Learn Maths, Young Person! The Secret of Success in the 21st Century

A currently fashionable pessimistic topic is the lifetime prospects of children born into the middle class. Graduate debt, lack of finance to buy homes and job insecurity after they graduate, the list goes on. Alan Milburn, the government’s ‘social mobility tsar’, put the seal of approval on this prevailing angst last month. His Social Mobility and Child Poverty Commission pronounced that children from families with above-average incomes are now set to enjoy a worse standard of living as adults than their mothers and fathers.

Certainly, the cohort of young people unlucky enough to enter the labour force during the last few years is likely to find things tough. Unemployment rose sharply during the recession of the early 1980s, and the negative impact of being unemployed at the start of a career has followed this particular group of young people through the past three decades. However, employment is rising strongly again, so this particular problem is becoming less serious.

An intriguing paper by William Emmons and Bryan Noeth of the Federal Reserve Bank of St Louis suggests that the financial crisis has already disadvantaged all age groups, not just the young, with the exception of those in their 60s and older. As they point out, it is not obvious in theory whether young, middle-aged, or older families are likely to fare better during various economic and financial cycles. Job losses obviously hurt the age groups which participate more in the labour force.  So does balance sheet leverage. The more the amount of debt used to finance the family’s assets, the more are falls in asset prices multiplied into proportionately greater falls in net worth. Against this, asset price falls hurt the elderly more, simply because they have more of them.

Emmons and Bryan show that empirically the young and middle aged have lost out, not just since the crisis, but over the past 20 years. Comparing those in their 60s now with those in their 60s twenty years ago, median net worth has risen by 70 per cent  In contrast, the median net worth of those with young families now is 30 per cent lower than it was for their counterparts.

Looking ahead, most people acquire assets by working, and by saving part of their earnings. Given the rapid rate at which technological progress is taking place, there is no reason why the group entering their 20s now should not prosper. Economic growth is basically determined by inventions and innovations, and the overall prospects are good.

The problem is that many young people, even many of the highly educated, are not well placed to benefit properly from the technological revolution. To understand Big Data and social media, strong mathematical skills are needed. Google, for example, made its founders unimaginably rich. But the company is basically formed on a mathematical concept called an eigenvector, which will mean nothing to anyone who knows no matrix algebra. The opportunities are there aplenty, but only a minority has the skill set to take real advantage of them.

Paul Ormerod

As published in City Am on Wednesday 13th November 2013

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e: aobyrne@volterra.co.uk
t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

e: eevans@volterra.co.uk
t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.