Episode Overview

Theme:
This special installment of “Prof G On Economics” delves into why young Americans feel stuck in today’s economy. Co-hosts Ed Elson and economic commentator/author Kyla Scanlon answer listener questions about generational shifts in spending, misunderstood economic metrics, and the challenge of interpreting economic noise in a confusing era. Together, they break down the data behind changing spending habits, discuss the psychology of financial “nihilism,” and share practical strategies for making sense of complex economic news.

Key Discussion Points & Insights

1. Generational Spending Shifts and the American Dream

Listener Question: How is younger generations’ spending on experiences, pets, and accessible luxuries—as opposed to homes and families—changing the economy? What opportunities may emerge?

• Aspirational Displacement:
  • Young people are diverting funds from traditional milestones (like home buying) to experiences, pets, and “accessible luxuries.”
  • Kyla Scanlon (02:29): “There’s something called aspirational displacement, where people who can’t afford to buy a house…start buying experiences, they start spending on their pets…It’s an interesting indicator of economic health.”
• Cost Disease & Globalization:
  • Goods are cheaper thanks to productivity gains (“easy to automate a car factory, much harder to automate a physician”), but services remain pricey. Travel and international trade offer access to treats and luxuries.
• Examples & Data:
  • Dog Airlines: Wealthy pet owners, especially in high-income countries, are catered to.
  • Gen Z Pet Spending:
    • Average pet spend: $4,400/year
    • Gen Z: >$6,000/year—40% higher
    • 1/3 of Gen Z pet owners have gone into debt for their pets.
  • Ed Elson (05:30): “So instead of saving up for these meaningful purchases, you instead just spend all your disposable income on what people are calling ‘little treats’…maybe the dog flight would be one of them.”
• Economic and Social Irony:
  • A sense of “financial nihilism”—an acceptance that meaningful purchases like homes are unattainable, so focus shifts to attainable comforts.
  • Ed Elson (04:54): “We don’t have enough money to buy houses, but we do have enough money to buy flights for our pets. It’s got a very depressing irony to it.”
• Opportunities & Risks:
  • Brands catering to luxury experiences and pet owners are benefiting.
  • There’s a risk of debt accumulation for transient pleasures.
  • The “American Dream” path is evolving due to economic constraints.

2. Misunderstood Economic Indicators

Listener Question: What’s the most misunderstood indicator of whether young people are actually gaining ground financially?

• Stock Market Participation:
  • High numbers of Gen Z investing, but with small balances.
  • Ed Elson (09:22): “If you look at Robinhood…average account balance is less than $250…Most of us, or at least on average…and then the second for me is like, what are we actually investing in? For most young people, it’s very heavy on the crypto and the meme stocks…That’s not healthy.”
  • Many are exposed to “risky” assets—Bank of America found ~30% of young investors’ portfolios are crypto.
• Sports Betting & The “Casino Economy”:
  • High engagement: 31% of 18–34s have a sports betting account; many bet frequently and heavily.
  • Kyla Scanlon (12:05): “But when you ask them if they want this, people say no…over 40% of people aged 18 to 29 think that legalized sports betting is bad…That matters.”
  • Signals not financial health, but desperation and easy access in search of quick wins.
• Misleading Signals:
  • Boomers may point to “avocado toast”/lattes or stock market stats as indicators young people are fine, but this masks deeper struggles.
  • Addictions & Unwanted Behaviors: Young people are engaged in things (betting, high-risk investing) out of a sense of limited options, not aspiration.
  • Ed Elson (13:40): “We’re addicted to this stuff. We know it’s not good for us, but we keep doing it because that’s the nature of addictions.”

3. Navigating Economic Noise & Developing Informed Perspectives

Listener Question: With all the media noise, how do you cut through and develop unique, nuanced insights?

• Structured Intake and Note-Taking:
  • Kyla Scanlon (18:04): “What I do every morning is check all of the major outlets…Then I keep a running Google Doc throughout the week…I try to compartmentalize and create themes for all of the things I’m seeing…Everything is connected.“
• The Value of Explaining Things Simply:
  • Ed Elson (19:23): “How would I explain this in three minutes to someone who has zero context?...If you want to learn, teach, which is kind of what you do.”
  • Pressure to articulate a viewpoint (e.g., TV appearances, podcasts) deepens understanding.
• Advice for Listeners:
  • Read diverse sources and understand all angles.
  • Practice articulating views, whether in meetings, at social events, online, or in writing—“the more you hold yourself accountable to producing thoughts… it really helps you connect the dots.”
  • Caveat:
    • Kyla Scanlon (22:28): “I don’t know if we need, like, more hot takes. I think we need more informed takes…people should read the data, read the research, and then…post on LinkedIn.”
• Empathy, Curiosity, and Real Conversations:
  • Be careful not to internalize the overwhelming nature of today’s news (“part of the media environment right now is a little bit of the Flood the Zone strategy”), and seek direct, real-world input.
  • Kyla Scanlon (24:23): “I talk to a lot of people who are real and like not on twitter.com…You have to make sure you’re open and you have to make sure you’re approaching people with kindness because the world needs a little bit more of that.”

Notable Quotes & Memorable Moments

• Aspirational Displacement:

  • Kyla Scanlon (02:29): “People who can’t afford to buy a house…start buying experiences, they start spending on their pets…It’s an interesting indicator of economic health.”

• Depressing Irony of Modern Spending:

  • Ed Elson (04:54): “We don’t have enough money to buy houses, but we do have enough money to buy flights for our pets. It’s got a very depressing irony to it…”

• Data on Pet Spending & Debt:

  • Ed Elson (07:04): “A third of those Gen Z pet owners say they have gone into debt because of their pets. So we’re literally levering up to put our dogs on flights and get them fancy dog collars…”

• Casino Economy & Unwanted Betting:

  • Kyla Scanlon (12:05): “Over 40% of people aged 18 to 29 think that legalized sports betting is bad. It’s up sharply from 34% in 2022 by the way. That matters. That changed…”

• Necessity of Viewpoint in Media:

  • Ed Elson (20:03): “My job is to say stuff…by the nature of this job, I literally have to have a viewpoint, and I have to articulate that viewpoint out loud.”

• The Need for Kindness in Discourse:

  • Kyla Scanlon (24:23): “You have to make sure…I think that you’re open and you have to make sure you’re approaching people with kindness because the world needs a little bit more of that.”

Timestamps for Important Segments

• 01:49 – Opening listener question about generational spending patterns
• 02:29 – Kyla Scanlon on aspirational displacement and experience spending
• 05:30 – Ed Elson discusses “little treats” spending and financial nihilism
• 07:04 – Surprising stats on Gen Z pet spending and debt
• 09:22 – Misleading economic indicators; the myth of stocks/crypto meaning financial health
• 12:05 – Kyla Scanlon: sports betting participation, addiction, and generational attitudes
• 13:40 – Ed Elson: “Casino economy” as both symptom and cause of malaise
• 18:04 – Kyla Scanlon on media consumption and note-taking routines
• 19:23 – Ed Elson: The discipline of articulating opinions for deeper learning
• 22:28 – Kyla Scanlon urges for informed, not just hot, takes and broader empathy

Tone

The conversation is frank, data-driven, and empathetic, blending hard economic truths with a spirit of curiosity and a call for kindness and honesty in public discourse. Both Ed and Kyla are skeptical of surface-level optimism and emphasize looking deeper—through data, direct conversation, and personal reflection—at what’s actually happening to young Americans in today’s economy.