Our divisive obsession with intergenerational unfairness

It’s true that the living standards expected by older generations when they were young are quite different from those common to young people today. But direct comparisons between baby boomers and younger people are misleading, and maybe in themselves unfair.

For one thing, they don’t consider the economic circumstances which contributed to the baby boomers’ prosperity, nor the circumstances now causing issues for millennials. A lot has changed since the 1960s and 1970s in terms of the labour market, pay, benefits, taxes, house prices and other factors which influence living standards. The fact that the experience of being 30 in 2016 is different from the experience of today’s 70-year-olds when they were 30 in 1976 is not surprising, nor should it necessarily be seen as a bad thing. And indeed, when asked about these issues, younger people do not “blame” older generations; they want to find solutions that work for everyone.

Moreover, many of the supposedly dangerous trends we’re seeing among younger people – such as higher levels of student debt, later entry into work, and a higher proportion of people in rented housing– may be responses to longer lives. In their book The 100 Year Life, Lynda Gratton and Andrew Scott argue that because more people can expect to celebrate their 100th birthday we must move away from the traditional three-stage cycle of education, work, retirement.  In future, people will have a multi-stage life with more career breaks and job changes; they will need to continue to refresh their skills and knowledge or retrain, build up savings and assets not only to fund retirement but also career breaks, and adapt to a rapidly changing labour market requiring greater flexibility and mobility.

Moreover, analysing the differences between generations by looking at the average for each generation only ignores the substantial inequality which exists within those generations. Our own Later Life in 2015 study showed that there is wide variation in how people experience later life. We identified six segments of people aged 50 and over based on their circumstances and levels of wellbeing, and some are doing far better than others.

One in five of those over 50 are what we called “Thriving Boomers” – enjoying high levels of wellbeing, generally in good health, financially secure and socially connected. They are more likely to be home owners and to enjoy generous occupational pensions. But our research also identified 12 per cent of those aged 50 plus who are “Struggling and Alone” – who experience poor health, financial struggles, are socially isolated and report low levels of wellbeing.

One in five of those over 50 are what we called “Thriving Boomers” – enjoying high levels of wellbeing, generally in good health, financially secure and socially connected. They are more likely to be home owners and to enjoy generous occupational pensions. But our research also identified 12 per cent of those aged 50 plus who are “Struggling and Alone” – who experience poor health, financial struggles, are socially isolated and report low levels of wellbeing.

The notion of intergenerational fairness also ignores the way wealth is passed down between generations within families. Analysts often focus on the winners and losers resulting from transfers in public finances – for example, taxation and benefits. Yet we understand very little about how financial transfers flow between generations within families – for example gifts, financial assistance, housing transfers and inheritance – and how these affect standards of living. The Social Market Foundation has found that two thirds of the population see handing down money or assets as “part of the natural pattern of give and take across the generations”. More people are receiving inheritances and gifts and housing assets comprise an increasing proportion of inheritances.

Nevertheless, such private transfers are likely to entrench inequalities across generations. What’s more, they reveal how what looks like intergenerational unfairness might actually conceal inequality within generations. A 25 year old daughter with two very rich parents looks vastly unequal to them – until they pass on their money.

For all these reasons, stereotyping age groups and pitting generations against each other is divisive, and will undermine the Prime Minister’s desire to strengthen cohesion within communities. At a time of significant social and demographic change it is important to encourage greater intergenerational understanding. That is the way to build a better society – not misconceptions tinged with bitterness and envy.

First published in The Telegraph on 11 November 2016.