2. Doing this definitionally excludes Zennials / gen after Millennials
3. I wanted to specifically see how they accounted for housing, and they're not really. They're looking at median incomes at each generation in the 36-40 age band, and seeing an overall rise in median income for each gen, although the increase is decreasing for each generation. Expenses really aren't taken into account. They use the PCE inflation measure, which theoretically includes a 17-18% component of "housing and energy," but how accurately this reflects the steep rise in housing and rent prices we saw 2018+ is anyone's guess. Because of their age band, even for the Millennial gen, they're only looking at 5 years out of 15, and specifically looking at Millennials born 1982-1986 only. How representative this slice is is probably up for debate, because a lot of those are of an age to have bought housing before the huge increases in house prices and rent post 2010.
4. The age band 36-40 seems oddly narrow to me, particularly when other papers like Chetty 2017 find clear declines in intergenerational mobility at the earlier age of 30. Here's their take on it: "They calculate in each year the share of adults aged 30 whose income exceeds that of their parents when their parents were around age 30. Whereas around 90 percent of 30-year olds born in the early 1940s had higher incomes than their parents at the same age, this was true for just over half of 30-year olds born in the early 1980s. This decline in absolute mobility is consistent with our finding of slowing intergenerational progress from the Silent Generation (born 1928โ1945) through Generation X (born 1965โ1980). But our results suggest that intergenerational progress is no longer slowing and may instead be picking up again for Millennials in their late 30s."
5. And indeed, if you look younger than 30: "First, we find that the higher household incomes of Millennials relative to Generation X, through their 20s, is a result of dependence on their parents rather than a rise in their own market incomes."
So like most "intergenerational mobility" papers, the data is mixed and highly dependent on specific choices like age band, inflation measure, and other choices, and doesn't really merit a strong conclusion either way, and is probably excluding huge increases in housing and college education costs post 2010, costs that materially affect younger generations, who even with higher "on the face of it" median incomes are facing significantly higher expenses.
Thanks for the comment. I will reply to your points based on the numbering you used.
1) Yes, since income varies so much by age, it is important to use a relatively narrow age range. Looking at a broad age range would give less valid results.
2) Yes, you are correct. Gen Z are too young to come up with definitive answers regardless of methodology.
3) You can read the report by clicking the link. The study is about income, not expenses.
4) The older age range gives greater validity. And since they are using the entire population, they can take a narrow slice. Income is very volatile at young ages. I would be skeptical of any study that focuses at income age 30 and under.
5) Not sure what your point is.
Regarding your last paragraph, you are correct, but that is true for all social mobility studies. The study includes college debt, and housing costs vary widely based on metro area. Prices of most material goods are declining. I think the inflation deflator captures overall price change better.
I see no reason to believe things suddenly changed since 2010 or 2018 as you seem to assume.
This analysis lines up with others that I have seen. There is a huge narrative of economic opportunity decay in younger generations (speaking as a member of Gen Z), that I struggle to square with the data. I am completely open to a reality where misinformation and entirely incorrect ideas about past prosperity are to blame. However, I really think much of it comes from the fact that the house price to median income is at an all-time-high since WWII:
Unpredictable future impacts of AI on high-skilled labor aside, I don't know what economic complaints my generation could have once the house-to-income ratio comes down when inventory increases. It really is difficult to square the cultural narrative that's so prevalent on social media with the data.
Thanks for the comment. Yes, I agree that the unaffordability of housing in many metro areas on Pacific coast and Northeast gives the narrative much more plausibility. This unaffordability is mainly due to very bad public policy.
And when I was your age, I never thought that I would catch up to my parents standard of living. If you make wise choices, however, your income keeps increasing with age. Just make sure to save as you go.
So a couple notes on the study:
1. Only considers adults in age band 36-40
2. Doing this definitionally excludes Zennials / gen after Millennials
3. I wanted to specifically see how they accounted for housing, and they're not really. They're looking at median incomes at each generation in the 36-40 age band, and seeing an overall rise in median income for each gen, although the increase is decreasing for each generation. Expenses really aren't taken into account. They use the PCE inflation measure, which theoretically includes a 17-18% component of "housing and energy," but how accurately this reflects the steep rise in housing and rent prices we saw 2018+ is anyone's guess. Because of their age band, even for the Millennial gen, they're only looking at 5 years out of 15, and specifically looking at Millennials born 1982-1986 only. How representative this slice is is probably up for debate, because a lot of those are of an age to have bought housing before the huge increases in house prices and rent post 2010.
4. The age band 36-40 seems oddly narrow to me, particularly when other papers like Chetty 2017 find clear declines in intergenerational mobility at the earlier age of 30. Here's their take on it: "They calculate in each year the share of adults aged 30 whose income exceeds that of their parents when their parents were around age 30. Whereas around 90 percent of 30-year olds born in the early 1940s had higher incomes than their parents at the same age, this was true for just over half of 30-year olds born in the early 1980s. This decline in absolute mobility is consistent with our finding of slowing intergenerational progress from the Silent Generation (born 1928โ1945) through Generation X (born 1965โ1980). But our results suggest that intergenerational progress is no longer slowing and may instead be picking up again for Millennials in their late 30s."
5. And indeed, if you look younger than 30: "First, we find that the higher household incomes of Millennials relative to Generation X, through their 20s, is a result of dependence on their parents rather than a rise in their own market incomes."
So like most "intergenerational mobility" papers, the data is mixed and highly dependent on specific choices like age band, inflation measure, and other choices, and doesn't really merit a strong conclusion either way, and is probably excluding huge increases in housing and college education costs post 2010, costs that materially affect younger generations, who even with higher "on the face of it" median incomes are facing significantly higher expenses.
Thanks for the comment. I will reply to your points based on the numbering you used.
1) Yes, since income varies so much by age, it is important to use a relatively narrow age range. Looking at a broad age range would give less valid results.
2) Yes, you are correct. Gen Z are too young to come up with definitive answers regardless of methodology.
3) You can read the report by clicking the link. The study is about income, not expenses.
4) The older age range gives greater validity. And since they are using the entire population, they can take a narrow slice. Income is very volatile at young ages. I would be skeptical of any study that focuses at income age 30 and under.
5) Not sure what your point is.
Regarding your last paragraph, you are correct, but that is true for all social mobility studies. The study includes college debt, and housing costs vary widely based on metro area. Prices of most material goods are declining. I think the inflation deflator captures overall price change better.
I see no reason to believe things suddenly changed since 2010 or 2018 as you seem to assume.
This analysis lines up with others that I have seen. There is a huge narrative of economic opportunity decay in younger generations (speaking as a member of Gen Z), that I struggle to square with the data. I am completely open to a reality where misinformation and entirely incorrect ideas about past prosperity are to blame. However, I really think much of it comes from the fact that the house price to median income is at an all-time-high since WWII:
https://www.longtermtrends.net/home-price-median-annual-income-ratio/
Unpredictable future impacts of AI on high-skilled labor aside, I don't know what economic complaints my generation could have once the house-to-income ratio comes down when inventory increases. It really is difficult to square the cultural narrative that's so prevalent on social media with the data.
Thanks for the comment. Yes, I agree that the unaffordability of housing in many metro areas on Pacific coast and Northeast gives the narrative much more plausibility. This unaffordability is mainly due to very bad public policy.
https://frompovertytoprogress.substack.com/p/how-housing-became-unaffordable
And when I was your age, I never thought that I would catch up to my parents standard of living. If you make wise choices, however, your income keeps increasing with age. Just make sure to save as you go.