today’s policy settings€¦ · baby boomers versus millennials: new zealand’s total fertility...

2015 Public Finance Debate Series

TODAY’S POLICY SETTINGS UNFAIRLY FAVOUR THE BABY

BOOMER GENERATION

20 APRIL 2015

FOR THE MOTION

Ms Becky Prebble

Age structure of NZ population

Source: Statistics NZ

House prices over 40 years

Source: Productivity Commission

Ratio of tax to GDP over 40 years

Source: The Treasury

Unemployment rate - % of labour force

0

2

4

6

8

10

12Mar-65

Jul-66

Nov-67

Mar-69

Jul-70

Nov-71

Mar-73

Jul-74

Nov-75

Mar-77

Jul-78

Nov-79

Mar-81

Jul-82

Nov-83

Mar-85

Jul-86

Nov-87

Mar-89

Jul-90

Nov-91

Mar-93

Jul-94

Nov-95

Mar-97

Jul-98

Nov-99

Mar-01

Jul-02

Nov-03

Mar-05

Jul-06

Nov-07

Mar-09

Jul-10

Nov-11

Mar-13

Jul-14

Sample tertiary qualifications

• Bachelor of Sport and Recreation

• Bachelor of International Hospitality Management

• Bachelor of Culinary Arts

• Certificate in Commercial Floristry

• Certificate in Construction Skills

• National Certificate in Health, Disability, and Aged

Support

AGAINST THE MOTION

Dr Simon Chapple

Baby boomer fiscal smash ‘n grab on Millennials

• Baby boomers will benefit from generous pensions and

rising old-age health spending

• They will not pay sufficient life-time taxes to fully fund

them

• The Millennial generation is smaller in size

• They will not generate sufficient pay-as-you-go funding

for these boomer commitments

• Taxing Millennials to cover the funding gap is unfair

• It raids their well-being to maintain that of Baby boomers

“It’s déjà vu all over again!” Ongoing memes of inter-generational fiscal conflict

David Thomson, Selfish Generations, 1991:

“Baby boomers, you’re being ripped off by the1920-

1945 generation”

David Willets, The Pinch, 2010:

“Millennials, you’re being ripped off by Baby

boomers”

Baby Boomers versus Millennials: New Zealand’s total fertility rate, 1921-2014

1.5

2.0

2.5

3.0

3.5

4.0

4.5

19

21

19

23

19

25

1927

19

29

19

31

19

33

19

35

19

37

19

39

1941

19

43

19

45

19

47

19

49

19

51

19

53

1955

19

57

19

59

19

61

19

63

19

65

19

67

1969

19

71

19

73

19

75

19

77

19

79

19

81

1983

19

85

19

87

19

89

19

91

19

93

19

95

1997

19

99

20

01

20

03

20

05

20

07

20

09

2011

20

13

Baby boomers and Millennials are fictions

• Egregious or necessary fiction?

• Generations are much more continuous than discrete binaries

• Policy shifts to be fair to binary generations necessarily create

unfairness within these binaries

• Variation in exposures and experiences within generations

spanning 20+ years may be greater than between generations

And it is not all about generational conflict….

• Generations are not simply linked by fiscal rules and

inter-generational fiscal conflict

• Unpaid work by parents, in-family transfers, gifts and

bequests between generations all matter

• The pass-on of broader social and physical environments

are also generational links

But let’s have fun and run with the generational

fiction….

Ultimately, policy goals are about well-being

Two questions:

• Is average well-being of Millennials systematically higher (or lower) than that of

Baby boomers?

• If yes (or no) are the between-generation patterns of well-being unfair?

Fiscal redistribution is but one contributor to inter-generational differences in well-

being and thus only one factor in assessing policy fairness

How do well-being advantages and disadvantages stack up across the two generational fictions?

Baby boomers…. The Good

• The ability to play, free of high levels of parental control

• Universal but modest and declining child cash benefits

• Low cost higher education

• Easy to find, relatively well-paid jobs on labour market entry

• Easy to buy a first house and make capital gains

• Brilliant new music

Baby boomers….the Bad

• Loads of siblings, low parental time investment

• Crowded schools, large class sizes

• Rubbish cooking

• Left home & school early

• Less chance of getting a higher education

• Inherit less from their parents, as sharing between lots of siblings

• Economic shocks, mid-1970s to early 1990s

• Worried sick about nuclear annihilation

Baby boomers…. the downright ugly

• Faced higher levels of violence in homes & schools, fewer rights as

children

• It was more legitimate to discriminate on the basis of gender, ethnicity and

sexual orientation

• Lived in a society which stigmatised and hid mental illness

• Were governed by a repressive patriarchal gerontocracy

• Widespread, unpunished fashion crimes: Flared trousers & mullets

Millennials….the Good

• Taller: Better health during childhood

• Live longer

• Higher parental time investments

• Living longer with parents

• Smaller class sizes

• Better chance of higher education

• Higher living standards

• Will inherit more than their parents, as fewer siblings

• Easier for their parents to provide for grandchildren’s childcare

• Face less racism, sexism, everyday violence, bullying

• Better acceptance of mental illness

• Awesome new electronic gizmos & whatsits

• Are taken more seriously by their elders

Millennials….the Bad

• As children, less freedom from adults

• Fatter

• Pay more for higher education

• A tougher labour market entry

• Harder to buy a first house

• Face retiring at an older age

• May pay higher average tax rates

• Fewer siblings to help with care of ageing parents

• Are worried sick about global warming

Millennials….the Downright Ugly

• Terrible music

• Rubbish reality TV

• Internet trolling

• Unpunished fashion crimes include ear lobe

stretching & bearded hipsters in ironical hats

A thought experiment on inter-generational policy fairness

Given a choice, would your well-being be better by:

• Being reincarnated as a Baby boomer?

• Or as a Millennial?

A thought experiment, contd

• Would “unfair to Millennials” fiscal policy settings influence your

choice towards becoming a Baby Boomer?

• How important would any socio-demographic characteristics

be in your choice (e.g. your gender, ethnicity, intelligence,

sexuality, family background or physical or mental health

status), compared with a purely random chance of being

reincarnated as any Boomer or Millennial?

Personal views

• If selection were random, I’d chose being Millennial

• The previous generation both gives and takes. Arguably it has, overall,

given more than taken. And that’s a good thing

• Consequently, policy settings do not obviously unfairly favour Boomers

• A possible future rise in my average Millennial tax rate of (at the most) say

5-10 percentage points, lasting for 20 odd years to pay Boomer pensions

is a minor issue of a particular well-being input

Personal views, contd

• For reasons other than Boomer versus Millennial fairness, I

favour raising the age of pension eligibility for Boomers to 67

and indexing it to life expectancy

• Global warming is a more serious negative collective legacy for

future generations (not just Millennials) by past generations

(including Boomers and Millennials, amongst others)

Thank you for attending.

Debate two: Economic evidence should play a greater role in health policy evaluation

20 May 2015, 3.00-4.00pm

today’s policy settings€¦ · baby boomers versus millennials: new zealand’s total fertility...

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