Consumer Behavior and Anxiety About the Future: A Study Focusing on the Baby-Boomer Generation

ABSTRACT

Though it is often stated that 'a large increase in anxiety about the future has a connection to consumption restraint," the correlation has hardly been studied. Among other psychological anxieties, this report identifies the economic anxiety an individual feels about his/her future income and analyzes its relationship to consumption. This report puts a focus on the baby-boomer generation (consumers in their 50s), the age group that bears much influence on macro-economic individual consumption. The consumption restraint in this high-income age group, for example, is greatly contributing to the present consumer recession. Because of the information limits in published surveys and macro-economic data, an independent survey was conducted for the purpose of this research, the findings of which provide the basis for this report.

The following are the results of the analysis:

Each separate age group clearly demonstrates a characteristic with respect to future anxiety. In the 50s age group, which includes the baby-boomer generation, there is a mix of different anxiety types. Worries about pension, health, wages, and employment all exist simultaneously with neither being more salient than the other.

The correlation between anxiety and consumption as a whole is complex. Simple statements such as 'if just pension anxieties are relieved or if just employment becomes stable, consumption as whole will grow" cannot be made. But there are cases in which a single type of anxiety has a strong connection with a specific category of consumption (e.g. residence, grocery, child rearing, etc.). However, there are also implications for the opposite effect, where, depending on the category of consumption, a rise in consumption brings about anxiety toward the future. A simple example would be an individual who becomes concerned about his future income after making the payment to purchase a house. This is one of the reasons why the correlation between anxiety and consumption as a whole remains somewhat unclear.

The correlation between future anxiety and consumption varies widely, however, according to age. Though the correlation is weak amongst the younger generations, when it comes to the 50s age group, various correlations are observed. This is perhaps related to the idea that the older one gets, the longer the time span of one's "future" becomes. In other words, the psychological act of looking into the future is common not among the young who have long futures ahead of them, but rather among the elderly who have already lived a long time. Such a circumstance runs contrary to the model of a rational individual posited by economics and is thus rich with implications.