Consuming forces: generational living standards measured through household consumption

Published on Incomes and Inequality, Intergenerational Commission

This report, which has been prepared by the Centre for Research in Social Policy at Loughborough University and the Resolution Foundation for the Intergenerational Commission, sheds further light on living standards across generations by considering levels and patterns of expenditure for working-age households in detail. It uses surveys of household spending to explore how actual consumption expenditure has changed over time overall, and for different age and income groups.

  • The real-terms spending of working-age households has doubled since the 1960s, and its nature has been transformed. In line with household income trends, consumption expenditure grew strongly during the 1960s, 1970s and 1980s. For adults age 25-64, mean equivalised real household consumption expenditure (including rents and mortgages) almost doubled between 1963 and 1989, from £162 to £293 (expressed in terms of the equivalent spending of a single-adult household). In terms of what people spend this money on, over the past half century 25-64 year old households have spent progressively less, as a share of expenditure, on meeting their basic need for food, clothes and warmth, and shifted spending towards leisure, communications and transport.
  • The baby boomers have experienced the fastest generation-on-generation expenditure progress, both when young and when older. On the other hand, the combination of weak incomes and the pressure of housing costs means that young people have experienced the tightest squeeze on spending in recent years. In 2000-01, 25-34 year olds and 55-64 year olds had the same amount of non-housing spending; but by 2014, 25-34 year olds had expenditure on non-housing items 15 per cent lower than that of 55-64 year olds.
  • A detailed look at individual areas of consumption illustrates how lifestyles are changing for people of different ages. Overall, consumption differences are often greater by income than by age, and wider price-related, social and technological shifts generally pervade across age groups. In addition, there is little evidence to support the characterisation of millennials as frivolous spenders compared to other age groups today or to their predecessors at the same age. Indeed, in many of the areas often seen as luxuries that the millennials in particular enjoy, from holidays to eating avocado toast in cafes, it is baby boomers who have actually experienced the fastest increases in consumption compared to their predecessors.