Understanding how age and gender affect our feelings about economy
How is the Irish economy for you? Is it the same for your partner, for your parents? Conditions facing consumers, and the way they perceive them, can vary enormously.
Are such differences a matter of chance or could someone's gender or generation play a part? A range of international studies suggest that your sex or age can make big differences, not only to your economic circumstances but to how you see them. We examined data from the KBC bank consumer sentiment survey to see whether gender or age made differences to how Irish consumers think about economic and financial conditions.
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Importantly, the period we looked at between the first quarter of 2003 and the same period of 2019 was one in which all consumers - men and women, young and old, saw dramatic changes.
The economy moved from boom to bust and, more recently, into a recovery now threatened by Brexit and global trade tensions. Virtually all consumers experienced gains and losses through these tumultuous times but there were important differences in how they saw this rollercoaster ride.
Irish men have been consistently more upbeat than women in the way they see their economic circumstances. In only four out of 65 quarters from 2003 to 2019 was consumer confidence weaker among Irish men than Irish women. These four occasions came at particularly painful points in the financial crisis. As a result, they coincided with 'wake-up calls' in terms of the economic outlook for Ireland.
The gender gap in sentiment has tended to be greatest in times of strong economic conditions such as the peak years of Celtic tiger exuberance of 2004-2006 and the emerging recovery of 2014 to 2016. In contrast, the sentiment gender gap virtually disappeared through the 2007-2010 period as sentiment among Irish men weakened to a greater degree than among women.
The recovery in the Irish economy saw the gender gap in sentiment open up again and reach its widest ever level in 2014 as green shoots of recovery became more evident. More recently, male confidence readings have become a little more cautious as Brexit concerns emerged, but they remain more confident than Irish women. The consistently more positive sentiment readings on the part of Irish men than women accords with a range of international studies that suggest men tend to be more optimistic in their outlook. The greater drop in confidence seen through the downturn might suggest that the more cautious views taken by Irish women were more realistic.
Of course, it could be that the gender confidence gap is simply a reflection of gender-related differences in economic circumstances. Over the period of the survey, jobs growth for women was about twice as fast as that for men, while admittedly-limited data suggest the gender pay gap narrowed.
However, a comparatively rapid rise in childcare costs may have weighed on women's economic opportunities even though the gap between the educational qualifications of Irish men and women widened modestly further in women's favour.
We also examined how sentiment varied by age group. Perhaps surprisingly, consumer confidence was notably more positive among younger age groups - those aged under 35 - and weakened progressively among older age groups up to age 65 with a slight improvement thereafter.
These age-related differences seem consistent with the view that risk aversion increases with age. This influence would likely be amplified by the dramatic changes in Irish economic circumstances seen through the years 2003-2019.
The comparative 'optimism of youth' was most pronounced in the pre-crisis period, presumably reflecting the expectation of 'perma-boom' and plentiful opportunities. However, this younger age group also reported a comparatively sharp deterioration in their circumstances (in line with a relatively large drop in employment) and, accordingly, in their sentiment readings as the crisis came to a head in 2008-2009.
Younger respondents to the survey also reported a comparatively large and speedy recovery over the period to 2013. Importantly, such readings exclude the likely more pessimistic assessments of those who emigrated during this period.
The aftermath of the financial crisis saw confidence particularly weak among those in the 35-54 age groups, presumably reflecting a combination of unfavourable job market outcomes, austerity measures and a sharp fall in house prices.
The 35-54 age group also saw a marked improvement in sentiment through the more recent recovery period, possibly driven by an improving jobs market and positive wealth effects from rising house prices.
Both middle and older age groups have seen a large weakening in sentiment in the past couple of years than those aged 35 and under, perhaps because of a greater sensitivity to Brexit risks. This may owe something to a greater awareness of historic difficulties in this regard as well as the reduced potential to make up for related losses at a later stage. Maybe those in younger age groups have come to see such 'shocks' as a feature rather than a bug of our economic system.
Examining why differences in age or gender may lead people to experience the economy differently is an important first step to creating a stronger shared economic future.
Austin Hughes is chief economist at KBC Bank Ireland
Sunday Indo Business