As people, it is easier to contextualise things if we put them in groups. We do that with almost everything, even us, grouping ourselves in generations to better understand how individuals birthed during a similar timeframe have taken in the world they lived in. We do this to grasp how shared experiences shape our values.
The concept of putting people of given ages in specific groups came in the mid-1900s when researchers thought that doing this would help them comprehend how sizeable social shifts affect humans. Sociologists Karl Mannheim and José Ortega y Gasset first proposed this in the late 1920s.
Today, everyone knows that Baby Boomers are those born after World War II, Generation X are people who came into this world after the mid-1960s, Millennials are individuals born slightly after the start of the 1980s up to the mid-1990s, and Generation Z members are people brought into being from 1997 to 2012, also baring the title Zoomers.
Here, we explore the evolution of risk-taking attitudes across generations, how these developed, and what attributes each generation boasts.
What is a Risk Mindset?
It refers to the willingness to take chances and is influenced by factors like economic conditions, technological advancements, cultural norms, and parenting. Thus, it makes sense that those who grew up during a period of human history where prosperity ruled will be more likely to foster a preference for stability. On the contrary, those who experienced instability during their formative years will be more prone to caution regarding financial decision-making.
Baby Boomers (1946–1964)
Boomers grew up in an era of post-war prosperity. Because of this, they are usually characterised by loyalty, a strong work ethic, and a strong focus on long-term stability. They lived their first few decades during what many call the age of the American Dream, a time of steady careers and easy homeownership. Hence, they are used to saving and investing in tangible assets. That is why it should not come as a shock that 51.8% of the United States national wealth belongs to Boomers, while only 9.4% is in the hands of Millennials, even though, demographically, these two populations are identical, with Millennials being the largest labor force in the US.
Boomers are less likely to switch jobs since they are generally risk-averse. This is in contrast to the stance of those younger than them, as many Millennials view job-related risk-taking as necessary in adapting to a changing world.
Generation X (1965–1980)
Often associated with punk music, dubbed the MTV Generation, and defined as cynical and disaffected, Gen Xers, born between 1965 and 1980, were called the forgotten generation. They seem to take a more pragmatic approach to risk, as they grew up during the 1970s oil crisis and the 1980s recession.
According to a 2022 study published in the Institutional Journal of Financial Studies by Cephas B. Nannwabb and Johnson Antwti, Gen Xers are less risk-averse than Millennials and statistically less likely to hold securities investments. That is probably due to their propensity towards skepticism and anti-authoritarian stances, which have made them resilient and adaptable.
According to a recent Nerd Wallet-sponsored survey featuring over two thousand Americans and conducted by The Harris Poll, Gen X is the generation that most like to gamble, but only slightly more than Millennials. Curiously enough, Scratch-off lottery tickets are their preferred method of choice, followed by jackpot games, such as real-money online casinos, and then sports betting.
Millennials (1981–1996)
Millennials, also known as the disrupted generation, are people who many remember what it was like to live in a pre-Internet world. They also remember the Great Recession of 2008 and know how technological advancements slowly but surely change everyday life and our lives as human beings.
Even though there is a notion that Millennials are too risk-averse, in general, some psychologists believe they are risk-aware. They seem to hold more cash and bonds than any other generation and are wary about putting money into stock portfolios. They also put less money into retirement savings, prioritising saving for rainy days that may come soon. That is data sourced from a Federal Reserve’s Survey of Consumer Finances.
That said, they do not display a dramatic aversion toward changing jobs or participating in the gig economy and prioritise experiences over material possessions. That is why so many of them pursue travel and creative endeavors.
Generation Z (1997–2012)
We come to people born between 1997 and 2012, whose lives were defined by the digital age, as they do not know what it was like to exist with no smartphones around. Gen Zers are digital natives, and they have witnessed significant global challenges. In the future, substantial research will probably be done on how the COVID-19 pandemic affected members of this generation, who appear highly risk-averse in most fields, especially finance.
Based on a 2023 Montclair State University study run by Professor Gabriel Rubin, Gen Zers perceive risk everywhere, which has created a mental health crisis for these young people. They show a risk aversion toward switching jobs and investing. The research states they seek high comfort levels, with many crediting this to them growing up in an era of unpredictability, where they have gotten bombarded with news alerts about international conflicts, climate change, financially negative events, etc.
