Born and bred optimists?


Does Irish consumer sentiment differ between men and women or between young and old?

Common experience of boom and bust dwarfs differences between men and women or old and young, but….

….Consumer sentiment is generally more positive among Irish men than women

Sentiment measure higher for women than men only 4 times in 65 readings since 2003

Men only less confident at flash points of economic crisis

Consumer sentiment gender gap greatest when Irish economy is strong and all but disappears during downturns  

Persistent sentiment gender gap at odds with male and female jobs trends in recent decades

Consumer sentiment consistently stronger among younger age groups than old but…

35-54 age group saw weakest confidence readings during crisis- reflecting austerity and wealth hit?

16-34 less buoyed by recent upswing presumably on housing costs and job insecurity 

Older age groups now more worried by Brexit

This analysis was undertaken by Austin Hughes and Shawn Britton of KBC Bank Ireland using aggregates constructed from source data in the KBC Bank Ireland/ESRI consumer survey collected by the ESRI.

The KBC consumer sentiment survey is intended to capture the thinking of Irish consumers in regard to general economic conditions they face as well as their own specific financial circumstances. In a wide range of countries, similar measures are monitored because they capture important ant timely information on the ability and willingness of households to spend. The diagram below shows how the broad trends in Irish consumer sentiment have mirrored changes in consumer spending over the past two decades.

The monthly KBC consumer sentiment survey asks a representative sample of 1,000 Irish consumers for their views on the economy as a whole and on their personal financial situations. Understandably, individual views are likely to vary significantly within this group reflecting the wide range of circumstances faced by consumers as well as differences in the opinions they hold.

Some of these differences might reflect random developments but others could be due to circumstances specific to particular groupings of consumers. For this reason, we decided to examine if certain personal characteristics were likely to lead to systematic differences in the views consumers held.

We did two tests in this regard: the first constructed separate sentiment series for men and women and the second measured confidence according to the age of the consumer. We were prompted to look at these areas by a range of international studies and commentaries.

It has been suggested widely that men and women may perceive economic opportunities and threats differently, with some studies suggesting this translates into a notably greater risk tolerance among men than women. Of course, it could also be the case that economic opportunities are not distributed equally between men and women.

In relation to age, a recurrent issue in media commentary is whether young and old had very different experiences of the gains and losses from the cycle of boom and bust that the Irish economy went through during the past twenty years.

The paragraphs below set out our preliminary findings from this work. It is intended that we will update these results regularly and probe the survey further in coming years to assess if consumers are conscious of how such differences affect their circumstances and thereby influence their economic sentiment and behaviour.

Women are from Ennis, men are from Moate?  

We constructed separate series for consumer sentiment for men and women for the period from the first quarter of 2003 to the first quarter of 2019. We used quarterly data to improve the sample size and increase the stability of the series.

As diagram 2 below suggests, men and women have both gone through dramatic changes in their economic fortunes through the past seventeen years. Not surprisingly, the shared experience of an Irish economy undergoing dramatic swings that saw  boom turn to bust and back to a recovery that more recently has given way to renewed uncertainty has dwarfed differences in the economic viewpoints of men and women. However, the diagram does also hint at some persistent differences in the way Irish men and women view their economic circumstances.      

Of the 65 quarterly observations for the series shown in diagram 2, consumer sentiment among Irish women was higher than that for men on just 4 occasions. As a result, diagram 2 suggests Irish men are generally more optimistic in their assessment of economic conditions and their personal finances than Irish women.

Diagram 2 also indicates that the range of sentiment readings varies more for men than for women, implying Irish men’s views about the economy and their household finances have tended to undergo greater swings than those of Irish women.

A comparison of the two series shows the gender gap in sentiment tends to be greatest in times of strong economic conditions such as the peak years of Celtic tiger exuberance of 2004-2006 and the emerging recovery of 2014 to 2016.

In contrast, the sentiment gender gap virtually disappeared through the 2007-2010 period as sentiment among Irish men weakened to a greater degree than among women (although both series showed substantial declines during this time frame). It is important to note that the larger drop in consumer sentiment among men does not necessarily imply that the downturn was more painful for them than for Irish women (although, as is pointed out below, the rate of job loss was greater among men than among women, that decline has to be seen in the context of its impact on household incomes overall rather than on the circumstances of men alone). The greater drop in male sentiment readings as the downturn took hold simply indicates that the adjustment in thinking among Irish men from a previously more optimistic view was greater than that made by women.   

The four data points at which male sentiment was weaker than the corresponding female metric (July 2007, April 2008, April 2010, and July 2010) coincided with notable re-assessments of the economic outlook. For example, the third quarter of 2007 saw a marked weakening in the outlook for the Irish property market, weaker equity markets and some high profile layoff announcements. Similarly, later ‘outliers’ in this respect coincided with markedly weaker economic developments and sharply increased estimates of the cost of banking support measures.

Do different economic experiences explain the gap in sentiment?

We are not in a position at this point to say why consumer sentiment among men was persistently higher than consumer sentiment among women between 2003 and 2019. However, it may be worth considering some of the broader economic trends for men and women through the survey period as a whole.

Over this survey period, female jobs growth (both overall and full time) at an average of +1.9% y/y was slightly more than twice the pace of male job growth (+0.9%).  The jobs trends illustrated in diagram 3 below might suggest that consumer sentiment among Irish women would have been on an improving trend relative to the corresponding male measure through the 2003 to 2019 period ( although the recovery in employment since 2012 has been marginally greater among men than women) .

Of course, employment prospects are but one element in economic wellbeing. While official data for 2014 indicate a gender pay gap entailing a 14% premium paid to male workers in Ireland relative to their female counterparts, historic data suggest this gap likely edged lower through the survey period.

It might also be noted that over the survey period 2003-2019, does nothildcare costs rose by 14% more than consumer prices overall and the pressures prompting such increases may have resonated more strongly with women than with men, perhaps reflecting the more direct consequences on labour force participation.

Education differences could be an additional consideration that might influence the gender gap in sentiment through variations in perceptions about the economy and/or different personal experiences.  A gender education gap--entailing a higher level of 3rd level qualifications among women than men widened somewhat in favour of stronger female qualifications through the survey period. The 2002 census found that 20.1% of men and 21.8% of women had third level qualifications or higher. The 2016 census found these shares had increased to 40.7% and 43.2% respectively.

While diagram 2 hints at clear differences in consumer sentiment between men and women through the past sixteen yearsit should be noted that such differences are overwhelmed by the common experience of both men and women of the exceptional changes in Irish economic conditions and the financial circumstances of Irish households that took place during this period.

It is also the case that the age structures and economic profiles of the survey samples of men and women were not constant over the 2003-2019 period. So, while these results are consistent with the findings of other international studies that show stronger confidence readings on the part of men than women, they should be seen as pointing in the direction of further research rather than offering definitive conclusions as to how different the economic and financial perspectives of Irish men and women may be.

No country for old men (and women)?

We also constructed sentiment series by age group, which we grouped under three broad headings: 16 to 34 year olds, 35 to 54 year olds and those aged 55 and older. As with the breakdown of sentiment by gender, the rollercoaster changes in Irish economic conditions means that all age groups saw broadly similar increases and declines in confidence between 2003 and 2019.

However, within this common pattern, views on the economy and on household finances showed clear age related variations, with sentiment notably more positive among younger age groups and weakening progressively among older age groups up to age 65 with a slight improvement thereafter.

The relative ordering of sentiment across age groups would be consistent with the view that risk aversion increases with age and this influence would likely be amplified by the dramatic changes in Irish economic circumstances seen through the years 2003-2019. Given other studies findings that consumers tend to dislike losses more than they like gains, the limited capacity to recover from losses experienced during the downturn might be an important influence that weighed on sentiment among older age groups.

Again, it is important to emphasise that these results should reflect the subjective judgements of respondents to the consumer sentiment survey. In isolation, these results don’t necessarily imply one age group has experienced objectively tougher times than another. Indeed, the relatively positive sentiment readings for younger age groups are completely at odds with a clearly poorer experience of the Irish jobs market for this segment of the population through the survey period.

As the graph illustrates, the ‘optimism of youth’ was most pronounced in the pre-crisis period presumably reflecting the expectation of ‘perma-boom’ and the continued emergence of associated opportunities. It should be noted that this positive sentiment was concentrated among those aged under 25.

However, this younger age group also reported a relatively sharp deterioration in their circumstances (in line with a comparatively large drop in employment) and, accordingly, in their sentiment readings as the crisis came to a head in 2008-2009. Younger respondents to the survey also reported a relatively large and speedy recovery over the period to 2013. However, we would caution that a post-crisis bounce may be biased as it excludes the likely more pessimistic assessments of those who emigrated during this period.

As the upswing took hold, sentiment among the 16-34 age group--whose access to housing likely deteriorated during the recovery, did not see the scale of improvement in confidence recorded by older age groups between 2013 and 2016.

This could also be a reflection of structural changes in the labour market in Ireland and elsewhere that have seen job insecurity and pay differentials become more pronounced features that are felt more intensely by those who entered the jobs market during the crisis. This is consistent with comparatively negative assessments of the jobs market during this period by younger respondents to the sentiment survey. Significant increases in education costs might also have weighed on some younger respondents.

The aftermath of the financial crisis saw confidence particularly weak among those in the 35-54 age groups, presumably reflecting the heightened impact of a combination of unfavourable job market outcomes, austerity measures on living standards and the effects of a sharp fall in house prices on their broader financial circumstances.

However, the 35-54 age group also saw a marked improvement in sentiment through the more recent recovery period, an upswing that may reflect some positive wealth effects from rising house prices as well as some positive impacts from an improving jobs market. As a result, sentiment among this middle group improved more during the recovery period than it did for those aged over 55- perhaps reflecting a greater capacity to make good losses experienced in the downturn.

Both middle and older age groups have seen a large weakening in sentiment in the past couple of years than those aged 35 and under. This presumably reflecting a greater sensitivity to Brexit related concerns than among the 16-34 age group. It could be that this could owe something to a greater awareness of historic difficulties in this regard as well as a potentially greater ‘scarring‘ effect on permanent income. It could also be the case that those in younger age groups have come to see such ‘shocks’ as a feature rather than a bug of the economic system.

Again these results provide more in the way of directions for future study than definitive results. A key issue in this regard is whether there may be specific cohort effects reflecting survey respondents’ particular experience of the crisis and its aftermath (such as job loss or adverse wealth effects) that will remain with them as they move into older age groupings or whether age specific influences on sentiment will cause the impact of such experiences to fade.   In this context, observing whether particular types of ‘scarring’ effects remain key features of specific groups as they age will be a fruitful area of study if we are to properly understand how the Irish economy evolves in the years ahead. 

This non-exhaustive information is based on short-term forecasts for expected developments in the economy and financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalised investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a judgment as of the date of the report and are subject to change without notice.