Another solid, numbers-and-logic based essay at ACX: Vibesession: Much More Than You Wanted To Know. I have seen a few people trying to sort this out, and this is as good or better than any.
Young people complain they’ve been permanently locked out of opportunity. They will never become homeowners, never be able to support a family, only keep treading water at precarious gig jobs forever. They got a 5.9 GPA and couldn’t get into college; they applied to 2,051 companies in the past week without so much as a politely-phrased rejection. Sometime in the 1990s, the Boomers ripped up the social contract where hard work leads to a pleasant middle-class life, replacing it with a hellworld where you will own nothing and numb the pain with algorithmic slop. The only live political question is whether to blame immigrants, blame billionaires, or just trade crypto in the hopes that some memecoin buys you a ticket out of the permanent underclass.
Meanwhile, economists say things have never been better.
Are the youth succumbing to a “negativity bias” where they see the past through “rose-colored glasses”? Are the economists looking at some ivory tower High Modernist metric that fails to capture real life? Or is there something more complicated going on?
Alexander first assesses the vibes according to usual metrics of consumer confidence and optimism. Are people, especially young people that discouraged and pessimistic or is this just click-seekers on social media? Answer: It's overstated but real. Next he looks at economists assessment of how we are doing, over the last five months, five years, and five decades. The short answer: Things are unevenly better all the time, but a few key things are worse.
And in particular, housing costs were at historic lows 2010-2012 - mortgages, interest rates, rents - and have risen since then. So they aren't bad until the covid years, but if you are young, they sure look it. That could be your vibes right there.
What looks like a throwaway line jumped off the page at me: Partly because the bill for ~50 years of NIMBYism has finally come due. Maybe I am overreading that, but it rings true. Housing is expensive because we don't have enough of it. Contractors make more money on bigger houses on more acreage, so that's what they build. Everyone knows we need to build more houses of less than 2500sf on 2 acres that cost half a million, but all the ways of getting there run into the roadblock of towns and neighborhoods not wanting that.
I was going to guess that getting more people into affordable houses would solve both the wealth accumulation and the vibes, because once people are in a house they are more likely to give up their weekends and travel, stay married, and volunteer in the community. But that's the reasoning that got us into the housing bubble of 2008. Maybe that would have not been as bad if we had regulated the mortgage market more tightly. Rule of thumb: When a percentage of Republicans asks for tighter regulations while everyone else is opening the throttle, that counterintuitiveness is worth examining.
Still, I have to think getting to the More Housing side of things would help.
I draw your attention to the section "The Brooklyn Theory of Everything," for some additional surprising insights.
9 comments:
I haven't read his essay yet but I did read Neo's post and the comments on a similar topic, and a few other recent posts.
One thing I was musing on this morning while walking the dog is that since the 1960s the average of first marriage and first childbirth has risen, and there seems to have been a similar rise in the age of 'launch', since college is now often taking 5 rather than 4 years, and many of the young people doing most of the complaining are likely to have taken courses beyond a bachelor's degree. When you tie this into the data often presented about the increasing size of houses, it suggests to me that one source of the discomfort is how much lower a standard of living that young person living (semi-)independently has compared to their standard of living prior to leaving mom and dad's place. Going from 5 people (mom, dad, and 3 siblings) sharing at 1500 sq ft house to two or three people sharing at 600 sq ft apartment is not that big a drop. Going from mom, dad, your sibling, and yourself sharing at 2000+ sq ft house to even a 300 sq ft apartment alone is going to feel like you are giving up a huge amount of space, let alone the likely amenities in the house. Couple that with the 2020s parents probably being at a point in their life with considerably higher earnings than the 1960s parents who started their family earlier, and I do understand how young people may feel they start very far below the standard of living of their parents.
Did most people ever really expect to OWN houses in expensive cities such as NYC? I had two relatives somewhere in the NYC area who spent their entire lives in rental housing, raised 3 kids between the two couples. Professions were, for the men, chemical engineer and PR man...for the woman, journalist (wrote for the AP) and full-time housewife.
I do not understand why children think they should start at, or anywhere near, their parents' standards of living. However, I see my GenX children making sacrifices to do just that. I am shocked by the dorm accommodations (and the cost of them!) that my oldest granddaughter has. Her GenX mother lived in dumps that passed for dorms in the 90s. I think it's not the boomers so much, but GenX and the older millennials that are determined their children will have it better than they did.
Working on a post about Affordability...which is basically a function of income adjusted for inflation...sort of, that is. If prices go up 30% and after-tax wages also go up 30% then affordability is constant in practical terms...BUT, I think there is a psychologival effect in significant inflation, and people will tend to feel that things are becoming less-affordable even given the above scenario.
You will find a lot of your data on those things at the link. Alexander is over-thorough, but you never come away feeling "But he overlooked..."
As I noted in my comment, I think it never mattered because for the vast majority of people the difference just wasn't that great. It's only been recently the gap widened enough to produce the feeling that leaving home is a significant step down and may produce a feeling that catching up is impossible, even though actual economic data indicate you likely will.
I actually think I saw something he overlooked: the massive increase in anxiety diagnoses in this time period, and how it impacts young people's perception of their economic prospects. Jonathan Haidt often points to 2010-2012 as the inflection point, which means we now have 15 years of increased anxiety teenagers who have progressed in to adulthood. I think we need to consider how that cohort coming of age is going to influence perception. According to his post here, almost 20% of those 18-25 have a diagnosed anxiety disorder, 12% of those 26-34, and about 8% of those 35-49. https://jonathanhaidt.com/anxious-generation/
Based on his graph, when I was in the young adult cohort, only 7% of my peers had diagnosed anxiety disorders. I don't see how you can more than double that number and not see a shift in perception.
I bring this up because my cohort *also* had rapidly increasing home prices....I graduated in the throws of the housing bubble rise. The two times I've been involved in purchasing a home were 2007 (one of the worst year on record before 2022) and 2012 (the best year on record since 2000). I can tell you concretely I didn't see half the panic in my cohort at the time as I do from young people now. I've talked to a bunch in person, and I get the strong sense anxiety is plaguing their thinking. A few things I say to help reframe:
1. I remind people that the difference between buying in the worst year and the best year was 5 years apart. Maybe this time it will be longer, but I feel like it's underappreciated that market conditions tend to fluctuate and don't last forever.
2. I point out that 2012 was a great year to buy because no one was sure it was a great year to buy. We had a lot of people question our timing, but we had a baby on the way so we just took the leap. This seems to relax a lot of young people, there's a vague perception that someone tells you "this is a good year to buy" and then you do it. I remind them it's mostly just "well things are uncertain" and then you get lucky. It's like no one's ever told them these trends only clarify in retrospect.
3. If someone's really grumpy, I point out that my cohort had to pay for our own health insurance immediately, and post-2010 adults got covered by their parents until the were 26. In theory they started with either thousands of dollars more in their pockets, more flexibility, or more peace of mind than I did. Everyone under the age of 40 got a pretty big handout those over 40 did not get, and they seem entirely unaware of it. I remember when the ACA debates took place and a huge part of this was supposed to be to ease young people's transition in to adulthood, and it now seems to be taken entirely for granted.
After these conversations, I tend to feel more like I've been calming someone down rather than really disputing the numbers. I think anxiety as a driving force is going to impact our sense of things for years to come.
Excellent point, and I also think it's worth noting that the most immediate economic benefit of marriage is that you have a person you can strategize about finances with in a way you never can with a roommate. How many people's early marriage stories involve "well I worked while he went to grad school" or some variation thereof? Mine certainly does. Marriage is a very economically efficient institution and losing that during your 20s has taken a toll on people.
@ bsking - The increase in anxiety diagnoses may not have registered with me because I now think that it is overhyped. Still, that would be a place I could easily be wrong.
I also like that your impulse now is to redirect and allay anxiety rather than refute. Would I had learned that 50 years ago, seeing that I did this for a living.
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