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A change in confidence

Zach Hagadone

In the epigraph to Ernest Hemingway’s famous novel The Sun Also Rises, the author included this six-word quotation from Gertrude Stein: “You are all a lost generation.”

Stein, a powerful writer and social critic, was referring to the generation that came of age during World War I and its attendant social and economic crises. Her point was that kids like Hemingway never really had a chance starting out. If they weren’t killed, crippled or psychologically maimed by the war, then they were practically guaranteed an adulthood haunted by poverty. The result was a deep cultural cynicism and mistrust – even disbelief – in supposedly sacred institutions.

Since then, Stein’s “Lost Generation” moniker has been used in other times when war or economics (or both) cause young people to lose faith in “the system.” It’s been applied to Vietnam War veterans and, more recently, the cohort that reached working age during Japan’s economically bleak 1990s.

Today’s Lost Generation may well turn out to be college-age Americans, who are looking uneasily from the university walls at a devastated labor market, a shattered body politic, two wars that have been gobbling up lives and the federal budget since many of them had baby teeth, and a financial system held together by the policy equivalent of duct tape and baling twine.

Kids these days may be excused for a certain measure of trepidation, and it’s starting to show up in a big way. According to a recent study funded by the National Endowment for Financial Education, a full 93 percent of college students say the economic crisis has affected their financial lives – most notably in the area of “financial confidence.”

Conducted at the University of Arizona from February 2009 to April 2009, the Arizona Pathways to Life Success in University Students found an average 19 percent drop in self-assessed financial knowledge, even as factual knowledge of financial basics held steady.

That means students today simply don’t think they have the tools to save, maintain good credit or adopt other financially mature behaviors.

Understandably, this lack of financial self confidence has bred risky habits. The study reports a 78 percent increase in students postponing health care, a 26 percent increase in students using one credit card to pay off another, and average credit card debt skyrocketing 64 percent.

These trends are evidence of something deeper, the study suggests. An overwhelming number of students reported they have “only some” trust in government, business, banks and other major institutions, and 20 percent reported “hardly any confidence.”

I’ve spoken with adults whose own views would probably fit right with that breakdown, but they’ve already established working lives, bank accounts, credit scores and educations. In short, they’ve already “bought in.”

Lacking trust or belief in the institutions that are supposed to govern their futures, and lacking any say in the matter, students are ham-stringing themselves by refusing to invest in the first place.

For instance: dropped classes have increased 169 percent; “leaves of absence” have risen 106 percent; quality of relationships and psychological well-being have fallen 6 percent and 5 percent, respectively; and physical and academic well-being have each declined 3 percent. Educational debt has also increased a shocking 80 percent.

None of this is even remotely offset by the study’s one bright spot: budgeting has increased roughly 3 percent among students who reported feeling the most affected by the crisis.

When I graduated from college seven years ago, things were somewhat better. With a degree in-hand I had about $17,000 in student loan debt – not bad compared to some of my classmates – and a job right out of the gate. I hadn’t ruined my credit and was living in a nice apartment in downtown Boise.

Most important, I had about four years to establish myself before the wheels came off the economy. I still didn’t have time to build up a retirement account, seniority in a company or invest in a home, so I expect that things will be harder for me in the coming years than I would have expected back when I was 18.

I can’t imagine stepping into this mess as a newly minted grad at the tender age of 22, and I bet a lot of the 22-year-old grads can’t either. That’s why, according to the study, the crisis of confidence among college students may end up being one of the biggest sleeper threats to the nascent economic recovery – made all the worse because it can’t be fixed by a bailout and it’s the antithesis of a “shovel ready” project.

According to the study, the best solution is going to come from parents:

“‘From the current study, we know that nearly 80 percent of students are financially dependent on their parents, and we know from earlier APLUS research that parents are the top influencer when it comes to students’ financial knowledge, attitudes and behaviors,’ Beck says. ‘That puts parents in a powerful position to help their young people navigate the wake of crisis in ways that repair and restore our economy rather than hobbling it for years to come.'”

About Zach Hagadone


  1. I appreciate the time you positioned on this purpose or on this post. although u have fascinating ideas.

  2. You have compressed time a bit, there Zach. When these soon to be grads were in Middle School, this country was at peace with the world and we had a BALANCED budget–in fact we were lowering the amount of debt we had. The eight years of “Shrub”..he was too much of a light weight to be called a Bush–saw us more than double our national debt, start two wars–one the dumbest foreign policy decision by America, EVER!-and piss of the world with our arrogant, self-centered ways.

    You don’t have to go to their kindergarten years or earlier for these grads to see when times were much better. Just have think back to when the hormones were starting to kick in!

  3. The parents might be happy to help if they had any money to help out WITH….(oh, sorry Zach; I meant “..with which to help out.”

  4. Remember that the generation that had the least – the one that grew up in the 30s – became known as the “Greatest Generation.” The circumstances of today’s young generation fits that moment in history much more than that of the Lost Generation. Both the challenges and opportunities are greater than we faced after WWI. Fix Wall Street, the health care system, end dependence on foreign oil and the $700B/yr cash outflow that goes with it, and create a more vibrant, innovative economy, and this generation won’t be “lost” at all. These are tall orders, but are they more daunting than defeating the Wehrmacht? I don’t think so.