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Children of Perestroika Afraid to Spend Money

Middle-aged Russians whose younger years fell in the era of change fear for their future and tend to save more money than they spend. In contrast, Russia's elderly and young adults are avid consumers: the former have survived hardship and scarcity – potential loss does not scare them, while the latter share the inherent optimism of youth, according to the paper 'Consumer Expectations of the Russian Public (1996-2009): Interconnections across Cohorts, Generations, and Ages' by Dilyara Ibragimova, Senior Researcher at the HSE's Laboratory for Studies in Economic Sociology

There is a widespread assumption that young persons part with money easily by making spontaneous purchases, failing to put money aside for a rainy day, and overspending on something they really like even if cheaper alternatives are available. However, Dilyara Ibragimova's empirical study demonstrates that grandparents may consume as avidly as their grandchildren. Having lived through years of hardship and lack, they are not afraid to part with money.

Ibragimova reported her findings in the paper 'Consumer Expectations of the Russian Public (1996-2009): Interconnections across Cohorts, Generations, and Ages' published in the Economic Sociology Journal.

We tend to assume that younger people tend to be more optimistic and active as consumers. However, the author’s interest in the older generations' consumer attitudes is driven by an understanding that age is more than just a biological characteristic and also includes the individual experience of where and in what circumstances they were born and raised and have lived.

Thus, older people who grew up in times of change may treat money differently from younger ones who have lived in a period of stability. Some people will try to save for a rainy day, while others may take out a couple of extra loans without concern for their own future. Thus, a twenty-year-old born in 1970 may differ significantly from a twenty-year-old born in 1990.

Ibragimova’s study was based on data from periodic consumer surveys conducted by the Levada Centre for thirteen consecutive years using the same methodology on the same sample of 182,507 respondents.

Based on the survey respondents’ age of birth, conditions of socialisation, and life experience, Ibragimova identified nine cohorts of respondents born between 1902 and 2006.

Old People and Children Do Not Fear the Future

A regression analysis revealed that belonging to a particular cohort was one of the key determinants of consumer attitudes.

In contrast, no linear relationship was found between age and consumer behaviour. Thus, people born between 1942 and 1951 were the greatest pessimists in terms of their views of the economy and their consumer attitudes. In contrast, the oldest age cohort, born between 1922 and 1931, were much more optimistic – their views of the current situation and their future expectations were similar to
those of their grandchildren rather than their children. The Index of Consumer Attitudes in middle-aged respondents was more than 10 points below that of the
youngest cohort.

According to Ibragimova, the optimistic attitudes of people born between 1922 and 1931 may be due to the fact that "having lived through hardship and survived, they do not see anything bad enough to shake their positive outlook."

The analysis also revealed certain distinct characteristics of respondents born between 1962 and 971 whose socialisation as adults – school, military service, college, first employment – fell in the Soviet era, while most of their adult life occurred in the post-Soviet period. These people tend to be less optimistic than the next-youngest cohort.

Born and raised during the relatively quiet and secure Soviet 'stagnation' period, they faced the turmoil of perestroika in their early adulthood; even though most are quite active, they sometimes "do not understand what they are working for or what will come out of their efforts," resulting in feelings such as insecurity and futility. Ibrahimova suggests that their pessimistic consumer attitudes may have something to do with these sentiments.

Woe from Wit

According to Ibragimova, other factors influencing people's optimism and consumer activity include gender, income, education, place of residence, and employment. Thus, she found that men tend to be a little more optimistic than women, and people with higher incomes are more willing to spend than those on a tight budget. A university degree reduces one's consumer optimism on average by 1.4 points, while being a resident of Moscow or St. Petersburg reduces it by 0.8 points, and being employed by 0.7 points.

According to Ibragimova, people with one or more of these characteristics tend to be better informed and are more likely to have a realistic view of the economic situation.

 

November 11, 2014