Michael Froggatt, now 38, had just started his freshman year at Millersville University in Pennsylvania when, like millions of Americans, he watched on television how the second plane hit the South Tower of the World Trade Center on the morning of September 11, 2001.
“I remember it very clearly. “I was preparing for class in my residence, watching the reaction on TV and then hitting the second plane,” Froggatt told Al Jazeera. “Later in class, my professor looked really shocked and confirmed to all of us that this day would change the world in a horrible way.”
Kristin Buhagiar, who was 18 and living in Irvine, California at the time of the attacks, said her mother woke her screaming.
‘I was asleep and woke up when my mother screamed’ Wake up! Our country is being attacked! ‘. “I did not fully understand what was happening until I got off, watched TV and watched in horror as the second plane crashed,” Buhagiar told Al Jazeera.
Millennials, the generation born between the early 1980s and mid-2000s, were young adults, teenagers and children when they saw the collapse of the towers of the World Trade Center and the deaths of thousands of people on live television.
But has the trauma made millennials more risk averse and therefore less financially wealthy?
Some economists say ‘yes’, although they add that it is difficult to determine how.
“Disasters mean people no longer avoid risks in their choices,” Karna Basu, an associate professor of economics at Hunter College and The Graduate Center at City University of New York, told Al Jazeera.
‘It could be partly because people have fundamentally more risk aversion, and partly because they think the possibility of a future disaster is greater. Both of these effects can indeed be subconscious, ”he added.
As the world looks less secure, millennials would have tended to take measures, such as saving precautions they might otherwise have invested in riskier assets such as real estate or the stock market.
“I felt an insecurity I had never felt before,” Buhagiar said. “What would happen next? Was this the first of many attacks? I was scared. I have never equated this uncertainty with my spending habits, at least on a conscious level. But maybe that was a factor. I can not say with certainty. ”
Economic reasoning can help us organize thoughts on how disasters can affect behavior, says Basu, although he did point out that most research done on financial risk aversion and risk-taking behavior focuses on the impact of natural disaster such as earthquakes and floods or the loss of a child.
Disasters make people more risk-averse in their choices.
Basu also underlines the difference between risk aversion and risk-taking behavior. The former is a description of people’s preferences (ie what their fundamental attitude towards risk is), while the latter is a description of the choices people actually make.
“These choices are determined not only by our aversion to risk, but also by our view of the world, our predictions for the future and our guesses about the likelihood of future disasters,” he told Al Jazeera.
Froggatt, who was in his first college week on 9/11, says that although the event is most remembered, it was not the only tragedy that shaped how millennials viewed the world.
‘Millennials have not only dealt with the 9/11, but also the aftermath: the war on terror. Suddenly we were told that everyone hates us because of wars and conflicts that previous generations started. On top of that, we were dealing with school shootings at home, learning to hide under our desks. We have literally become a terrifying generation, ‘he said.
Generation wealth gap: ‘We stand outside and watch’
Millennials are known for putting off important milestones in life, such as buying a home, getting married, and starting a family.
According to the Federal Reserve Bank of St. Louis, families of those born in the 1980s and 1990s have less median wealth than previous generations at the same time in their lives.
“Younger families today simply have less wealth than younger families had in the past, while older families today have more wealth than older families had in the past,” said Ana Hernández Kent, senior researcher at the Institute for Economic Equity at the Federal Reserve Bank of St. Louis, told Al Jazeera.
Millennials grew up in a very different world from that of the white-peak fence ideal of the Boomer generation — those born into the affluent and social-net era after World War II.
Younger families today simply have less wealth than younger families had in the past.
Older millennials, those in their mid to late 30s and this year 40, who grew up in the era of mass school shootings and grew up against the backdrop of 9/11 and the American “war on terror”, were treated another just when they were studying at college with unprecedented levels of student debt.
The Great Recession of 2007-2009 left the stock market, real estate and, especially the millennia, the labor market in disarray.
And now another catastrophic event could deter many millennials from growing their finances. Since March 2020, stock and house prices have experienced a historic rally as the coronavirus pandemic plagued the US.
Those positioned to take advantage of rising asset prices have seen their wealth grow. For those who have not, it is another economic hurdle with lifelong consequences, Hernández Kent told Al Jazeera.
‘It can make it harder for them to invest large sums in the stock market or buy a house. “These assets have risen rapidly in recent months, which is beneficial if you already have the assets, but make it difficult to acquire them if you do not have them,” she said.
And millennials must experience another decade without any major political or economic upheaval.
“We are the first generation since the 1900s to deal with mass deaths on American soil, from 9/11 to the epidemic of firearms violence and now a global pandemic,” Froggatt said. “Of course we are cynical about investing, because we stand outside and watch.”