Donald Hirsch Independent consultant and writer on social policy Forget the lucky boomers A lifecycle approach to intergenerational equity

Three ways I might think about inter-generational equity Age 100 Age 50 Age 0 1. Do I get a good lifetime deal compared to other cohorts? My parents’ generation My generation My children’s generation

Three ways I might think about inter-generational equity Age 100 Age 50 Age 0 2. Am I getting a good deal today compared to other age groups? Frail elderly Third agers Working age (me) Young adults Children Equity between eg: - Care spending - Pension spending - Tax burden - Higher ed spending - School spending

Three ways I might think about inter-generational equity Age 100 Age 50 Age 0 3. Are we constructing a distribution of resources that I or my descendents would choose over a lifetime? My generation My children’s generation My grandchildren’s generation

The cohort perspective “Baby boomers are the lucky generation. They were the first to benefit from mass higher education, and will be the last to benefit from decent occupational pensions”. Really?

The cohort perspective Year of birth Postwar 1960s Boomers boomers s: student grants : grants and loans loans and fees 2006 onwards: top-up fees (Based on best approximations, not precise data) Percentage entering higher education Year of 18th birthday

The cohort perspective Year of birth Postwar 1960s Boomers boomers Year of 60 th birthday (Based on best approximations, not precise data) Annuities on retirement Pension payout on invested private contributions, relative to average earnings (1992=100) Annuity rates Pension yield

The cohort perspective Year of birth Postwar 1960s Boomers boomers Year of 60 th birthday Age in 1967 – when no. of employees paying into private occupational pensions peaked Age in 2004 – when no. of pensioners receiving occupational pensions peaked

The cohort perspective THE FANTASY “So life was never better than In nineteen sixty-three (Though just too late for me) - Between the end of the Chatterley ban And the Beatles' first LP.” - Philip Larkin THE REALITY If you were born in 1963, near the height of the baby boom, you were: “Much too early” for truly mass higher education, and “Much too late” for the golden age of pensions

The age group perspective Thorny distributional issues ahead, eg Will we continue to privilege spending for educating younger rather than caring for older people, against the population trend? Proportionate rise since late 1990s in percentage of: GDP spent on education: +19% Children in the population: -9% Meanwhile, the percentage of over-85s has risen by a fifth, while care funding has been squeezed

The age group perspective Will the constraint of housing shortage continue to be felt by asset-poor younger rather than asset-rich older people? Proportionate rise, , in: Percentage of year olds living with their parents Percentage of people aged 75+ living on their own Eight in ten year olds living with parents relate this to housing affordability

The age group perspective...and especially: Do we redistribute sufficiently from wage- earners to pensioners via taxation and pension contributions? Millions contributing to occupational pension schemes Years of life expectancy for a woman aged 60

The life-cycle perspective...or rather: Are we being effective at smoothing economic well-being throughout our lives?

The life-cycle perspective Life-cycle trade-offs when resource are constrained, eg: Independence aged 28 or aged 78? Running up debt aged 20 or running down equity aged 80?

The life-cycle perspective We need to: Rethink the terms of intergenerational reciprocity Debate priorities about resource allocation in this context

The life-cycle perspective Does the social policy debate think widely enough about what resources contribute to well-being at different life stages?

The life-cycle perspective For example, time, money and energy: Student Mid-career Retired Time Money Energy Time Money Energy Time Money Energy

Conclusions Yes, beware about over-mortgaging our futures But not a wilfully selfish grab by present generation Foresight and future-orientation works for ourselves, not just our descendants And unlike Groucho Marx, we do care about posterity