Cohort consumption analysis
over a 30-year period, focus on
the cohort born in 1955-1959,
and comparison to previous andfollowing cohorts
Janika Bachmann Consumption theories
 Economic development

Key points

 Data overview
 Analysis result
 Interpretation

Consumption theories
 Life-cycle theory about smoothing consumption
over lifetime is still base for majority of thepopulation
 Requires planning and knowledge of financial
instruments
 People tend to dynamically change theirdecisions based on their situation andpreferences at that time, rather than optimize
with future perspectives
 Consumption behavior research shows thatsystematic errors in the thinking of normal
people influence consumption decisions

Consumer life-style
related changes

What impacts
consumption

Consumption process
related changes

Business model
adaption drivenchanges

Later marriage

Household size

Economic situation

Longer education

Cost of time

Mass media

Employment form

Purchase experience

Social media

Lifestyle

Purchase expectations

Business modelTax changed…

…

Subsidies
Value perceptions
Ageing…

 The Labor Force Survey
 The National Survey of Family Income and Expenditure

Data
Scope

AgeGroup
Under2525-29
30-34
35-39
40-44
45-49
50-54
55-59
60-64
65-69
70-74

1984
11109876543211989
12111098
7654321994
13
12111098
765431999
1413
12
11
10987
6542004
15
1413
12
11
1098
7652009
1615
1413
12
11
1098762014
1716151413
121110987

Japan GDP growth
15

10

50-5

Economicdevelopment-10
1961 1962 1963 1964 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 19992000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Analysis objective
 Focus on labour market changes andhow these may have impacted
consumption expenditure changes
during a 30-year period
 Male unemployment rate doubled
from 2% in 1991 to 5% in 2002
 Use of non-regular employment
formats among male employees
increased to 20% by 2014

Cohorts
9, 10, 11 Born during 1950-64
 Shirake generation

At birth

Cohort 9
Born first halfof 1950s

Cohort 10
Born second half of1950s

Cohort 11
Born first half of1960s

High birthrateLower number of births

Births started to grow

School years

Economic growth

Economic slowdown

Join labormarketHigh economicgrowth

Stable economic growthPre-bubble period

Male
Unemployment
at working age

Above averagewhen 60-64

Below average at anyage

Above average when
under 25

Male unemployment
at age of 22

91011

Cohor t 9 1 972-76

Cohor t 10 1 977- 81

Cohor t 11 1982- 86

170,000

Starting monthly
salary foruniversity
graduates incurrent value

165,000
160,000
155,000
150,000
145,000
140,000
135,000
130,000

Incomedevelopment

1

Annual income
000 Yen23459

101135-39

40-44

45-49

10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Under25

25-29

30-34

50-54

55-59

60-64

910

1135-39

40-44

45-49

450000400000350000300000250000Consumption
expenditurechanges

20000015000010000050000
0Under25

25-29

30-34

50-54

55-59

60-64

2+ household expenditure data by the age of household head. (Japan Statistics Bureau, 2018)

Consumption
expenditure changes v
previous period
Cohort 9N

Minimum

Maximum

MeanStandard
Deviation

6-50934

67278

13098.33

49169.721

Cohort 10

6-21274

49125

23717.50

28008.151Cohort 11

61243948101

28818.67

15967.966

 Consumption expenditure changes set as dependent variable, annual
income changes, male total unemployment changes and male regular
employment rate changes are set as independent variables
 Only for Cohort 10 the model shows acceptable level significance .06
Modelsummary
Cohort 10R Square.959

Adjusted R Std. Error ofSquare
the Estimate.898
8935.030

Analysis result

Cohort 9

Cohort 11

DurbinWatson
2.143

 Cohort 10 is different compared to 9 and 11, and tends to adjust
consumption expenditure more according to labor market generaltrendsInterpreting
results

Cohort 10 through out their career had lower
unemployment in their age group compared to maleaverage
Cohor t 9

Cohor t 10

Cohort 10 was eager saver, and by the age of 40-44
had achieved savings 7 ppts ahead of cohort 9 and 11
Cohor t 9

Cohor t 11
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

1.5
10.5
0-0.5
-1-1.5-2
Under25 25-29

30-34

35-39

40-44

45-49

50-54

55-59

60-64

Male unemployment in age group gap to national male unemployment. Negative gap means that age unemployment within age
group is lower than national unemployment.

Cohor t 10

Cohor t 11
100%
92%

77%
58%
37%

30-34

35-39

40-44

Cumulative savings per cent for each age group by the age of 50-54.

45-49

50-54