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Friday, January 12, 2007

To be rich and famous, in London, in the summertime...

According to the USA Today story, the youngsters who comprise Generation Y (those born since 1980) have one primary goal in life: to be rich and famous. I don't criticize people for their hopes and dreams but I do wonder how a large proportion of 70+ million people is supposed to be rich and famous at the same time. It is possible that many could be rich, that is earn a lot of money. It is possible that some might be famous - that is to be recognized by a large proportion of the rest of the population. However, it would seem unlikely that a large proportion of Generation Y could be famous in the sense that a lot of us would know who they are.

There is a limited amount of time and attention that individuals can dedicate to gossip and following the antics of the famous. Indeed, in equilibrium there might be a fixed number of famous people - if there is to be a new famous person an existing famous person must fade to the background. This would imply fleeting fame, such as that enjoyed by those on a reality television show, but fleeting fame is not likely correlated with changes in permanent income.

I liked this quote from the story:
"Society raised us where money is glamorous, and everybody wants to be glamorous," says Jason Head, an aspiring actor who turned 26 just before Thanksgiving. He earned an associate's degree in applied arts. To pay the bills, he's a bar manager and bartender in the Dallas suburb of Plano.

Now, it is possible, of course, to become a millionaire without a college degree. It is also possible, perhaps, to eventually become a famous actor in your late 20's or early 30's while living in Plano, Texas. However, most actors are already discovered in their mid 20's, most aspiring actors live where actual acting takes place, e.g., New York or Hollywood, and working with an Associate's Degree in a bar is not necessarily the road to riches. Again, I am not critical of anyone's aspirations, but it seems the pursuit of those aspirations may not have a high probability of success.

As I mentioned in an earlier post here, the data clearly show that higher levels of education are corresponding to higher incomes. As a PHD economist, I can attest to the relatively comfortable life the salary of a professor provides.

I also liked this one:
stereotype, my first year I bought things," she says. "I bought a lot of clothes and stuff for my room, and I bought my laptop. If my friends wanted to go out, I'd go out and spend on food when I knew I didn't have the money."

She turns 24 this month. She says hearing rags-to-riches stories and watching television shows about the lives of the rich and famous inspires her to want success in her own arena: She wants to become a college professor.

"I see some professors who have these big houses," she says. "It would be nice if I could."
Oh, poor girl. She thinks she is going to get rich being a professor? The professors who get rich through books, syndicated talk and writing opportunities, and who are paid $50,000 for a speech are an incredibly small minority. Most professors do not get rich, although perhaps we can become slightly famous in our own field; alas, not enough to get a free coffee at a Starbucks. PhDs in English earn less than $50,000 at most universities/colleges. Professors in economics earn around $70,000 if their department is in the Business School. PhDs in accounting and finance are currently commanding 6 figure salaries, even at lower-tiered schools. Howevever, event $125,000 doesn't go far if the goal is to live like Paris Hilton or some other camera gadfly. Nevertheless, I would strongly recommend seeking education (productive human capital) rather than seeking fame as a means to a comfortable (if not overly rich) life.

An interesting question is not so much what these young folks want today (they generally have no budget or time constraints) but what they will want ten to twenty years from now.

In my view, there is a loud wake-up call coming for many college kids in the sense that their first job at $40,000 per year will not provide them with a new BMW, the largest plasma tv, the vacations to wherever. A salary of $40,000 means a take home pay of around $2,200 per month after FICA, taxes, etc. At that amount of income you can affor to lease/buy a Chevy Cobalt not a BMW 325. Will having to step down to the Chevy Cobalt reduce junior's happiness and sense of self-worth? This is a question I am sure others are working on and it will be interesting to see how opinions change over the life cycle of Generation Y (perhaps they won't).

I hope that Generation Y, like my Generation X before it, comes down to earth about their expectations and what makes for the "good life."

Here's some more information from the study:

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