The Washington PostDemocracy Dies in Darkness

The reason millennials aren’t spending as much money is they don’t have any

It is the question that has launched a thousand TED talks: What do millennials want? Or, more precisely, why don’t they want the things I am selling?

Like anthropologists striving to understand the cultural practices of a remote Amazonian tribe, marketers have devoted themselves to studying the spending habits of people under the age of 35 to try to figure out how to appeal to their alien tastes. Maybe millennials are too health-conscious and illiterate in the ways of opening metal containers to like canned tuna. Or are too environmentally conscious and content to bike around their urban habitats to want a new car. Or would rather splurge on Instagram-friendly brunch items such as avocado toast than embrace the responsibility of adulthood and save up for a down payment on a house.

Or maybe, just maybe, the generation that graduated both with more debt and into the worst recession in 80 years simply cannot afford to spend money like the ones that preceded it. Now, I know, I know, there is nothing delightfully counterintuitive about this. There is no brave thinking involved, no reason to stroke your chin, not even an excuse to feel morally superior to kids these days whose financial plight must be some sort of karmic payback for their annoying quirks. No, there is just the rotten reality that the economy is not producing as much opportunity as it used to …

… Which, according to economists at the Federal Reserve, really is the reason young people today are not buying as much stuff as young people of yore. Indeed, the researchers found that, once you account for demographic factors such age and income, there is “no evidence that the generation-specific tastes and preferences of millennials favor lower levels of consumption than the tastes and preferences of other generations." Which is to say young people are not spending as much money right now not because they do not want to, but rather because they do not have any. Or at least not as much as young people did in the 1980s, 1990s, and early 2000s. Give them some more, though, and they would happily shell out for all the trappings of middle-class life — a house, car, and, okay, maybe not canned tuna, as that is actually one case where there are, in fact, better options nowadays — they had supposedly eschewed.

The question, then, is not whether this is true, but rather why it was so hard for us to see something that so obviously was. After all, as the researchers succinctly put it, millennials “are less well off than members of earlier generations when they were young, with lower earnings, fewer assets and less wealth." Is it really a surprise that only 34 percent of them had bought a home by 2016, compared with the nearly 50 percent of Gen Xers and baby boomers who had at that stage of their lives? It should not be.

The problem, though, is we live in a media culture that prioritizes what is interesting but wrong over what is boring and true. Take unemployment. We literally spent years debating why it was so high in the wake of the biggest financial shock in history, worse even than the Great Depression. Among the theories bandied about by actual economists were that workers simply did not have enough skills for the unemployment rate to ever come down below 10 percent again, that video games had become so enticing that young men were choosing the rewards of World of Warcraft over the rewards of work, or that robots were on their way to stealing all the jobs. Never mind that it was entirely predictable unemployment would still be high when the stimulus had not been big enough to fill our economic hole.

Sometimes the obvious answer is the correct one. Sometimes unemployment is high because we have not done enough to make it low. And people are not buying things because they cannot afford to.

The only thing worse than not being clever is trying to be too clever.