Let's delve into the fascinating topic of generational luck and explore whether those born in the late baby boom era, like myself, are indeed the luckiest. I'm Evan Davis, and I was born in 1962, right at the tail end of this demographic phenomenon. It's an intriguing question, and one that has sparked debates and analyses in recent years.
The Student Loan Conundrum
When it comes to higher education, there's no denying that the student loan system in England has its complexities. While younger graduates today face a 9% tax on their earnings, my generation received annual maintenance grants and had our tuition fees covered. This stark difference in treatment is a source of injustice for many. Natalie Whittaker, a 27-year-old graduate, highlights the reality of accumulating substantial debt, which contradicts the initial promise of a 'coffee-priced' loan.
However, it's important to consider the broader context. The expansion of higher education opportunities has benefited a larger portion of the population. In 2022/23, nearly half of state school pupils in England had started higher education by age 25. This shift has created a new dynamic, where the loan system aims to ensure fairness between generations of students, rather than across all generations.
Housing Market Advantages
The housing market presents another interesting aspect. By purchasing a flat in London in 1988, I, like many of my peers, benefited from substantial capital gains. This advantage is a result of the timing of our entry into the market, as well as the unique dynamics of the London property scene. The city's resurgence in the early 2000s, coupled with a growing population and limited housing supply, created an ideal scenario for property owners.
Generational Pensions
Pensions are yet another area where the baby boom generation has arguably secured a more comfortable future. Our generation benefited from defined benefit pension schemes, which guaranteed a fixed proportion of salary as a pension. These schemes, however, became increasingly costly for employers and have since been replaced by defined contribution pensions for younger generations. The difference in employer contributions is significant, with the private sector contributing 15-20% for defined benefit pensions compared to just 3% for defined contribution plans.
A Shared Disappointment
While it's true that my generation has enjoyed certain advantages, it's important to recognize that not everyone within it has been equally fortunate. Furthermore, the grand disappointment of recent decades may not be solely attributed to the costs of education, housing, or pensions. The decline in per capita economic growth, particularly post-2007/08, has had a significant impact on the overall sense of material deprivation. A slower growth rate means that not all age groups can expect to be richer than their predecessors.
Final Thoughts
In my opinion, while I was fortunate to benefit from certain circumstances, I wouldn't go so far as to say that my entire generation was lucky. It's more accurate to say that the late baby boom era was a particularly opportune time to be lucky. The challenges of intergenerational equity are complex and multifaceted, and addressing them requires a nuanced understanding of the various factors at play. Perhaps the key to resolving these issues lies in reigniting the growth engine that has been stalling in recent years.
