What is generation X? Generation X
describes people who were born between
roughly 1965 and 1980. Every generation
seems to think that they are the cursed
generation. So, for example, Gen Z will
say our childhood has been ruined by
social media and smartphones.
Millennials will say we can't buy a
house. Uh baby boomers will say our
retirement is very uncertain. But what
I've kind of discovered is that really
the true losers in the generational war
are generation X. So tell me what it is
that makes us Generation X really so
unusual. So one thing that's unusual
about Generation X is that no one is
really that interested in them. So if
you look for example at the number of
books that have been written about
generation X or even things like the
number of times that people search for
Generation X online compared with say
searching for baby boomers there they're
just much less popular basically.
They're also much less likely than any
other generation to know that they are
themselves part of generation X. And so
there's this weird thing where they've
kind of vanished from public
consciousness. So why should we be
thinking about them? Gen X are at a
tricky age at the moment. Um there's
this theory called the Ubend of life
theory which actually has quite a lot of
academic support. And basically what
this says is that you're pretty happy
when you're young and you're pretty
happy when you're old, but you're pretty
miserable uh when you're in middle age.
So there was a recent poll by Ipsos
which found that roughly a third of Gen
X's are either not very happy or not
happy at all. Now the question is why
does this happen? There's a few reasons.
One is that um some chronic health
issues begin to emerge in middle age. uh
people kind of come to realize that
they're not going to achieve or they
want to achieve in their career and also
where they're at this tricky stage where
often they have to look after both
children and parents. Uh so it's not
surprising that people find those years
to be particularly difficult. So those
are the age dependent things but you're
also talking about a slightly different
cohort effect right? Yes. So there's age
effects which is kind of like where gen
X are right now. And then there's cohort
effects which is like Gen X the people
who are in Gen X are are themselves kind
of cursed in some way and that's the
kind of second plank of the argument
which is that yes Gen X are uniquely
challenged. So one way of looking at
this is by looking at their incomes. Now
one historical pattern that has endured
for a long time is that the current
generation earns more than the previous
generation. That was true of the baby
boomers. That's also true of generation
Z or Gen Z and of the
millennials. The the Gen X have have
done better than than the previous
generation, the boomers, but by the
smallest amount of any generation. So,
in that sense, their income growth has
been has been pretty weak. Now, the
question is why is that? One factor is
to do with kind of cultural preferences.
There's this idea that goes around that
certainly in comparison to the baby
boomers, generation X are less kind of
keen on being corporate drones. And so
that might mean that they just put less
effort in at work. But the other thing
that's going on is that if you look at
when people's earnings start to really
take off, it's in their kind of 30s and
early 40s. Now for Generation X, this
coincided with the aftermath of the
financial crisis of 2008 where wage
growth across the world was very very
weak. So they were hit at just the
moment when they were really going to
see a takeoff in their earnings. Callum,
this all sounds a bit bogus to me. I
mean, it's a 25 year cohort. millions
and millions of people. Is there is
there really such a thing as generation
X or any other generation? The way I
think about it is that there is a lot of
fluff that is written about the
generations. Uh people love to read
about the generations for some reason
and there's a lot of nonsense that goes
along with it, but I think there's
actually a lot of pretty robust
historical and economic and sociological
evidence that people of a certain cohort
really do think about the world in in
different ways. So the kind of classic
example would be if you look at people
who grew up uh during VHimar Germany,
they became much much more averse to
inflation uh than other Germans of of of
different ages. Or if you look at
Americans who were you know accumulating
wealth during the great depression,
those people continued to be very
skeptical of the stock market. So I
think you have to be careful about how
you use this generational analysis. But
I think it would be wrong to throw it
out entirely. But haven't generation X
done pretty well in terms of wealth
accumulation and tending to own their
own homes? Well, that's what I thought,
but when I looked into the data, I
discovered that that wasn't the case.
So, there's often two big kind of
components of someone's net net wealth.
One is to do with like savings. So,
often savings that are in retirement
accounts are in stock market. And the
other is to do with if they're in a home
or not. So on the on the stock market
again, generation X kind of had a tough
time in the sense that the period during
which they would be expected to
accumulate most stock market wealth was
a was a was a decade in which stock
markets did really badly that was the
2000s. They did particularly badly in
the US actually where the US market
really underperformed uh the global
market but but global stock markets as a
whole did pretty badly partly because of
the dotcom crash and partly because of
the financial crisis um crash. So they
actually weren't really able to
accumulate as much wealth as as as
either previous or or following
generations. And the other thing about
home ownership is also was also
surprising to me. Um if you look at the
older um millennials, they're actually
more likely to own a home than u
generation X were of the same age. And
again, the the the the long shadow of
the financial crisis is is to blame here
because what you had in in 2008 to 2011
was a large number of foreclosures and
so on, particularly in the US. And the
people who got hit hardest by that were
generation X. So, as a result, they've
not been able to get on the housing
ladder to anywhere near the same degree
as the baby boos. So, is there any hope
on the horizon for generation X? When
are they going to come out of the the
Ubend of life into the happier decades?
So the Ubend will be left behind in you
know 10 to 15 years and then it will be
the millennials turn to um to to to to
become unhappy. So in that sense that's
that that's optimistic. The future
though for um generation X might not be
that rosy either um for two reasons. One
is that a lot of them are going to
retire just at the point when um pension
systems really hit a crunch. So for
example in the US 2033 is seen by many
people as the kind of crucial day uh
crucial date at which um the social
security trust fund starts to kind of
run out of money and that will be just
as some generation X's start to retire.
The other thing that's going on is that
um an inheritance bonanza is coming as
the baby boomers die off but what's
really going to happen is that money is
going to be passed not to generation X
but to millennials and and and Gen Z.
So, I'm afraid to say that the outlook
for generation X is not that good. I'll
try not to take it personally. Callum,
thank you so much for talking to me.
Thank you, Mizie.