Easterlin Hypothesis:
An Update of the Status of the Baby
Boomer Cohort
PHYLLIS CUMMINS
OHIO ASSOCIATION OF GERONTOLOGY AND
EDUCATION
APRIL 15, 2011
Presentation Summary
What
is a cohort and why is it
important to study cohorts?
What is the income status of the baby
boomer cohort as compared to their
parental cohort?
 What are the intracohort differences
in income for the baby boomer
cohort?
What is a Cohort?
Ryder (1965) defines a cohort as:
 “the
aggregate of individuals (within some
population definition) who experienced the
same event within the same time interval”
(p. 845)
A cohort can be based on year of birth
A cohort can also be any group of individuals
who experience the same event within a time
interval
Why is it Important to Study cohorts?
Insights can be gained on the impact of
sociohistorical events, gender, race, and
other life course factors
Cohort studies are usually longitudinal
rather than cross-sectional
The Baby Boomer Cohort
There are about 78 million baby boomers
Includes those born between 1946 and 1964
Largest group of older Americans ever
They have had and will continue to have a great
influence on society
Easterlin, Schaeffer, and Macunovich (1993)
studied the economic status of the baby boomer
cohort as compared to their parental cohort
This study updates the analysis of Easterlin et al.
(1993)
The Easterlin Hypothesis
Economic prospects are adversely affected by
cohort size
Cohort aspirations are established during
adolescence
Incomes will be higher but there will be substantial
intracohort variability
To offset reduced economic prospects:
Young adults will marry later, delay
childbearing and have fewer children
More women will work outside the home
Research Question:
Have baby boomers maintained an
economic advantage over their parental
cohort?
Methods
Used Current Population Survey (CPS) data from
1964, 1974, 1984, 1985 (parental cohort), 1989,
1999, 2009, and 2010 (baby boomer cohort)
Compared inflation adjusted “Income per Adult
Equivalent (IAE)” of the baby boomer cohort to
their parental cohort
Considered the baby boomer as a whole and as four
smaller cohorts
Compared baby boomer median IAE to parental
cohort median IAE
Results
The economic advantage of the baby boomer
cohort over their parental cohort has steadily
declined between 1988 and 2009
In 1988 the advantage was 85% and by 2009 it had
declined to 11%
IAE for the boomer cohort as a whole and by
quartile declined between 2008 and 2009
Effects of the Great Recession are only partially
reflected in this analysis
Baby Boomer Cohort - Median Annual Income per Adult
Equivalent
(adjusted to 2009 dollars)
Baby Boomers
1988
1998
2008
2009
First Quartile
24,457
32,922
31,450
30,058
Second Quartile
22,032
27,938
32,150
31,727
Third Quartile
22,030
23,801
29,063
27,332
Fourth Quartile
22,806
22,520
26,207
25,769
All Baby
Boomers
22,770
26,396
29,386
28,846
Percentage Advantage in Median Annual Income per Adult
Equivalent for Baby Boomer Cohort over Their Parental Cohort
Baby Boomers
1988
1998
2008
2009
First Quartile
84.8
32.1
27.3
11.1
Second Quartile
88.7
27.8
21.2
18.1
Third Quartile
89.1
28.8
15.2
2.2
Fourth Quartile
84.9
28.8
11.8
2.4
All Baby Boomers
85.3
29.0
17.4
11.3
Median Annual Income per Adult Equivalent
Age and Income Comparisons for the Baby Boomer Cohort and their
Parental Cohort (in thousands of dollars)
40
35
30
25
Baby
Boomers'
20
Boomer
Parents'
15
10
5
-
24-42
1988/1963
34-52
44-62
1998/1973 2008/1983
Age and Years
45-63
2009/1984
Age and Income Comparisons for the First Quartile Baby Boomer Cohort
and their Parental Cohort (in thousands of dollars)
Median Annual Income per Adult Equivalent
40
35
30
Baby
Boomers'
25
20
Boomer
Parents'
15
10
5
-
38-42
1988/1963
48-52
58-62
1998/1973 2008/1983
Age and Years
59-63
2009/1984
Age and Income Comparisons for the Second Quartile Baby Boomer
Cohort and their Parental Cohort (in thousands of dollars)
Median Annual Income per Adult Equivalent
40
35
30
25
Baby
Boomers'
20
15
Boomer
Parents'
10
5
-
33-37
43-47
53-57
54-58
1988/1963 1998/1973 2008/1983 2009/1984
Age and Years
Age and Income Comparisons for the Third Quartile Baby Boomer
Cohort and their Parental Cohort (in thousands of dollars)
Median Annual Income per Adult Equivalent
40
35
30
25
Baby
Boomers'
20
15
Boomer
Parents'
10
5
28-32
1988/1963
38-42
1998/1973
48-52
2008/1983
Age and Years
49-53
2009/1984
Median Annual Income per Adult Equivalent
Age and Income Comparisons for the Fourth Quartile Baby Boomer
Cohort and their Parental Cohort (in thousands of dollars)
35
30
25
20
Baby
Boomers'
15
10
Boomer
Parents'
5
-
24-27
1988/1963
34-37
44-47
1998/1973 2008/1963
Age and Years
45-48
2009/1984
Summary and Discussion
Results of the current analysis are consistent
with Easterlin et al.’s (1993)
The baby boomer cohort still has an
economic advantage over their parental
cohort but it has narrowed over time
There is substantial intracohort
variability in median IAE
Summary and Discussion
 Effects of high unemployment rates have had a greater
impact on the retirement prospects of the baby boomer
cohort than has their decline in wealth
 Less educated baby boomers are at an economic
disadvantage
 Higher unemployment rates
 Lower IAE
 The retirement prospects of younger baby boomers and
those with less with less education are very uncertain
 Opportunities for further research
Questions?
References
 Easterlin, R.A., Schaeffer, C.M. and Macunovich,
D.J. (1993). Will the baby boomers be less well off
than their parents? Income, wealth, and family
circumstances over the life cycle in the United States.
Population and Development Review 19, 497-522.
 Rossignol, A. (2007). Principles and practice of
epidemiology: An engaged approach. New York:
McGraw Hill.
 Ryder, N. B. (1965). The cohort as a concept in the
study of social change. American Sociological
Review, 30, 843-861.