Are young Americans really worse off than their parents and grandparents, or is Scott Galloway just spinning a sensationalist tale for views? NYU Professor Scott Galloway, also known as prof. G, recently set the internet ablaze with his provocative TED talk claiming that the young in America today
they’re doing more poorly than previous generations.
But, can we trust that Prof. G is telling us the truth?
As an economist and ex-university lecturer who tracks macroeconomic trends like this for a living, I was intrigued, and also pretty skeptical when I first saw this video, where Galloway presents a slew of charts as evidence that (1) young people today earn less, (2) they face higher costs, and (3) they experience lower well-being compared to previous generations.
Finally, to put the icing on the cake, prof. G even suggests that this is not an accident. It is all due to an
unbelievable transfer of good will, of well-being and of prosperity from young to old.
So, when concerned viewers asked me to fact-check his TED talk, I dove deep into his charts and calculations, comparing them with data from leading experts about generational wealth in America. Surprisingly, my investigation revealed that while Galloway addresses valid concerns, the quality of his TED talk is not what I expected from a university professor, mainly because he conveniently only uses evidence to support his narrative, shows us charts that mean something else than what he claims, and he frequently leaves out crucial opposing data.
So, to find out which of Galloway’s charts are misleading and what crucial evidence he conveniently leaves out, let’s dive into each of these arguments now, starting with Prof. G’s main argument that
Young people earn less than previous generations
, if we correct for inflation. To back up this claim, prof. G shows us 3 main pieces of evidence. The first is that,
Essentially, as we go down generations, we’re seeing that for the last two generations, people are making less money on an inflation-adjusted basis.
where prof. G shows us this slide which shows us pre-tax income at 25 years, for 3 different generations: grandparents, parents & kids.
Evidence number 2 comes from a study by Harvard professor Ray Chetty and colleagues that was published the prestigious journal Science. This study finds that from 1940 to 2016, the percentage of people that earned more than their parents at the age of 30 drops to about 50%.
Finally, evidence number 3 is not about income, it is about wealth, where according to prof. G,
people over the age of 70 used to control 19 percent of household income, versus people under the age of 40, used to control 12. Their wealth has been cut in half. This isn’t by accident, it’s purposeful.
So, based on this evidence, which clearly seems to show that generations are earning less and have less wealth, prof G. concludes that
This is a breakdown in the fundamental agreement we have with any society, and it creates rage and shame.
And, yeah, of course that sounds very logical. But, is prof’s G’s evidence actually any good? That is, is it somewhat scientific in the sense that it represents strong evidence from multiple studies? Or did he just cherry pick evidence to sell us his message?
If we start with evidence number 1, we can immediately see a big red flag. The source for this table is … prof. G’s calculations. But, prof. G doesn’t tell us anything about this calculation other than that he chose to compare income at the arbitrary age of 25, which is in itself a bit suspicious given that previous generations typically didn’t to go college and therefore tended to earn more at such a young age. Of course, in the spirit of the social sciences, I sent prof. G an e-mail asking for his sources and calculations. However, sadly he did not respond.
Therefore, given that we do not know anything about prof. G’s calculations, this piece of evidence is simply not valid.
Luckily, prof. G’s remaining piece of evidence that should show that younger generations earn less is a very reputable study by Harvard professor Ray Chetty and colleagues that was published in the prestigious journal Science. Indeed, this study almost finds that
for the first time in the US’s history, a 30-year-old is no longer doing as well as his or her parents were at 30.
More precisely, the study still finds that 50% of children born in 1984, so these are early Millennials, earn more than their parents did when they were 30. But, the trend is clear, and very worrying. So, yes. Well-known research. Published in a good journal, by a respected author. These are all good signs because it means that the study has been seen and examined by a lot of people, and overall it seems to hold up.
However, it is just one study, and typically in the social sciences, we’d like to have multiple credible studies before we accept something is credible. Sadly, prof. G only cites this one study. So, I went to look for other recent studies hat shared this finding, that young people today earn less than their parents. This was easier said than done, probably because it’s really difficult to get good reliable data about what each generation earned over time.
Nonetheless, I did find two credible, recent studies. The first is this study from economists from the Federal Reserve that compares both average and median income across generations for multiple ages, but with a focus on ages 36 to 40. The second is this study published by the National Bureau of Economic Research, NBER for short, which looks at average and median, income, consumption and wealth across generations with a focus on ages 26 to 34.
In contrast to prof. G’s cited evidence, both of these other studies find that, while progress between generations has slowed down, new generations still earn more than those before them.
So, are these studies right, and is prof. G’s evidence wrong? No. In fact, both of these studies cite prof. Chetty’s study with respect, and don’t claim that their results invalidate that study. So, why are the conclusion so different?
Well, I found 3 big differences between these studies which can explain a radically different conclusion. Firstly, the Chetty study cited by prof. G looks at a very specific age, and relatively young age: 30, while the other two studies look at ages above 30 as well. 30 is probably a more representative age than 25, which prof. G looked at with his own calculations. However, it still suffers from the same problem to a certain extend, which is that younger generations stay in school longer and therefore start their career later in life. Secondly, the Chetty study looks at income before taxes and transfers, while the Federal reserve study looks at both income before and after taxes. And, while the Fed study finds that for both these measures 36 to 40 year old’s are better off today, they also find that taxes and transfers improve the situation for today’s young people, which could contribute to the more negative result of the Chetty study for people at 30 years old. Finally, the Chetty study just looks at whether or not children earn more than their parents while the other two studies look at average and median incomes across generations. This could make a big difference if inequality in America increased over time, which it did. To see why just imagine a simple scenario where 5 children earn a little bit less than their parents, while 5 children earn a lot more. In this case the Chetty study outcome would be that American prosperity is slowing down. However, the other researchers would find that the both average and median incomes have still improved.
But, while generations are still better off in these two other studies, all three of them find evidence that growth between generations is slowing down. For example, while the Federal Reserve study finds that the real median income of Millennials was 18 percent higher that of Gen-X at the same age, it reports that boomers did 27% percent better the generation that came before them. On top of that, the Fed study reports that the higher income of younger people may be skewed by the fact that they are
increasingly living with and relying on their parents well into their 20s
Finally, while the NBER study finds that on average and at the median young Americans are doing better than previous generations, this is not the case for the poorest in US society, where progress has stagnated.
So, in short, the second piece of evidence given to us by prof. G is valid. However, for a university professor, it is really quite disappointing that he only picks a single study that seems to confirm his point, while ignoring other recent, respectable studies that go against it.
Luckily, prof. G still has a third piece of evidence, which is this chart that clearly shows that there has been
an enormous transfer of wealth, where people over the age of 70 used to control 19 percent of household income, versus people under the age of 40, used to control 12. Their wealth has been cut in half.
But, does this chart really show that there has been enormous transfer of wealth from young to old? No it doesn’t. Instead, it probably shows us that America …. has gotten older.
You see, to make this chart, prof. G used this data from the Federal Reserve. This chart shows the total wealth controlled by 4 different age groups in America. To see why this is not proof that there has been a transfer of wealth from young to old, let’s assume that everyone just has a constant level of wealth. They do not get richer. Now assume that there is a really big generation of Americans that is bigger than the generation before them and bigger than the generation after them. This second assumption is true, there is a group like this in America, they are called the baby boomers.
Now, this chart shows that in the year 2000 baby boomers were between 35 and 54 years old. In 2010 they were between 45 and 64 years old, and in 2020 they were between 55 and 74.
Now, as you can see in the Federal Reserve graph, from 1990 to 2010, when most baby boomers pass the age of 40, the under 40s loose a lot of wealth. Then, from 2000 to 2020, the 40-54 year category loses a lot of wealth, and then finally from 2010, to 2020, the people above 70 seems to control more and more wealth.
Is that a coincidence? I doubt it.
Indeed, if we now go back to prof. G’s chosen years of 1989 and 2023, we can calculate that in 1989 baby boomers were younger than 40. But, in 2023, quite a few baby boomers were already older than 70.
So, while I will admit that one explanation for prof. G’s graph could indeed be that there has been a massive wealth transfer from young to old, a simpler explanation could just be that a really large generations, the baby boomers, just got older. What likely makes this effect even bigger is that as people get older, they build wealth. So, if a really big generation gets old, old people overall will of course control more wealth.
So, in short, prof. G’s third piece of evidence is not evidence at all, because it can show us multiple things.
Luckily, the NBER study that I mentioned reported that young Americans still earn more than previous generations, did properly study wealth across these generations per person. However, in line with the findings about income, the NBER study finds that younger generations are also a bit wealthier than those before them, even though, quite worryingly wealth inequality in America has increased a lot.
So, in short, prof. G’s evidence to support his claim that younger generations are worse off than those before them, is very weak. His first piece of evidence only looks at the age of 25 and is based on his own calculations that we cannot verify. Just as bad, his third piece of evidence really does not proof there has been a massive wealth transfer because it could simply show us that America got older. And, while his second piece of evidence is valid, it is pretty suspicious that prof. G only quotes one of the three respectable recent studies about this subject.
But, luckily for prof G., he might still be right, that the young today are worse off than those before them, because, even if they earn more and are still a bit more wealthy, they could still be worse off because, according to prof. G
life is more expensive for the young today
Because, while the income and wealth calculations from the previous sections have already taken into account inflation in general, as prof. G says
the cost of buying a home, the cost of pursuing education, continues to skyrocket
This disproportionally affects the young, since they are the ones that still need to buy an education, or need to buy their first home. But, are these effects really so bad that they offset the fact that young generations are still earning more than previous generations?
In his talk, prof. G does not give is us any evidence that it does. He just mentions that an education is now much more expensive than it was when he was young. On top of that, he tells us that its now much more difficult to get into a good school. Both of this is true. And, yeah, I think its really good that prof. G calls our attention to this because it is clearly a problem. However, he does, again leave out two pieces of more optimistic evidence that run counter to his narrative. The first is that, even though colleges today accept a lower percentage of applications, they still accept way more applications then when prof. G was young. Indeed, as you can see here, younger generations are more educated than those that came before them, a trend that is, according to Pew Research, holding up for generation Z.
He also doesn’t tell us that, luckily for our children, the terrible trend that colleges got way more expensive has recently turned a corner, as we can see here in this graph from the Collegeboard.
Finally, while one study is not enough evidence to be sure, the Fed study I mentioned earlier does find that the extra income younger generations earn is more than enough to cover the increased costs of education because these costs are typically only incurred for a couple of years, while the financial benefits of an education accrue over decades.
So, while I think prof. G is right to talk about America’s increased education costs and competitiveness as a serious problem for young people, he does not provide us with any serious evidence to show how bad it really is and he leaves out hopeful trends for our children such as more people getting an education and costs falling in the last few years. A worrying trend that continues when he talks about America’s housing problem.
To be clear, as I discussed in my video about housing, exploding housing costs are a very serious problem for younger generations. It could even explain why young generations are living longer with their parents, as reported by the Fed researchers. However, what prof G. leaves out is that, as you can see here in this graph, while house prices went up by a lot, interest rates went down by a lot. Of course, there is one notable exception, which is after the pandemic in 2022 and 2023, when interest rates shot up, while house prices kept rising.
Rising interest rates are really important because what matters for most people, is not just the cost of a home, but rather, the cost of a mortgage payment, which is heavily influence by both house prices and interest rates. Prof G. knows this because he states that
pre-pandemic, the average mortgage payment was 1,100 dollars, it’s now 2,300 dollars because of an acceleration in interest rates and the fact that the average home has gone from 290,000 to 420.
But, isn’t it a bit suspicious that he shows us a long historical graph starting in 1985, when interest rates were really high and home prices low. But, then he only looks at 2019 and 2024 for the mortgage cost comparison. If he wanted to present a more nuanced picture, he could have relied on research here, which shows that if you take into account both home prices and interest rates, house affordability was very bad in the 1980s, when interest rates were super high, and in the early 2000s, when the US was in the middle of a housing bubble, but were actually a bit better in the 2010s thanks to super low interest rates and lower house prices after the 2007 crash. However, as you can see here, it doesn’t feel that way right now because now both interest rates and house prices are very high.
And, that is not fair to gen-Z’ers who are now joining the housing market. But, it doesn’t fit with prof. G’s story that housing just gets worse for each generation.
What he could have presented though is this chart which shows that despite earning more, gen-X has a lower home ownership rate than boomers, and millenials have a lower home ownership than Gen-x at a similar age. And, while gen-Z had a promising start, the post-pandemic surge in interest rates and home prices might spoil that.
So again, here my conclusion is that while prof. G is speaking about two big problems for America, that hit younger generations especially hard, he has not shown us any evidence that this offsets the general finding that young people generally still earn more than the generations before them. Therefore, it also does not proof that
There has been massive transfer of wealth from young to old
But, what about prof. G’s arguments that
it would cost 11 billion dollars to expand the child tax credit. But that gets stripped out of the infrastructure bill. But the additional 135 billion dollars a year to Social Security, that flies right through Congress.
or that
for the last 40 years, capital has been kicking the shit out of labor. Well, you think, what about wages, right? They’ve gone up. Well if you compare them to the S and P, they barely register. It’s been an amazing time to own assets.
or quite a few similar arguments about Harvard not accepting many more people, or that the top tax rate is down since the 1970s, or that senior poverty is way down while child poverty is up.
Well, some of these arguments are good and some of them are highly flawed. But, more importantly, despite Scott Galloway branding himself prof. G, there’s really nothing academic about these arguments. He is just giving us random examples of transfers from young to old without giving us any insight into how big these transfers are and whether or not they are offset by other big transfers, such as, for example, 45-65 paying by far the largest share of taxes.
Indeed, the fact that the Fed study found that the income of younger generations looks better AFTER taxes and transfers suggests that the transfer from old to young could be bigger than the transfer of young to old.
In his defense though, prof. G was convinced by this one study that young people are worse off in America. So, in that case it made sense to just mention a few examples of why that could be the case. But, now that we have seen that it is not proven at all that this is the case, these arguments about a massive transfer just look like random examples which do not proof at all that there has been an
unbelievable transfer of good will, of well-being and of prosperity from young to old.
in America. However, even if it doesn’t look like young people are poorer than previous generations, could prof G. still be right about his final point that today?
Young people have lower well-being and happiness?
To back-up this claim, prof G. show us
a bunch of graphs all headed up into the right.
The first shows us that self-harm harm rates among children from 10-14 have exploded, especially amongst girls. The second is that teens, and especially girls, are increasingly depressed. Then, young people, and especially men are having less sex. Cumulative gun-deaths are way up for very young children, youngsters are more obese, and, finally, overdose deaths amongst the young are way up.
Even if younger generations better off materially, this will convince any human being with a heart that the world is a dark place for today’s youth, right?
No. Again, prof. G’s charts are to my knowledge correct. But, they are also again very selective meaning that, much like a politician, prof. G just looks like he wanted to push a story and then went out finding only graphs that support that point, while ignoring other that don’t.
However, if we take a more scientific approach and take a look at the key national indicators of child well-being from the US Federal Interagency Forum on Child and Family Statistics, we can also find many important graphs that remain fairly stable, like child poverty, which prof G. briefly mentioned in his talk. But, if we want to sell a story that kids are better off than their parents, we can also find many graphs that show life for children got better, (1) such as less air pollution, (2) less asthma, (3) less water pollution, (4) less led in the blood of children, (5) less youth victims of serious violent crimes, and (6) more young adults finishing high school.
Where, you may have noticed that I selected 6 graphs that go against prof. G’s point to proof a point, which is that prof. G is not acting like a prof in this video. But, rather like a politician trying to push a message.
That message may resonate with you. Actually, a big part of that message resonates with me, given that I myself have made videos addressing the housing crisis in the Anglo-Saxon world, or the fact that due to stagnant wages and inflation, the US economy may look great on paper, but doesn’t work for a lot of people.
However, this video was never about trying to sell you a message, it was about trying to find out if prof. G is acting like a professor, trying to uncover a nuanced truth, or as politician, trying to sell a story. And, there my
Conclusion
is that prof. G’s evidence for his main point that the young in America are doing more poorly than previous generations is very weak. Yes, extensive studies suggest that the rate of progress has decreased, that lower income people are no longer progressing, and that many people don’t do as well as their parents. But, both looking at the average and median, current generations are still earning more than the generations before them, and there is no evidence that this is offset by increasingly expensive homes and colleges, no solid evidence that there is a big wealth transfer from young to old and no evidence that kids today are overall worse off than generations before them.
Therefore, my conclusion, purely based on this TED talk, is that prof. G is an interesting speaker, and his data is generally correct, even though he sometimes interprets it the wrong way. However, he acts more like a politician than a professor, often presenting only evidence that confirms the message he is pushing, rather than providing us with the more nuanced state of research, which I would have expected from a professor.
But, yeah this is just how it came across to me, because while I did reach out for comment to prof. G’s NYU e-mail well before publishing this video, I didn’t receive a response. Hopefully, he will still do so in the comments of this video.
What do you think, is my critique fair? Or have I been too harshor generous, let me know in the comments. And if you think peer-reviews like this are essential for the YouTube information ecosystem, consider supporting my channel on Patreon or by becoming a member.