The last fifteen years have been disappointing for many people. The great financial crisis caused a long and deep recession, which was aggravated by the debt problems of several countries in the euro zone. Then came the covid health crisis. These have been years of difficulties and a recurring comment is that the new generations face the bitter prospect of having a lower standard of living than their parents. Is this true? Let's look at the data.
A person born in 1980 who entered the labor market at the age of twenty would have experienced, up to now, a growth in their per capita income of 0.9% per year. If she kept up with this rate, in 2040, approaching her retirement, she would reach a standard of living 1.4 times higher than when she started her working life. Therefore, the expectation is that, on average, the generation that is currently in its prime will live better than their parents.
What happens is that this improvement in well-being, although considerable, is clearly less than what their parents enjoyed. And let's not mention your grandparents! His parents' generation, born in the 1950s, registers an annual growth rate of per capita income of 2.3%, which over forty years of working activity allows him to multiply his standard of living by 2 ,5 times. And the figures for grandparents are even more striking. Those born in the 1930s registered a growth in the standard of living of 4.4% per year between 1950 and 1990, which meant multiplying their well-being by 5.5 times. Children are not going to live worse than their parents, nor than their grandparents, far from it. But without a doubt they will not enjoy throughout their lives that formidable improvement in material well-being that their parents experienced.
These figures are averages and, therefore, they can hide very different realities. When per capita income growth is low, some people are more likely to suffer welfare losses relative to the previous generation, especially if income inequality increases over the years. But it is necessary not to forget that the starting point of the new generations is much higher than that of the previous generations. This explains, in part, why the upward potential is less. However, the human condition is what it is and, even if the starting point is high, it is difficult to be recognized as such by those who have not experienced how life was lived a generation or two ago.
Fortunately, in our society, along with these generational concerns, there is also a very high concern for causes such as the preservation of the natural environment. This is precisely a logical consequence of the fact that the new generations start from a much higher income level than that of their parents or grandparents. For this reason, their vital priorities and their political commitments are different, even coming to have a different conception of what progress and well-being are.
