and-closure-accrual/">reduction in the value of the benefits</a> accruing to existing members of defined benefit schemes. There are many approaches to doing this, for example, increasing the retirement age, reducing the rate at which pensions accrue or capping the amount of salary that is used to calculate the pension. </p>
<p>The general idea is to reduce the cost of the scheme as much as possible without unduly upsetting the employees – rather in the spirit of the approach to taxation of Louis XIV’s finance minister, Jean-Baptiste Colbert, who said: </p>
<blockquote>
<p>The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.</p>
</blockquote>
<p>Organisations are unlikely to reduce benefits that relate to the past service of employees. Instead, cuts normally apply to benefits due to be granted on future service. So the baby boomers have largely escaped as their working lives are largely or entirely behind them. They were of the right generation to benefit from the great boom in defined benefit schemes, without suffering too much from their subsequent collapse. As in other areas, the post-war social and economic trends worked greatly in their favour. </p>
<p>It is, however, hard to attribute any blame to the baby boomers for their good fortune in this respect. Given the general <a href="http://www.express.co.uk/finance/retirement/394055/Astounding-lack-of-interest-in-pensions">lack of interest in pensions</a>, the vast majority of baby boomers probably have little idea of how fortunate they have been. Similarly, many younger people are unlikely to be aware of how tough their retirement may prove to be.</p><img src="https://counter.theconversation.com/content/45008/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Robert Hudson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Baby boomers have benefited from a golden age in pensions that that will almost certainly never return.Robert Hudson, Professor of Finance, University of HullLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/460562015-09-08T10:11:42Z2015-09-08T10:11:42ZBaby booms and busts: how population growth spurts affect the economy<figure><img src="https://images.theconversation.com/files/93593/original/image-20150901-13419-r1hc2e.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Does a boom in babies give the economy a boost or cause a bust?</span> <span class="attribution"><span class="source">Baby money via www.shutterstock.com</span></span></figcaption></figure><p>A baby boom is generally considered to be a sustained increase and then decrease in the birth rate. The United States, the UK and other industrialized economies have experienced only one such baby boom since 1900 – the one that occurred after World War II.</p>
<p>In addition, many <a href="https://ideas.repec.org/a/bla/popdev/v26y2000i2p235-261.html">currently developing economies</a> such as India, Pakistan and Thailand have experienced a baby boom since 1950 as a result of a sustained decline in infant and child mortality rates as a result of improved medicine and sanitation.</p>
<p>So what’s the economic impact of these baby booms? Do demographics play a role in determining when an economy expands and contracts? Do they boost incomes or cause them to fall as more young people enter the workforce? I’ve been studying the impact of baby booms on wages, unemployment, patterns of retirement and gross domestic product (GDP) growth for 20 years and, while there are some questions that haven’t been answered, here’s what we’ve learned so far.</p>
<h2>Negative impact on employment</h2>
<p>The initial impact of a baby boom is decidedly negative for personal incomes.</p>
<p>Baby booms inevitably lead to changes in the relative size of various age cohorts – that is, a rise in the ratio of younger to older adults – a phenomenon <a href="http://www.jstor.org/stable/2061197?seq=1#page_scan_tab_contents">first described by economist Richard Easterlin</a>. (In statistics, a cohort is a group of subjects who have shared a particular event together during a particular time span.) </p>
<p>These effects cause a decline in young males’ income relative to workers in their prime, a higher unemployment rate, a lower labor force participation rate and a <a href="http://eric.ed.gov/?id=EJ547606">lower college wage premium</a> among these younger workers. </p>
<p>This occurs because younger workers are generally poor substitutes for older ones, so the increased supply of youths leads to <a href="https://ideas.repec.org/a/spr/jopoec/v12y1999i2p215-272.html">these negative employment results</a>.</p>
<p>Back in the 1950s, entry-level young males in the US were able to achieve incomes equal to their fathers’ current income. This was because of that age group’s reduced relative size as a result of the low birth rates in the 1930s. But by 1985 – about the time the peak of the baby boom had entered the labor force – that relative income had fallen to 0.3; in other words, entry-level men were earning less than one-third of what their fathers made. </p>
<p>In developing countries, these relative cohort size effects – the reduction in young males’ relative income and increase in their unemployment rate – are <a href="http://ukcatalogue.oup.com/product/9780198292579.do">multiplied</a> by the impact of increasing modern development, especially the rising level of women’s education. </p>
<p>In addition, the large influx of baby boomers into the labor market in the US forced many older workers, who would otherwise be working in “bridge jobs” prior to retirement, into earlier retirement. This explains how the average age of retirement for <a href="http://ftp.iza.org/dp4652.pdf">men</a> and <a href="http://ftp.iza.org/dp4653.pdf">women</a> went down in the 1980s.</p>
<p>This decline in income relative to their parents and their own material aspirations has a host of repercussions on family life. It leads to <a href="http://ftp.iza.org/dp5886.pdf">reduced</a> or delayed marriage, <a href="http://www.sciencedirect.com/science/article/pii/S105353579980095X">lower</a> fertility rates and <a href="http://www.jstor.org/stable/2808013">increased</a> female labor force participation rates as young people struggle to respond to their worsened prospects. </p>
<h2>From boom to bust … to boom?</h2>
<p>The reduction in relative income – which the US experienced in the ‘60s and '70s – thus results in a subsequent “baby bust” as people delay starting a family.</p>
<p>It was <a href="http://www.jstor.org/stable/2061197">hypothesized</a> that these baby booms might be self-replicating as reduced birth rates on the trailing edge of the boom caused the subsequent cohort to be smaller in size, thus leading to better labor force conditions, increased birth rates and an “echo boom” in the next generation. </p>
<p>This theory was based on what led to the baby boom in the first place, when the favorable labor market conditions experienced in the 1950s emerged as a result of fewer children being born during the 1930s, reducing the young-to-old-adult ratio. </p>
<p>Though the echo boom of the 2000s represented an increase in the absolute number of young adults, it didn’t lift their cohort size relative to their parents because birth rates have remained fairly stable at low rates since the end of the post-WWII baby boom. </p>
<p>That has not, however, translated into significantly better labor conditions, at least not the kind experienced by young adults in the 1950s that led to the baby boom. The reasons for this phenomenon have not yet been explained.</p>
<h2>So can changing demographics cause recessions?</h2>
<p>Another way of exploring the effects of changes in the proportion of young adults in the population is to look at fluctuations in the relative size of the young adult population over time. These seem to have a <a href="http://link.springer.com/chapter/10.1007/978-1-4020-4481-6_10">significant effect</a> on the economy. </p>
<p>As young adults move out of high school and college and set up their own households, they generate new demands for housing, consumer appliances, cars and all the other goods attendant on starting a new adult life. These new households don’t account for a large share of total expenditures, but they represent a major share of the growth in total consumer expenditures each year. </p>
<p>So what happens if, after a period of growth in this age group, the trend reverses? It is likely that industries counting on further strong growth will be forced to cut back on production, and in turn to cut back on deliveries from suppliers – which will in turn cut back on deliveries from their suppliers, creating a snowball effect throughout the economy. </p>
<p>This picture is supported by the patterns over the past 110 years depicted in the graph shown below.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=431&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=431&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=431&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=542&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=542&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93590/original/image-20150901-13412-hc6vo2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=542&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The graph tracks the three-year moving average of the annual rate of change in the proportion of young adults in the US. The red vertical lines indicate the beginnings of recessions. Data past 2020 are projections.</span>
<span class="attribution"><span class="source">US Census Bureau</span></span>
</figcaption>
</figure>
<p>The curve on the graph represents a three-year moving average of the annual rate of change in the proportion of young adults in the US population, as given by the United States Census Bureau. “Young adults” are defined as those aged 15-19 prior to 1950, and 20-24 in the years after, given changing levels of education over time. This curve is overlaid with vertical lines that mark the start of recessions, as <a href="http://www.nber.org/cycles.html">defined</a> by the National Bureau of Economic Research.</p>
<p>There is a very close correspondence between the vertical lines, and peaks in the curve, as well as points where the curve turns negative. In addition, the deep trough between 1937 and 1958 contained another four recessions, and there were two in the trough between 1910 and 1920 (not marked on the graph). The only recessions over the last 110 years that don’t appear to correspond to features of the curve, are those in 1920, 1926 and 1960. </p>
<p>The pattern of causation – if it is one – cannot run from the economy to demographics, since these are young people born over 15 years before each economic downturn. In addition, there’s a one-year lag in the age groups that has been used to control for possible migration effects of a recession – that is, how many people left the US as a result of worse labor market conditions.</p>
<p>The fact that no “double dip” recession occurred in 2012, even as the share of young people fell that year, might be the result of the economic stimulus applied after the most recent recession.</p>
<h2>Food for future thought</h2>
<p>Obviously there are many other factors associated with economic downturns, but aspects of the empirical regularity <a href="http://repec.iza.org/dp4436.pdf">demonstrated</a> here can be seen in many countries over the past 50 years – especially regarding the international financial crises of 1980-82, 1992-94, and 1996-98 and 2007-2008. </p>
<p>This is not to say that demographics were the sole cause of the recessions, but rather that they influenced the timing of such events, given a host of other possible factors. For example, did they play a role in determining when the recent housing bubble burst? That question has yet to be answered, but further study may shine some light.</p>
<hr>
<p><em>This article is part of a series on <a href="https://theconversation.com/uk/topics/whats-next-for-the-baby-boomers">What’s next for the baby boomers</a>.</em></p><img src="https://counter.theconversation.com/content/46056/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Diane J Macunovich does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Research shows baby booms are generally bad news for the economy – at least for the boom’s babies.Diane J Macunovich, Professor of Economics, University of RedlandsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/464842015-09-08T05:29:57Z2015-09-08T05:29:57ZHard Evidence: what does the future hold for the baby boomers?<figure><img src="https://images.theconversation.com/files/93556/original/image-20150901-13412-1kki7i2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A life lived.</span> <span class="attribution"><a class="source" href="http://www.shutterstock.com/pic-311474609/stock-photo-happy-retired-couple-having-tea-in-cafe.html?src=qDM6YueYAm-FoHWNibINFw-3-64">Baby boomers by Shutterstock</a></span></figcaption></figure><p>If you are British, and were born just after World War II and are therefore in your late 60s, you are one of the post-war baby boomers. This period saw a surge in births and though there were other periods of high births afterwards, it is the first group to have benefited from the NHS for the majority, if not all, of their lives. </p>
<p>Post-war baby boom women have enjoyed greater access to education, particularly further education, than their predecessors and have also been in employment in much larger numbers. More people of this generation got married than previously, and marriage <a href="http://www.britac.ac.uk/policy/Happy-families.cfm">was almost universal</a> from the end of WWII to the 1970s. Nevertheless their early childhood was shadowed by food rationing and the aftermath of rebuilding cities and an economy devastated by war.</p>
<h2>Predictable ageing</h2>
<p>So what can the post-war baby boomers look forward to as they age into their seventies and beyond? </p>
<p>According to the Office for National Statistics, they can expect to live on average a further five to six years after the age of 65 than their parents did, with an average life expectancy for a current 65-year-old man of 87 years and a woman of 89 years. This means they will be spending close to 25 years in retirement – a long time <a href="http://visual.ons.gov.uk/how-long-will-my-pension-need-to-last/">for their pension to last</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=434&fit=crop&dpr=1 600w, https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=434&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=434&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=545&fit=crop&dpr=1 754w, https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=545&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/92801/original/image-20150824-17760-12ugn1e.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=545&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Figure 1: population pyramid for UK 2015.</span>
<span class="attribution"><span class="source">Office for National Statistics</span></span>
</figcaption>
</figure>
<p>Not all these years will be healthy or free of disability – on average around half of remaining life after 65 will be spent with a disability. However this proportion <a href="http://www.ons.gov.uk/ons/rel/disability-and-health-measurement/health-expectancies-at-birth-and-age-65-in-the-united-kingdom/2009-11/stb-he-2009-2011.html">differs depending on where you live</a>. A 65-year-old man in Northern Ireland can expect to live over a year longer with disability than men in England, for example.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=359&fit=crop&dpr=1 600w, https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=359&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=359&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=451&fit=crop&dpr=1 754w, https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=451&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/92802/original/image-20150824-17797-sp9nfo.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=451&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Figure 2: disability-free life expectancy (DFLE) at age 65, in 2009-11.</span>
<span class="attribution"><span class="source">Office for National Statistics</span></span>
</figcaption>
</figure>
<p>Even greater inequalities <a href="http://www.ons.gov.uk/ons/rel/disability-and-health-measurement/sub-national-health-expectancies/disability-free-life-expectancy---subnational-estimates-for-england--2008-10/stb---disability-free-life-expectancy.html">in the years spent with disability</a> are evident at smaller geographical areas. Men aged 65 in London’s Kensington and Chelsea are expected to live for a further 20.6 years, of which 6.2 of these (30%) will be with a disability. Although life expectancy at age 65 for men in Newham is almost four years less (16.7 years), they can expect to live 11.2 years (67%) of remaining life with a disability. </p>
<p>The good news is that the course of disability with ageing is predictable. Disability is often measured by whether a person has difficulty or needs help with personal care activities such as dressing or bathing, or doing things to maintain a household such as shopping or the laundry. As we age it is the household maintenance activities that we <a href="http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0031665">first find difficult</a> followed by personal care. And the first activities we lose tend to be those that require mobility and balance.</p>
<p>But it’s not all downhill – there is good evidence that when this happens, tailored physical activity can improve physical function. In <a href="http://www.ncbi.nlm.nih.gov/pubmed/24866862">a large US study</a> a structured programme of walking, strength, flexibility and balance training in older people already showing some reduction in physical function reduced mobility disability compared to a health education programme.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/93551/original/image-20150901-13425-1gj4bgl.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">You win some, you lose some.</span>
<span class="attribution"><span class="source">Pick up sticks by Shutterstock.</span></span>
</figcaption>
</figure>
<p>Knowing the order of loss of activities is important for older people and their families. By recognising the first signs of difficulty with activities, older people can increase their exercise levels to slow down further decline, or actively plan with their families for further dependency and a move to more appropriate housing that again might maintain function for longer. Health professionals might also take a rapid decline in activity loss as a sign to do a more detailed medical assessment. </p>
<p>Much disability that we experience with ageing is due to chronic diseases and conditions, many of which increase with age. Perhaps the condition that increases most strongly with age is dementia, but there is good news even here for the baby boomers – they appear <a href="http://www.sciencedirect.com/science/article/pii/S0140673613615706">to have a lower prevalence of dementia</a> than their counterparts 25 years before. The reduction in dementia prevalence (from 8.3% in 1991 to 6.5% in 2011) is thought to be a result of better levels of education in the later-born population as well as improved prevention of heart attack and stroke.</p>
<p>But dementia is only one disease. As we reach our 80s, all the chronic diseases and conditions whose prevalence increases with age result in multiple rather than single diseases being the norm. So where we might have just one long-term condition in our mid to late 60s, by our 80s we are more likely to have at least three. Indeed <a href="http://www.bmj.com/content/339/bmj.b4904">in a study of 85-year-olds in Newcastle</a>, men had on average of four diseases and women five, with 30% having six or more and none of the 845 participants being free of disease. Nevertheless, only 20% of this cohort required help at least once a day. </p>
<p>This does have further implications for the baby boomers, however, since the increases in life expectancy over the last century mean that a considerable number may well have parents of this age who will be requiring care. And of course many baby boomers may also be caring for grandchildren. So their ability to continue in paid employment <a href="http://www.ncl.ac.uk/ageing/about/news/ageingworkforce.htm">may not only be affected by their own health</a>, but that of their parents, with implications for government and employers.</p>
<p>Most postwar baby boomers have many years of life to look forward to. Active lifestyles, both physically and mentally, early recognition of deterioration in function and forward planning for their own dependency could allow more of these years to be healthy ones.</p>
<hr>
<p><em>This article is part of a series on <a href="https://theconversation.com/uk/topics/whats-next-for-the-baby-boomers">What’s next for the baby boomers</a>.</em></p><img src="https://counter.theconversation.com/content/46484/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Carol Jagger receives funding from the European Commission and the Economic and Social Research Council. She has previously received funding from the AXA Research Fund and the Medical Research Council. </span></em></p>The first to have benefited from the NHS the longest, more marriages and long retirement – but more living with disability too.Carol Jagger, AXA Professor of Epidemiology of Ageing, Newcastle UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/455242015-09-07T05:28:59Z2015-09-07T05:28:59ZThe generation game: how society loads the dice against the young<p>The UK’s July budget, regarded by some as an outright <a href="http://www.newstatesman.com/politics/2015/07/george-osbornes-budget-attack-young">attack on the young</a>, prompted some timely <a href="http://www.theguardian.com/commentisfree/2015/jul/12/osborne-britain-no-country-for-young-men-and-women">discussion</a> on the question of <a href="http://www.theguardian.com/commentisfree/2014/mar/21/older-people-vote-george-osborne-budget">intergenerational justice</a>. Among other things, George Osborne, the chancellor of the exchequer, has abolished housing benefit for under-21s, <a href="https://theconversation.com/abolishing-student-grants-and-raising-fees-above-9-000-heaps-more-debt-on-poorest-students-44485">scrapped maintenance grants</a> for the poorest students, and locked under-25s out of a new living wage. </p>
<p>This final measure was greeted <a href="http://www.theguardian.com/politics/2015/jul/08/fist-pumping-iain-duncan-smith-george-osborne-living-wage-budget">memorably</a> in the House of Commons by the fist-pumping of Iain Duncan Smith, the work and pensions secretary.</p>
<p>At the same time, the latest findings of the <a href="http://www.if.org.uk/archives/6909/2015-intergenerational-fairness-index">Intergenerational Foundation</a> highlighted a starkly widening gap in its fairness index between those under 30 and those over 60. In just the last five years, they report a 10% deterioration in the prospects of younger generations relative to older generations across a range of measures including education, income, housing and health. </p>
<p>Responding to the report, former World Bank economist Lawrence Kotlikoff <a href="http://www.if.org.uk/archives/6909/2015-intergenerational-fairness-index">called intergenerational inequity</a> the moral issue of the day, and accused the UK of engaging in “fiscal, educational, health and environmental child abuse”.</p>
<p>In June, the Centre for Policy Studies issued <a href="http://www.cps.org.uk/files/reports/original/150604093838-WhoWillcareforGenerationY.pdf">a report</a> detailing a bleak outlook for Generation Y (those born between around 1980 and 2000), who will have to pick up the tab for <a href="http://www.dailymail.co.uk/news/article-3108441/Generation-Y-left-pick-6trillion-tab-Report-warns-children-born-1980-2000-face-apocalyptic-levels-debt-Government-spending.html">apocalyptic</a> levels of national debt incurred by baby-boomer overspending. The report’s author, Michael Johnson, said:</p>
<blockquote>
<p>Baby-boomers have become masters at perpetrating intergenerational injustice, by making vast unfunded promises to themselves, notably in respect of pensions. Indeed, such is their scale that if the UK were accounted for as a public company, it would be bust.</p>
</blockquote>
<p>The injustice and the urgency of the issue seems obvious, but the want of political will to address this suggests that we still don’t know how to think well about the generation game.</p>
<h2>The problem of generations</h2>
<p>In 1923, the Hungarian-born sociologist <a href="http://www.britannica.com/biography/Karl-Mannheim">Karl Mannheim</a> wrote an essay called <a href="http://1989after1989.exeter.ac.uk/wp-content/uploads/2014/03/01_The_Sociological_Problem.pdf">The problem of generations</a>, which points us helpfully to some of the structural and sociological features of the relationships between young and old.</p>
<p>Mannheim carefully observed the tension involved in the continuous process of transitioning from generation to generation, a phenomenon based ultimately on the biological rhythm of birth and death. While former participants in what Mannheim calls the “cultural process” are constantly disappearing in death, new ones are constantly emerging through birth into their own time of life.</p>
<p>This phenomenon creates the responsibility to continually transmit the accumulated cultural heritage to new generations. However, tensions arise as young people appropriate that heritage, but want to interpret the world afresh and shape it differently. Mannheim observes that younger generations tend to be “more dramatically aware of a process of destabilisation and take sides in it” while “the older generation cling to the reorientation that had been the drama of their youth.”</p>
<p>It seems older generations have become much better at clinging on. Only recently, for instance, has 87-year-old Bruce Forsyth retired from his regular prime-time slot on Saturday night television. If there is a generation game, didn’t he do well?</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/vRIefjtm8mc?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Nice to see you, to see you nice.</span></figcaption>
</figure>
<h2>Fixing the future against the young</h2>
<p>There are powerful establishment narratives that discourage the destabilising political agency of the young, not least a creeping broad-brush rhetoric around “<a href="http://www.theguardian.com/uk-news/2015/jul/19/occupy-london-counter-terrorism-presentation-al-qaida">extremist</a>” views and so-called British values. But an especially effective modern mechanism of holding new generations in thrall to the old is to make the young pay a fare for their futures.</p>
<p>The chancellor’s recent policy announcements only advance on the norms of a society that has quickly built the accumulation of enormous personal debt into securing the advantages attained so cheaply by previous generations, such as <a href="http://www.theguardian.com/money/2015/aug/04/homeownership-the-generation-that-had-it-so-good">housing</a> and <a href="http://www.bbc.co.uk/news/education-33706943">education</a>. You can have your cultural heritage, only now you’re going to have to pay for it. When older generations can impoverish or indebt young people swiftly and heavily enough for the advantages they are schooled to covet, their behaviours can be better disciplined to preserve the stability of a prevailing culture and pacify the threat of the new.</p>
<p>But Mannheim also shows us that the great virtue of the young is that they make fresh starts possible. Being open to the destabilising effect of new generations “facilitates re-evaluation of our inventory and teaches us both to forget that which is no longer useful and to covet that which has yet to be won.” </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/lZAmhB55_-k?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<p>The stability that is so prized and clung to by older generations cannot last forever, and our social future requires the kind of radical re-evaluation that only the young can effect. But while figures like the young Scottish National Party MP <a href="https://theconversation.com/mhairi-black-goes-viral-how-britains-youngest-mp-became-a-political-star-44728">Mhairi Black</a> may offer a glimmer of hope, too many young people are being offered little more to covet than a living wage and the payment of their debts.</p>
<hr>
<p><em>This article is part of a series on <a href="https://theconversation.com/uk/topics/whats-next-for-the-baby-boomers">What’s next for the baby boomers</a>.</em></p><img src="https://counter.theconversation.com/content/45524/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Reader does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The baby boomer generation has fixed the future.Simon Reader, Research associate, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.