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Society - Written by on Friday, March 20, 2009 17:00 - 5 Comments

Naumi Haque
Recession and the psyche of a generation

Economic downturns tend to invoke a lot of immediate concerns – understandably, people are worried about jobs, security, and keeping a roof overhead. But, I often wonder how this will affect our personalities in the long run. Just think of your grandmother hoarding elastic bands and paying the grocer in exact change – behavioural imprints (or scars) left over from previous economic traumas.

Joseph Brusuelas, economist at Moody’s Economy.com is quoted in the Wall Street Journal as saying he fears “we’ve lost a generation of investors.” His take was that people won’t invest because they won’t have the money to do so, but I think it’s safe to say that there will also be a certain lack of trust in the market. Have we gained a generation of entrepreneurs? A generation of socialists, scrutinizers, realists, and environmentalist?

Jon Stewart’s “senior black correspondent” Larry Willmore jests that the swath of white collar crime leading into the recession will change the face of criminality in America such that the Wall Street look (i.e. white men in suits and ties) will be seen as inherently untrustworthy in the future. Willmore’s analysis is satirical, but looking at our own research here at nGenera, Scrutiny and Integrity are two of the eight norms of the Net Generation that will definitely be amplified by the recession (the other norms are Freedom, Customization, Collaboration, Entertainment, Speed, and Innovation). If the Net Gen weren’t already scrutinizing corporate America before, they certainly will be now.

For some deeper thinking on the effect of the recession on the Net Gen, I turn to Fast Company staff writer and author of Generation Debt, Anya Kamenetz. As Anya rightly noted in one of her Yahoo! Finance columns, “Economic dramas shape an entire generation’s beliefs about the nature of the economy and the risks involved.” That was a year ago and already she was postulating about how the Net Gen’s psyche might be shaped. Specifically, she noted that young people:

  • Won’t expect to get rich quick.
  • Will “get real” about consumption.
  • Will buy on the cheap.

I spoke with Anya recently so I thought I’d ask her to elaborate on her thinking.

What effect do you think this recession will have on the psyche of people entering the workforce now?

“The climate in the last 10 years has been a very unrealistic one. We have been living in this huge bubble. For young people who are entering the 20’s now, this is really all they knew: Inflated expectations, ridiculous monthly consumer debt, and the idea that you don’t need to save for the future because you can just count on the equity in your house. But, when the bubble bursts, the paradigm shifts. For young people now, they are really looking around and seeing the world as being a very different place. For older people, it can be a lot more traumatic to have this happen, but for young people, they’re more ready to maybe accept that change.

And so, if you look at ‘The Greatest Generation’ that came of age during the depression and then entered World War II, they were able to achieve at incredibly high levels and get a great education. That legacy of the depression, obviously it was very hard for a lot of people, but it also led to realistic attitude about money, and a very practical down to earth determination to try to succeed, and some strong family-oriented values. I think that I’m starting to see the beginning of that among this generation. People are saying, ‘Well, you know, this idea of endless wealth and greed, it’s not something I really want to sign up for.’ Young people are forced to consider, at a very young age, what is really important to them and what they really want to have because they know they can’t have it all.”

So, really, this is good for us?

“From a purely economic point of view, I think it could be [good for us]. It’s a mixed bag, right? Because on the one hand, the drama that you enter into upon graduation, it actually can determine your salary for years to come. So if you start in a down market or you have to take a job that’s not exactly matching your skills, it could have a long term effect on your income. But on the flip side, if you get into a habit of saving very early, you have the magic of compound interest on your side, plus you develop lifelong healthy financial habits.”

So, in the end, a generation known for being spoiled, having unrealistic expectations about work, and graduating university with an inflated sense of entitlement might actually end up being the “sensible generation.” I would add to Anya’s analysis the notion this will be a generation that will trust corporations even less than previous generations and will be more adamant in demanding integrity from their corporate and government leaders.

And while I hope all of this is true, I also know that there is a layer of insulation between the Net Gen and the economy: their parents. The extent to which many Net Geners will feel the impact of the economy is also dependent upon how well their Boomer parents are able to weather the storm and continue to provide for adult children that may still be living in their basements. Given that many Boomers are being forced to delay retirement, I would say the insulation is getting thin. In fact, if pensions shrivel up and forced retirements put a strain on the family coffers, the Net Generation may even have their own basements occupied by Boomer parents that need caring for in old age. I’m sure there is an entire school of psychology devoted to that topic, so I won’t even get started.



5 Comments

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Tel
Mar 20, 2009 23:22

“we’ve lost a generation of investors.”

translation: “this lot won’t be as gullible as the last lot”

Tokhir Dadaev
Mar 22, 2009 4:29

“Anya noted that young people:
* Won’t expect to get rich quick.
* Will “get real” about consumption.
* Will buy on the cheap.”

In my opinion it all boils down to the way one is brought up. Above three points were hardwired into my brain by my rational, rather pessimistic father, which makes me keep my feet on the ground.

Thanks to this crisis, spoiled young peope who keep their heads in the clouds realised the simple fact of life: you can’t have everything!

Alex Marshall
Mar 23, 2009 10:45

Great post, Naumi.
I’ve thought about this topic previously, but with a somewhat different spin. I’m concerned about the psyche of my generation (those born in the early- to late- 1980′s), and how we’ve been effected by growing up in such a boom time.
Take a Canadian born in 1987, for instance. He would probably have no memory of the early 90′s recession, or the Cold War. He would have been raised in a wealth bubble – probably eating out frequently, getting all the latest technologies as they came out (bigger tvs, dvd players, cell phones, etc), raised with little/no risk of his parents being laid off, and no risk of widescale war (after the termination of a 40 year cold war). Growing up Canadian in the 1990′s was pretty sweet – sort of an outlier in world history.

How well positioned is this generation to adapt to a more realistic (less comforting) world, after spending their formative years in such a golden age? That’s my concern.

Twowan
Mar 24, 2009 20:37

Any recession and, better yet, any depression, can have some valuable psychological teachings. It places our values in question. I was reading that the rate of divorces was suddenly dropping. Family, as a refuge, is once again an important topic. Do we learn better when it hurts? This period affects us all in the long term as these are times to remember (learn?) what is important. And it’s not money!

News Round Up and Discussion: Young People and the Recession « Entry Level Living
Apr 2, 2009 7:42

[...] Minnesota Public Radio: Impact of Recession on the Young New York Times Op-Ed: Recession Even Worse for Young Workers Slate Magazine: How Twenty Somethings Are Coping with the Recession Wikinomics: Recession and the psyche of a generation [...]

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