The sharing economy and “experiential” consumption are all a product of millennials' values and lifestyles, several studies have suggested. This generation is different from its parents, we have been told.
Well, maybe not.
A new study from the Federal Reserve has concluded that consumers born between 1981 and 1997 are pretty much like every other generation. They might not engage in as much spending, but it's not because they don't have the desire, they just don't have the money.
“We find little evidence that millennial households have tastes and preference for consumption that are lower than those of earlier generations, once the effects of age, income, and a wide range of demographic characteristics are taken into account,” the study's authors write.
These findings run counter to a number of other studies that conclude young consumers are very different from the generations that came before them. But it is possible the biggest difference is they don't have as much money and face higher costs than previous generations.
Trends in healthcare
A recent study by Kaiser Health reported that millennials are creating a new trend in healthcare, avoiding primary care physicians and instead frequenting less expensive retail walk-in clinics and urgent care facilities.
The Fed study makes the argument that millennials want what every other generation has wanted. But because they came of age during the financial crisis and its aftermath, they have struggled in a stagnant-wage economy while the cost of housing, food, and mobility has continued to climb.
Millennials tend to have lower incomes than other generations did at the same age. That could explain some emerging economic trends, such as sharing a car instead of owning one.
“For example, for spending on motor vehicles—which accounts for roughly 20 percent of retail sales and is highly sensitive to the business cycle—we find little evidence that millennial households have significantly different tastes and preferences than households of previous generations,” the authors write. “We find similar results for spending on food and housing-related expenses.”
Boomers earned more money
The study notes that when the baby boom generation was young, it was often criticized for spending more than its predecessor, the silent generation. But the authors note boomers didn't spend a greater percentage of their income than their elders, they just earned more.
While boomers faced runaway inflation in the 1970s, they didn't have to pay a fortune to attend college and they didn't feel compelled to overspend on smartphones, because they didn't exist.
The Fed report concludes that millennials aren't all that unique in their consumer behavior. They spend less on housing and food than previous generations, but that could be because they spend more on education.