Intergenerational Differences

Intergenerational Differences

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8 Responses

  1. Avatar Al Cam says:

    I agree the differences are not as significant as one might have expected them to be.
    I guess this is a combination of the use of averages (peak median wealth < £200k is a bit of an eye-opener ) and the general rhetoric and hysteria around the subject.

    No real issues with your conclusions.

    A couple of thoughts on the "analysis" follow:

    1) RPI was used as the deflator

    2) is a lot of the so-called intergenerational differences not largely the consequences of ten plus years of near ZIRP; explicitly, prolonged low interest rates have meant:
    a) asset prices have grown significantly which, amongst other things, boosts DC pots;
    b) DB valuations have increased significantly as they are based on Gilt prices;
    c) cheap mortgages with limited supply of housing so prices of houses have risen;
    d) lower interest rates for cash savings accounts – which, as you point out, remain a favoured vehicle

    However, the ZIRP consequences argument is not so compelling and/or eye-catching.

    • Mike Rawson Mike Rawson says:

      I agree – low interest rates mean high house and stock prices and DB valuations. Perhaps some will live to see the reverse process, though I doubt it will be in my time.

  2. Avatar Emma Vinson says:

    Thank you for your article. It is a very nice summary.
    Coming back to one of your last point about most people that “are consumers rather than investors”, I was wondering during the whole reading is if the FCA published data about consumption. Interesting information would be the consumption per age group and the evolution of this consumption over time as well as the saving rate (although both are linked). That would be significant pieces of information to understand the rest of the study better.
    I am surprised as well that with one of the points of the FCA concerning the need for more flexibility for short-term credit. I felt that over the last 20 years with the evolution of financial services and technologies, credit is more accessible and flexible than ever. However, this may be a misconception, and I would be interested in the rationale behind it (if anyone knows).
    About “consumers fail[ling] to take advantage of services designed to help them make financial decisions”, I think this is also due to the increasing complexity of the available financial services and the low level of financial literacy. 50 years ago, there were fewer available services which means fewer opportunities, but also less possible financial mistakes and missed opportunities.
    One last thing that I was wondering is how the participation in the stock market evolved by age group. Does the FCA publish any data about it in its report?

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Intergenerational Differences

by Mike Rawson time to read: 5 min
More in Reports
A new generational contract
A New Generational Contract

Today's post is about a report from the Resolution Foundation (RF) called A New Generational Contract.