We can always debate how useful economists might be, or how legitimate their field of study is. But it should be obvious to you by now there is significant value in understanding things such as GDP, employment, government stimulus, and interest rates. This kind of knowledge influences everything from how you save to who you’re voting for.
Many of us expected that the people alive during this recession might fundamentally change their own financial habits. The generation that grew up in the Great Depression was notoriously frugal. We know that in the wake of this recession people have saved more and are definitely paying down debt. But how do we know the recession will fundamentally change the habits of a generation?
We probably won’t know for another generation. If you got into couponing, will you keep it up in five years? Ten? It will certainly be interesting to see. Now that we are at least a few years removed from the official recession, we can start to see if there was any effect; and if there was, start tracking it to see how lasting that effect will be.
This is already starting to pop up in a few areas. There are lots of organizations out there that can check out these things without the use of official government data. One of them, the Council for Economic Education, has a survey where they look at how well people are saving. As it turns out, Millennials are better savers today than Generation X. This is a bit surprising since Gen X probably got hit hard in the recession. They would have been the ones buying and borrowing perhaps the most, while Millennials were still in the early part of their careers or in school. It could be that they watched their parents go through this pain and are learning from them.
Millennials are apparently conservative investors too. Opting to take on less risky options than other generations. This poses its own potential problems down the road, since Millennials will have even less Social Security than their older generations.
To really know if we’ve learned any lessons though we need to test the knowledge of the people. The Department of Education tests high school students every year on their economic knowledge; things like the GDP, interest rates, and opportunity costs. And while these high schoolers may actually be talking about economics more, they have no greater understanding of economics than high schoolers did before the financial crisis.
So the lasting effects of the recession so far are mixed. It’s disappointing that high schoolers aren’t learning more about economics, but a new generation of workers are saving more than we probably would have expected before the recession began. Keep watching for signs of whether we have a generation of well-informed penny pinchers or a new crop of people destined to repeat the mistakes of old.