Recessions and beliefs

Michael Skapinker writes:

The division of work into “socially useful” and “socially useless” was a particular preoccupation of the post-Woodstock generation.

But it certainly wasn’t one of the preoccupations of the post-post-Woodstock generation. I’m a member of that later cohort. I’ve spent almost 24 million minutes on this earth, and in not a single one of them have I given a parrot’s clunge about whether my work is “socially useful.” My only concern has been to find any job and to keep it. I’ve never even been especially interested in the industries I‘ve worked in - investment banking and journalism.
There’s a reason for this generational divide. Skapinker’s (and Lord Turner’s) post-Woodstock generation - those who were teenagers in the 60s - had their beliefs shaped by growing up at a time of full employment. So they thought they could pick and choose what jobs they did. My generation was shaped by the mass unemployment and industrial decline of the 70s and 80s. So we felt we had no such choice. For us, any job would do. And many of us still feel this way. When I think about it - and I prefer not to - I’m always surprised that anyone thinks I’m employable.
Economic conditions in our formative years, then, can have long-lasting effects upon our attitudes towards the economy. It is, surely, only a generation brought up cosseted in (relative) affluence that could ever have listened to song lyrics such as “All you need is love” without laughing contemptuously.
Two recent papers provide academic evidence for this.
This one finds that:

Individuals growing up during recessions tend to believe that success in life depends more on luck than on effort, support more government redistribution, but are less confident in public institutions.

And this (pdf) shows that people’s experience of asset returns in early adulthood can affect their attitudes to risk and personal investments even decades later.
Such recession-induced beliefs can, in turn, have macroeconomic consequences. For example, one reason why the Bundesbank was for years so ferociously anti-inflationary was that Germans who grew up in the early 20s were scarred by the horrors of hyper-inflation and determined not to repeat them. Perhaps it was the passing of this cohort that weakened opposition to joining the euro.
And one of my favourite (partial) explanations for the rise of wage militancy in the late 60s and early 70s was that the generation that was cowed by memories of the 1930s’ depression into accepting low wage growth gradually retired, to be replaced by people who had never suffered unemployment and so were more willing to demand higher pay.
Which brings me to a possibility. Perhaps younger people today will have their beliefs permanently formed by this recession. They’ll not care about doing “socially useful” work, be grateful for what they can get, and have no trust in authority.
In which case, we can welcome them to our world.

Comments

[Luis Enrique]

I really like this idea of important cohort effects in attitudes.

Isn't it often remarked that young (middle class) people nowadays expect their jobs to be rewarding in themselves, and all idea of the dignity of honest (but dull) labour has evaporated? I have seen some left wing commentators express contempt for working class jobs (although there's probably nothing new about that). If true, I wonder what that would imply for labour supply decisions and unemployment.

[it's worth noting that when it comes to discussions about whether banking is "socially useful", it's possible to confuse the notion of "socially useful" that (I think) Chris is using here with another notion, used by economists. And that involves taking people's preferences as given (not worrying about whether things are socially useful in a deeper sense), and then to ask whether banking is welfare destroying (socially useless), that is to say, whether aspects of the finance industry are extracting rents from the economy but doing nothing productive in return. There are other ways of being socially useless, in this sense, then just rent seeking. This sense of being "socially useless" is distinct from, say, doing something like writing mobile phone ring tones, which although some people might regard it as socially useless, would be regarded as welfare generating in the sense that people apparently enjoy such things]

[Matthew]

No disrespect intended, but you look as if you have spent more than 14m minutes on earth. Did you mean 'in employment', or in fact perhaps more accurately 'with a job'?

[chris]

@ Matthew - sorry, I miscalculated. I meant almost 24 million. Correction made.
Blimey, I feel old.

[Luis Enrique]

"My only concern has been to find any job and to keep it."

Rather than "any job" don't you mean find the "best job you could" (a job that delivers the best combination of (possibly negative) job-satisfaction and remuneration you can find, given search costs?) You didn't spend your life stacking shelves in a supermarket, after all. (You're not going to tell me that finding a job in an investment bank was easier for you than finding a job in a supermarket, are you?)

[chris]

@ Luis - I'm not sure I meant the best job I could. To a very large degree, I never much bothered looking for jobs whilst I was in work. Keeping the job I have has always been vastly more important to me than looking for a better one.

[Glenn]

well I did the opposite, almost by accident. Stayed on at Uni did postgrad and doctorate in economic development in UK, looking at effects of recessions, now working in economic regeneration. So directly took experiences of recessions from formative years in North East of England to try and develop some interest and insight into what can be done about recovering from recessions and making vulnerable economies a bit more recession proof....

[Bull Fax]

Very interesting post on a topic I also thought about recently. The recession did indeed bring up the jobs issue. And I fully agree that the "useful" tag plays a huge role in it.

With ever growing capital base, technical innovation and outsourcing of the most unpleasant and labour intensive parts of production to the dev. world, there is an ever decreasing number of workplaces that can be considered vital or even needed for the basic social functioning.

In the modern world more and more people are employed in the "services" sector ( 76% Japan, 80% US, 70% EU).

This encompasses things like stylist haircuts, florists, opera singers or language researchers. From a purely economic point of view none of their work is especially "useful". However this is a solution to our job killing productivity - creating services jobs and convincing society that they are needed or useful.

In brief - I agree with you - labeling jobs "socially useful" or not is quite irrelevant. Currently we have plenty of people with no jobs so any job that is "socially sustainable" is good for them and hence good for society -> socially useful ;).

[Luis Enrique]

(a paper that's not about generational beliefs, but about a tangentially related topic of uncertainty and recessions, which you might like is "Really Uncertain Business Cycles" by Bloom, Floetotto and Jaimovich. Available on Nicolas Bloom's homepage.)

[Will]

Interesting. As an 80s teenager, 90s graduate, my experience is that recessions are strangely liberating. If you're going to be paid peanuts whatever you do, then it may as well be for something you find rewarding in other ways: just what that means is then a matter of personal taste, but it's economic booms that pressurise people into possibly-unsuitable jobs just because that's where the money happens to be at the time.

[George B]

Imagine how I feel: I've just graduated out into a fresh new recession, without any experience of one before.

[rolex datejust watches]

And a lot of it reflects a switch from bank deposits to securities; foreigners “other investments” in the UK, http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.
http://www.watchgy.com/tag-heuer-c-24.html
http://www.watchgy.com/rolex-submariner-c-8.html