Liam and Arleeshar have created a dilemma: while I love the idea of attending a Stoush get-together, I’ve thus far tended to avoid much exposure to discussions on Gen X, Gen Y, Gen Z or whatever they’ll be calling my children. (As an excel junkie, I suggest Gen AA.)

The first thing that makes me suspicious of these labels is that no-one can ever tell me which one I’m in. (According to Wikipedia, Gen X ends in 1981, and Gen Y starts in 1977, and I was born in 1979.) I seem to flick between generations, depending on who the speaker is, and what they’re trying to prove.

Then there’s the fact that I mostly hear these generational generalisations trotted out by marketing or management types. Apparently baby boomers respect managers because they respond to hierarchies, while Gen X employees will respect a manager they perceive as competent. And Gen Y, well, they don’t want to commit to a job or a hierarchy, but see it all as a life-style decision. Really?

While digging around in the empirical literature on life cycle savings patterns recently, I came across a concept that clarifies my objection. It can be hard to identify the life-cycle pattern of savings in cross-sectional data, because other factors are at work. The asset holdings by an individual of age a in time period t will reflect an age effect, time-period specific effect and a cohort effect for those born in the period t - a. The age effect reflects the point reached in the individual’s life cycle; you save during your working life, in order to spend in retirement. The time effect is the impact of the particular period when the survey is taken. Savings might be higher for all age groups, for example, following a period of favourable stock market returns. Finally, the cohort effect is related to a person’s date of birth. For example, cohorts who lived during the Great Depression may have lower life-time earnings, and so lower savings at all ages.

So why did I bore you with all of that? Well, it seems to me that a lot of the generalisations we hear about a particular “generation” purport to be observations about the characteristics of the cohort (t – a), which allow us to gain insights into how this group will behave in the future. But can we really do that? The behaviour we observe of a particular “generation” now may be a function of a time effect, an age effect and a cohort effect. Are gen Y really bored and keen to change jobs at the drop of a hat, or is it just that they’re all in their early 20s at the moment (a), and have grown up in a part-time and deregulated workplace (t) which has influenced their views on the nature of employment? And if I can’t separate the behaviour that makes them gen Y from the time and age effects, how do I have any idea of what they’ll be like in the future?

It all just seems like a thrown together make-a-quick-buck-and-book-deal analysis of evidence that by its very nature is incomplete. Perhaps we could all get more insight out of reading horoscopes.

PS. See you all on the 28th anyway…