Millennials (individuals born between 1981 and 2000) are often portrayed as living short term and therefore spending on immediate rewards – eating out, social events, travels – rather than on investing on long-term possessions, like housing. In the end, ‘YOLO – You Only Live Once’. I am a millennial; I eat out, I go to social events, I travel, and I do not own a house. My own experience very much resembles the findings of our recent study, done in conjunction with the Resolution Foundation, which looks at consumption patterns of different generations across time.
But our findings show that the idea of millennials as a carefree bunch living a life of pleasure is a gross misrepresentation.
We used data from the Food Expenditure Survey 1963, 1989, 2000-01, and the Living Costs and Food Survey 2014. We examined expenditure patterns of adults aged 25-34, 40-49, and 55-64, corresponding with different stages in life of the millennials, generation x (born 1966-80), baby boomers (born 1946-65), and the silent generation (born 1926-45).
Our study found that not only have millennials’ incomes failed to grow in the same way as previous generations did, but also they are facing increasingly higher housing costs, which constitutes on average over a fifth of their income: up to three times the proportion spent on housing as other generations when they were of a similar age.
In other areas of consumption, our research indicates that millennials are spending more on ‘experiences’ than older generations. For example, millennials are generally spending more on eating out than generation x or the baby boomers, paired with a reduction in expenditure on food eaten at home. However, the overall shift towards eating out is seen across generations. In 1963, households spent about 30% of their income on food eaten at home and only 4% on eating out. In 2014, households spent around 11% of their budget on food eaten at home and around 7% on eating out.
Another way in which millennials are buying ‘experiences’ is through technology. Computers and audio-visual equipment enable socialisation through social media as well as entertainment through mobile games, or streaming of video contents. Millennials have more electronic devices than other generations did in the past, not only because smartphones and iPads did not exist but also because prices of electronics have drastically fallen in a small period of time. Our research, however, indicates that all generations have benefitted from the technological revolution. In fact, it is the baby boomers who see a particular ‘catch up’ with technology: while in 2000, baby boomers spent half as much as younger adults on these items, in 2014 they increased their expenditure to be 16% more than younger adults.
Ironically, looking at expenditure on leisure services (subscription fees, cinema and theatre tickets, recreational classes, holiday packages – all of which explicitly refer to ‘experiences’), millennials are the ones who tend to spend the least among the age groups studied, with £21 per week, compared to generation x spending £28 and baby boomers £34 per week. Leisure services have become considerably more expensive during the last couple of decades, partly because they are labour-dependent and therefore influenced by increases in staff costs. If millennials are indeed living an ‘experience economy’; is it perhaps through activities that would not require a subscription or entrance fee, or is it perhaps through social media and contents freely available through a smartphone?
We millennials are living in a different world to the one in which our parents and grandparents grew up, with different challenges and different rules, some of which are tougher and some of which open up new possibilities. Perhaps we cannot still afford to buy a house, but we are always looking for innovative ways to achieve a decent standard of living within our highly constrained disposable incomes.