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Why economics is still the 'dismal science'

Economists befuddled by the economy's twists and turns often fail to tap into data on the most optimist group – young people. Their hopeful 'animal spirits' may be the force for a full recovery.

John Baldridge, 13, returns a quail to a pen in the backyard of his home in Roanoke, Va. with the help of his father, Duke Baldridge. John raises quail eggs to sell to a couple of local restaurants.

Kyle Green/The Roanoke Times/AP Photo

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When economists are at a loss for hard data to explain trends or make predictions, they fall back on a soft phrase first coined by one of their famed own, John Maynard Keynes.

It is “animal spirits.” 

That term of art may sound like a “Twilight” flick. But it refers to immeasurable qualities of human thinking that can put energy into free markets but don’t easily fit on a Wall Street spreadsheet or an academic graph.

One quality – optimism about the future – isn’t so animal at all. In fact, despite the dozy economy, hopefulness seems to be an abundant trait among Americans who have the longest future, young people.

Nearly 90 percent of them who hold jobs believe they will earn enough in the future. Even among those not working, that same optimism is still high at 75 percent, according to a recent Pew Research Center poll.

In sharp contrast, more than half of today’s adults older than 35, whether working or not, are pessimistic about their future earnings. What’s more, the economic bullishness of working young adults hasn’t changed much since even before the 2007-09 Great Recession.

Such polls stand out like the first spring blooms amid all the negative news about young people. Yes, this group’s jobless rate is above average. More than 1 in 5 lives with a parent. Students loans are a financial ball and chain. This group is dubbed “the lost generation.” Many have joined the “Occupy” movement.

But economists and government leaders must take notice that a young person’s stage-of-life confidence could be the most important animal spirit worth investing in.


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