by Viktor Shivets, Macquarie Research
Key points
â˘Â US college surveys spotlight significant shifts in priorities of young cohorts.
â˘Â Paving the way towards less freedom but more equality and fairness.
â˘Â State will be more intrusive but not in the traditional industrial age areas.
Changing societal compass should drive Thematics and ESG
As we have discussed, capturing zeitgeist (or the spirit of the age) is one of the most value-enhancing investment opportunities. Zeitgeist is particularly important at the crossroads when the likely changes are already visible but have not yet been fully reflected in the prevailing investment strategies. We are currently at one of these critical junctures and deciding whether it is the right time and what type of strategies will offer a winning edge, becomes critical.
Given that these intersections are essentially social phenomena, surveys of different ages, status and employment groups provide the best insight into the direction and intensity of change. However, these surveys frequently suffer from sampling errors and a generational drift or as Winston Churchill reputedly said â âIf youâre not a liberal when you are 25, you have no heart; if you are not a conservative by the time you are 35, you have no brainâ.
However, there are several surveys that have been conducted on a consistent basis over the last five decades asking pretty much the same questions to the same age group, hence eliminating the age drift. One such survey is the âThe American Freshman â National Normsâ, which has been conducted annually since 1966, addressing the same audience â the college entry class.
A number of conclusions arise from these surveys. 1. In the â60s and early â70s, when asked why they were attending college, freshmen argued that the need to âdevelop a meaningful life philosophyâ and âhelping othersâ were the key reasons (~83% & 69% respectively). On the other hand, to âbe well off financiallyâ scored poorly at 43%. This was also when 21% wanted to attend college to volunteer for Peace Corps. 2. By the late â70s, there was a dramatic shift, and by â87, the need to âdevelop philosophy of lifeâ slumped to ~40% while to âbe well off financiallyâ rose to 75% and the goal of enrolling in Peace Corp collapsed to 7%. 3.
This preoccupation with money has remained the dominant theme for three decades. But the desire to âhelp othersâ started to grow from â98-99, rising continuously over the last twenty years (up from 60% to 80%). Ditto, the need to develop a âmeaningful philosophy of lifeâ and âparticipate in community projectsâ. 4. There were similar changes in the preferred study majors. Whereas in the late â60s, ~45% wanted to do Arts, Humanity, Education or Social Science, this dropped to ~20% by mid- â80s while Business majors exploded from 14% to 27%. Over the last 20 years, Humanities ranking improved while Business was replaced by hard sciences.
What do these changes tell us?
1. Baby Boomersâ with their unrelenting demand for growth and wealth, exerted the greatest pull from the late â70s to early â00s, explaining low rating of âhelping othersâ and âseeking âphilosophy of lifeâ and high value placed on money.
2. Since then, Millennials and Generation Z have been reversing consensus closer towards â60s, explaining a rising score for âphilosophy of lifeâ, âhelping othersâ and âcommunity serviceâ. But unlike â60s, making money is still important while environment and leadership are today far more valued as is participating in technology and Information Age.
3. New generations support a more expansive state role and redistribution but with a twist: no bridges or roads but a lot more technology. It is all about âfairness, equality and no wasteâ. This should boost new tech and ESG rather than conventional industrial age assets.
Copyright Š Macquarie Research
