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Baby Boom Age Wave Theory – Definition

Baby Boomer Age Wave Theory Definition

Baby Boomer Age Wave Theory refers to an economic theory which suggests that the economy will peak or culminate in markets and also consumer spending as the generation of Baby Boom aged. Coined by an economist named Harry Dent, and based on his discovery that consumer spending habits reach the peak at 50 years, this theory opines that European and U.S. markets will peak from 2008 to 2012, as Baby Boomers got to 50 years.

A Little More on Baby Boomer Age Wave Theory

Baby Boomer Age Wave Theory, which economist Harry Dent first described, suggests that an economic peak in European and U.S. markets will occur from 2008 to 2012, as the Baby Boom Generation’s last members reached age 50. Baby Boomer Age Wave Theory depends on Dent’s discovery that consumer spending habits peak at the age of 50.

While cultural critics and economists keep on debating the authenticity of Baby Boomer Age Wave Theory, as well as, its effects, the Baby Boom generation effects have had a clear and major impact on both cultural and economic trends in the United States and around the world.

As there is a continuous movement of the Baby Boom population into retirement age, economists anticipate seeing a decline in overall consumption, as well as, an increase in demand for services like retirement planning, caretaking and estate, and products for the old. Expectations increase that this shift would, in turn, affect interest rates, real estate, stock prices, inflation, and other economic factors. Certain forecasts expect the U.S. economy to continue slowing down until the next generation, often called Generation X, gets to its spending peak around the year 2022.

Ken Dychtwald, being a psychologist and entrepreneur, developed the Age Wave concept and it was the major thesis of his 198o book titled Age Wave: The Challenges and Opportunities of an Aging American.

Age Wave focuses on observing the cultural shifts brought about by the union of 3 major demographic forces, including:

The Baby Boom: A rise in fertility rates in Canada, United States, Australia, and Europe, in the mid-20th century. While certain analyses differ, the Baby Boom generation is usually identified as part of those born between 1946 and 1964.

Elongated longevity: Life expectancy had a significant increase during the 20th century as a result of advances in public health, medicine, and nutrition.

The Birth Dearth: Following the Baby Boom, there was a sharp drop in fertility rates, and sub-replacement fertility rates are now occurring in various parts of the world.

This theory suggests that as a result of the Baby Boom generation size and tendencies, this population was capable of transforming consumer trends, as well as, life stages. Major market shifts across various industries have been associated with the Age Wave, with the inclusion of the effect on the manufacture, as well as, sales of urban homes, gym equipment, minivans, toys, fast food, and SUVs.

In 2006, Dychtwald foretold a massive decline in workforce growth in the near term, predicting a little fraction of the workforce growth provided by the Baby Boom generation.

References for Baby Boomer Age Wave Theory

http://www.businessdictionary.com/definition/Baby-Boomer-Age-Wave-Theory.html

https://www.investopedia.com/terms/b/baby-boom-age-wave.asp

https://investinganswers.com/financial-dictionary/economics/baby-boomer-age-wave-theory-3946

Academic Research on Baby Boomer Age Wave Theory

  • Will bequests attenuate the predicted meltdown in stock prices when baby boomers retire?, Abel, A. B. (2001). Will bequests attenuate the predicted meltdown in stock prices when baby boomers retire?. Review of Economics and Statistics, 83(4), 589-595. General equilibrium models that predict a reduction in asset prices when baby boomers retire typically assume that people consume all of their wealth before they die. However, many people hold substantial wealth when they die. I develop a rational expectations, general equilibrium model with a bequest motive. In this model, a baby boom increases stock prices, and stock prices are rationally anticipated to fall when the baby boomers retire, even though consumers continue to hold assets throughout retirement. The continued high demand for assets by retired baby boomers does not attenuate the fall in the price of capital.
  • Generation Y vs. Baby Boomers: Shopping behavior, buyer involvement and implications for retailing, Parment, A. (2013). Generation Y vs. Baby Boomers: Shopping behavior, buyer involvement and implications for retailing. Journal of retailing and consumer services, 20(2), 189-199. This paper presents some significant empirical findings about generational cohorts and their shopping behavior. Marketing has long relied on the use of market segmentation. While birth age has been a useful way to create groups, it describes segments but does not help to understand segment motivations. However, environmental events experienced during one’s coming of age create values that remain relatively unchanged throughout one’s life. Such values provide a common bond for those in that age group, or generational cohort. Segmenting by ‘coming of age’ age provides a richer segmentation approach than birth age. This study compares two significant cohorts: Baby Boomers and Generation Y, with respect to their shopping behavior and purchase involvement for food, clothing and automobiles. For the three types of products, Baby Boomers value the retail experience and in-store service higher than Generation Y. For Baby Boomers, the purchase process starts with a retailer the consumer trusts, who gives advice for choosing the right product, while for Generation Y, the purchase process starts with choosing a product. This study presents implications for retail strategies that have an appeal to different generational cohorts and considers how retailers should deal with building customer relationships.
  • Baby boomers and busters: an exploratory investigation of attitudes toward marketing, advertising and consumerism, Roberts, J. A., & Manolis, C. (2000). Baby boomers and busters: an exploratory investigation of attitudes toward marketing, advertising and consumerism. Journal of Consumer Marketing, 17(6), 481-497. The purpose of the current study was to compare and contrast various marketing‐ and consumer‐related attitudes and behavior across the baby boomer (those born between 1946‐1964) and baby buster (those born between 1965‐1976) generations. Study results suggest that baby busters, compared with baby boomers, are more favorably predisposed toward marketing and advertising. It was also found that the two generations differ in their understanding of the domain of marketing. These findings have important implications for marketing practitioners and academics alike. Possibly the most significant finding of the present study was the generally elevated levels of compulsive buying found across both generations. Using Faber and O’Guinn’s compulsive buying clinical screener, we found that 7 percent of baby boomers and 11 percent of baby busters were classified as compulsive buyers. These are considerably higher than earlier estimates of the incidence of compulsive buying and warrant further investigation.
  • Generation X, baby boomers, and swing: Marketing fair trade apparel, Littrell, M. A., Jin Ma, Y., & Halepete, J. (2005). Generation X, baby boomers, and swing: Marketing fair trade apparel. Journal of Fashion Marketing and Management: An International Journal, 9(4), 407-419. – Results revealed that baby boomers and swing respondents differed from Generation X participants in their greater focus on qualities of apparel comfort, value, and quality; preference for authentic products and ethnic attire; and local activism behavior. In contrast, they exhibited more limited interest in wearing fashionable attire. All respondents placed high importance on fair trade philosophy centered on wages, workplace, and the environment. For all generational cohorts, their propensity toward wearing ethnic attire was the strongest influence on future intentions to purchase fair trade clothing.
  • A comparison of younger and older baby boomers: investigating the viability of cohort segmentation, Reisenwitz, T., & Iyer, R. (2007). A comparison of younger and older baby boomers: investigating the viability of cohort segmentation. Journal of Consumer Marketing, 24(4), 202-213. – With the exception of cognitive age, there were no significant differences between younger and older baby boomers regarding a large number of salient behavioral variables. This conclusion suggests that marketers use caution when applying the widely accepted age segmentation strategy of splitting baby boomers into younger and older boomers.
  • Age cohort analysis in adoption of mobile data services: gen Xers versus baby boomers, Yang, K., & Jolly, L. D. (2008). Age cohort analysis in adoption of mobile data services: gen Xers versus baby boomers. Journal of Consumer Marketing, 25(5), 272-280. – This study found that baby boomers perceived mobile data services as more difficult to use than gen Xers. However, the perception of usefulness of mobile data services was stronger for the baby boomers than gen Xers. Usefulness of mobile data services may be a critical motivator for baby boomers to adopt mobile data services. Mobile data service marketers should focus on mobile data service usefulness when they are targeting the baby boomer cohort.
  • Emotional branding, Gobe, M. (2001). Emotional branding. Paradigma Baru Untuk Menghubungkan Merek Dengan Pelanggan, Penerbit Erlangga, Jakarta.
  • Assessing the baby boomers‘ financial wellness using financial ratios and a subjective measure, Baek, E., & DeVaney, S. A. (2004). Assessing the baby boomers’ financial wellness using financial ratios and a subjective measure. Family and Consumer Sciences Research Journal, 32(4), 321-348. The article examines traditional leadership research and assumption concerning hierarchical and leader-focused paradigms against the needs of the Baby Boomers, Generation Xers and Millennials who favor a spontaneous, self-initiated leadership/followership theory identified as Alternating Leadership – that acknowledges the duality of leader/follower within each individual. A matrix offers interventions that enhance and expand leadership and followership roles and generational expectations. Conclusions suggest a confirmation of the dual Alternating Leadership role existing within all employees or managers and range of worker-centered, real-time interventions needed to increase worker interaction and synergy.
  • Baby boomers‘ attitudes towards product placements, Schmoll, N. M., Hafer, J., Hilt, M., & Reilly, H. (2006). Baby boomers’ attitudes towards product placements. Journal of Current Issues & Research in Advertising, 28(2), 33-53. Including branded products within mass media programming is becoming common. Previous research has focused almost entirely on college-age students’ attitudes about placements in movies and television. This research focuses on Baby Boomers and is the first to include questions about multiple media in forming attitudes towards product placements. Six hypotheses were tested. Attitude toward product placement is related to media consumption. Males appear more positive than females. Interactions effects of media consumption x gender and media consumption x age appear insignificant. Analytical results, graphs, tables and managerial implications and representative comments from respondents are presented.

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