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Drivers of Intergenerational Inequity

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In the UK, the final report by the Intergenerational Commission speaks in terms of an intergenerational contract – “the principle that different generations provide support to each other across the different stages of their lives”, and also the notion that each successive generation should be better off than previous ones. One of the biggest issues in current reporting on this and so-called “generation wars” is the cost of housing, which has become significantly less affordable…

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Is the wealth transfer a myth?

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Mass media will always jump on stories that seek to challenge and debunk commonly accepted narratives. CNBC is running a story suggesting that the huge intergenerational wealth, estimated at $30 trillion, is a myth, because the actual transfers will be “small, fragmented and drained”. Why? Because baby boomers will spend on themselves as they age (what’s known as SKIing – Spending your Kids’ Inheritance), and because they will choose to gift their wealth to charitable…

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US Fed on Intergenerational Transition

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The US Federal Reserve have completed a study on how intergenerational wealth transmission can affect wealth concentration. The issue of “inequality” is a popular one – the notion that the rich are the primary beneficiaries of national economic benefit (at the expenses of others, whatever that means), and the lack of economic mobility. I will tackle these issues in more depth in future newsletters. The stats in the report are revealing. More than 70% of…

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Happiness = Doing better than your parents

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Now, here is some real research on generational difference. According to a study by Oxford University academics, men who surpass their parents’ qualifications report lower levels of psychological stress, while those who do worse are more likely to feel depressed, lonely or sad. Women, however, have no such hangups. The study is quite extensive – using European Social Survey data from 52,773 people aged 25 to 65 in 28 countries. The lead researcher attributed a…

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Are Generations a ‘Thing’?

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The ongoing debate about ‘generation wars’ will never stop, but here’s an interesting take on this from Slate Magazine, which claims that research on generations is flawed. Statements like “baby boomers are selfish” and “millennials are narcissists” abound, but where is the science to support this, it asks. While they acknowledge that times change and people do, they reject the idea that distinct generations capture and represent these changes. The author then goes on to…

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Facebook and Boomers vs Millennials

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Not surprisingly, Baby Boomers and Millennials use Facebook very differently. This is manifested in their social media approach to friendship, family & romance – where Boomers reconnect while Millennials seek to expand their personal networks. Boomers use Facebook to augment their existing news sources, while for many Millennials, social media becomes their primary news source. And of course Millennials are far more tech savvy, having grown up with technology. Social media can be a powerful…

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How to raise ‘unentitled’ kids

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Affluenza and entitle-itis are some of the newest ‘diseases’ that afflict the wealthy, and of course there is always the ubiquitous ‘privilege’ that almost everyone is now obliged to check. In her book Uneasy Street: The Anxieties of Affluence, Rachel Sherman, associate professor of sociology, has interviewed 50 affluent parents in and around NYC to understand the challenges they face raising children with wealth. They are somewhat torn between stigma of wealth and the competitive…

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Generation Wars?

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Have the Baby Boomers ruined the US economy (and the world) for the Millenials? That’s what Bruce Gibney asserts in his book A Generation of Sociopaths: How the Baby Boomers Betrayed America. Gibney lays blame on the Boomers that have controlled Congress for decades for the huge increase in the debt-to-GDP ratio, the under-investment in infrastructure, and inaction on climate change. He claims that it all stems from their lack of investment in the future….

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At What Age Should Someone Inherit?

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Increasing life expectancies have meant that for the first time in history, four generations are alive at the same time. This has important implications for the timing of the transition of family wealth. There is an ‘inheritance boom’ coming when the Millennial generation inherit the wealth of the Baby Boomer generation, but this is expected to peak in 2035 when the average Millennial has already passed the age of 60! Some wealth originators shudder at…

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Greed or Envy?

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Greed and Envy are two of the ‘seven deadly sins’ and are relevant to material wealth. Economists adopt the fundamental principle that people seek wealth maximisation (a form of greed), but is this really the case? Because we live in communities and families, it can be argued that the more significant driver of behaviour is envy, because we invariably compare and benchmark ourselves to those around us. For the economists among you, the analysis is…

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