Guest Post: “Why Everyone Younger Than You is Spoiled” Advanced Edition

Way back in June, UCSD sociology graduate student Jeff Lundy provided two excellent guest posts on perceptions of consumption across generations. Inspired by some of the comments on those posts, Jeff has written a follow-up piece for your enjoyment.

Why Everyone Younger Than You is Spoiled: Advanced Edition
By Jeff Lundy

Because of the interest in my earlier posts, I’ve decided a quick follow up is in order. In particular, one of the comments to the posts hit upon an argument that I definitely ignored: generations don’t tend to stay in the same economic position (at least they try not to).

Why is this an issue? Well, each of the four factors I listed earlier covered accounting mistakes that trip you up when comparing your life to a younger person following a similar trajectory to your own.

For instance, imagine that there is a young man out in the world today, who by some miraculous coincidence happens to be living an economic life that is nearly identical to my father’s. He went to college in the same way that my father did; he started his first job at the exact same age as my father, working for the same organization, and making the same inflation-adjusted income; he’s bought modern-day equivalents of the cars, houses, etc. that my father bought, on the exact same timetable, and he’s paid the exact same price for these objects when you adjust for inflation.

Even though my father’s economic counterpart has led a nearly equivalent life to my dad, the accounting errors I listed earlier (inflation, substitution, etc.) could lead my father to think that his doppelganger was spoiled!

This hypothetical misjudging of equals is interesting from an academic perspective. However, in the real world, most children aren’t striving to exactly match their parents – and most parents don’t want their children to live the same life they’ve lived, they want them to live a better life. When children aspire to have more than their parents, this is where the foibles of amateur comparisons really get tricky. And they get tricky for two main reasons: social mobility, and increasing resource inequality.

Social Mobility

One of the comments to the original posts argued that children today are spending comparatively more on iTunes than their parents ever did on substitute entertainment goods like records (even accounting for inflation). This is probably true – however, there’s a catch: many of these children are also vying for better career paths than their parents did.

What does social mobility have to do with iTunes? Well, the French theorist Pierre Bourdieu once wrote about working-class Frenchmen who had trouble with a certain news story (I’m paraphrasing here). The news story was about a man buying his daughter a watch, worth three million francs, for her 16th birthday. In his discussions with these working-class Frenchmen, they tended to say something like: “How could this person buy such an extravagant gift, when there are so many necessities to take care of first?” These respondents were obviously overlooking that a wealthy person isn’t generally concerned with the basic necessities of food and shelter. In fact, Bourdieu noted, a three million franc watch could very well be a “necessity” among the rich man’s peers.

What Bourdieu is pointing out is that various tiers in the economic hierarchy value different things (and consider different things to be “necessary” to life). In connection to the topic at hand, these wealthy individuals also make their decisions about whom to hire and fire based on these values. A highly qualified candidate, who is not wearing a nice suit to an executive-level job interview, has a good chance of looking “unqualified.” A nice suit hardly seems like a necessity (people survived a long time without modern suits); but, for the person trying to move up the ladder this is an “essential.”

These are harsh realities. They are not necessarily good ones either. It is questionable why we need to spend so much money in order to signal our “fitness” for a job. However, these are the realities we face, and sometimes things as trivial as music from iTunes can mean having the “cultural capital” needed to advance.

What does this all have to do with accounting and comparisons?

Many older individuals seem to want younger individuals to surpass them; but at the same time, they don’t always seem to recognize the increased pressures that come with vying for upward mobility. On the one hand, they want their children to do better; but on the other hand, they don’t seem to recognize that the cost of this mobility will be relatively higher than what they paid to get to their current place in life.

If older generations want their children to achieve economic mobility, then it is only reasonable to expect that their children will need more costly investments to achieve this mobility. Furthermore, the form of these investments may look markedly different from the investments that brought parents to their current state (e.g. modern children may need expensive watches to move ahead yet another rung, rather than the tie-died shirts that elevated their parents).

It should also be said that, whether or not a child “needs” the things that are bought by a higher social class, upwardly-mobile parents should recognize that there is a good chance that their kids will want them. Just as much as these parents may look down on the purchases of their parents (or at least they looked up to the purchases of those in a higher rung), the children of upwardly-mobile parents will grow up with peers of a higher economic station, and are very likely to have increased expectations. A number of these increased expectations might seem unjustified, but parents should be prepared for them if they truly want their children to move up the economic hierarchy.*

Increasing Resource Inequality

The problems of social mobility do not stop at the unfortunate reality that you have to spend more to achieve a higher station. Unfortunately, as time goes on, it seems that the cost of economic advancement is getting higher and higher, no matter from where in the hierarchy you are starting.

For instance, if a family in the 1950’s was in the 60th income-percentile, then (hypothetically) they needed to invest an average of “ x ” number of dollars to help their children advance to the 95th income-percentile. For a family in the 60th income-percentile today, the cost of achieving the same feat of moving their children up the income ladder could likely be something like “ x * 3 ” inflation-adjusted dollars.

Why? Because the difference between the 60th and 95th percentile in the 1950’s was far less than the difference between the 60th and 95th income-percentile today (accounting for inflation). This increase is colloquially known to most of us as “the rich getting richer,” and since the boom years following WWII this inequality in income has steadily increased.

Furthermore, at the same time the rich have been getting increasingly richer, the number of paths to getting a top-level income has not changed. For instance, average hourly pay has ranged within a couple of dollars since the US economy moved to a post-industrial economy in the 1970’s.

So not only has the “height” of the economic mountain been getting higher; but at the same time, the number of trails leading to the summit has stayed the same.

What does this all have to do with accounting and comparisons?

Well, in particular for the boomers, it makes it hard for them to see the difficulties faced by younger generations.

Following the economic boom after WWII (the same boom that coincided with the Baby Boom), the income disparities in the US dramatically shrank. At this time there was an unprecedented leveling of the playing field, while simultaneously a strong growth in jobs increased opportunities for advancement. When the boomers first went into the workforce to find jobs, there was a surprising abundance of good ones to be found.

Then came some changes. We decided it might be cool to let women and people of color work real jobs. This achieved a better fit between our ideals and our reality, but it happened to also increase the number of people looking for jobs.

At the same time, we made some decisions about how our economy should be run. We “cut the fat” repeatedly (following a Jack Welsh strategy of always cutting “the bottom 10%”). We also decided it would be cheaper to make our products in other countries, and to use our domestic labor force for inexpensive services.**

These choices had definite outcomes, and now youths face very different circumstances than their parents. The problem is that our parents don’t seem to realize all that has changed since they first went out to find their first job.

For them (if they were white men, or some white women) all it took was to work hard in college and there were a number of new jobs for them to find. This period in their lives must have really affirmed that old American belief in the efficacy of hard work and sacrifice. However, while these people were working their way up the corporate ladders, they were having children who now come to face current realities. And it’s not hard to see how these parents aren’t impressed with the efforts of their children.

Their children may in fact be achieving much more than them at an earlier age (e.g. working harder in K-12 to get scholarships to pay for college, rather than having to pay out of pocket). However parents probably don’t see the increased effort because the “hard work equals good results” mindset suggests that if their kids aren’t advancing, they must not be doing a lot of hard work. Thus, one can see how trends in the macro-economy toward greater income disparities have distorted the perceptions of older generations.

Conclusion
I end this follow-up post with a few concluding thoughts on mobility, and social comparisons across generations.

The background from whence a parent comes infrequently syncs up with the aspirations of their children. Moreover, the lifestyle that lifted a parent up the social ladder almost certainly will not be the lifestyle that their children desire, nor the lifestyle that is needed to move their children up to the next rung.

Given this disconnect in lifestyles, parents may see their children as “spoiled” for wanting superfluous purchases. However, it should be remembered that some of these “superfluous” things are actually emblems that are “necessary” to gain a higher economic status. It’s also important to keep in mind that higher expectations are part of what you bargain for when you seek upward mobility for your children (regardless of whether these expectations are agreeable or not).

Finally, for those parents who think their kids are lazy, or who don’t understand why they have to contribute so much (or for so long) to their kids’ well-being, keep in mind that the climate out there isn’t as hospitable as when you were younger. Generations from the great depression may have more in common with today’s youth than their own parents, who benefited from a “rising tide.”

And though it may seem unfair that your kids need more help than you did, take some comfort in knowing it’s not necessarily because they’re lazy. Your kids likely have had a higher hill to climb than you did (even though it may look like they’ve had better resources) so make sure to give them all encouragement you can muster. ***

* On a complete tangent: Why is it that everyone is so dead-set on having their children exceed them? From a logical standpoint, doesn’t it seem hard to understand how everyone’s children are going to advance forward? Especially when there are an exponentially increasing number of children on the planet; and at the same time technology is exponentially decreasing the need for human intervention in the production of our goods and services? As we go each day into the future we have more people to do work, while at the same time we have less work to do. How are we all going to find our kids well-rewarded jobs, when we just don’t need as many people working?

And moreover, isn’t income mobility likely going to generate kids that parents don’t like? Maybe the world would be a better place if parents stopped judging their kids by the height of their salaries, and started esteeming them more for the net social good they contribute to humanity. (Easy for me to say, I know….)

** To talk tough for a moment, it is worth remembering that it was not the young people of today who voted for these policies that leave us in our current economic situation. It is interesting how frequently the “me generation” of youth is being blamed for all of our current economic woes, when in reality the youngest people in society have the least amount of resources (economic or political) to impact the economy. Older generations should take the time to consider their own contribution to our current problems, rather than simply calling for more responsibility from youth. In fact, they should recognize that in today’s tough climate, many youth are displaying a hard resolve matching the vigor of their depression-era grandparents.

For a different, but similar-themed argument, check out this excellent post by economist John Quiggin.

*** Caveat Emptor: Some kids are actually lazy, of course. I’m just saying that many fewer of them are lazy than is commonly believed.