We’ve heard again and again that the current economic downturn is the worst the United States has seen since the Great Depression. But, will it shape our attitudes about money for years to come?
Robert Perez learned what it took to put food on the table at an age when most children are still learning the alphabet.
“I think we were about 5 or 6 and we were already out there with the family," Perez said. "We’d all work together picking walnuts. You got paid by the box or the sack and we just made so many sacks with the family.”
“My brother and I each took a gunny sack and a pocket knife and we would walk quite a ways to the central market and go through the garbage cans and underneath the trucks where stuff would fall," he said. "Like – you’d find a garbage can where they would throw the potatoes that were rotten. So, we’d just take and cut the half off. Two rotten potatoes makes one, and that’s what we did and take them home.”
Watching their parents or neighbors struggle to meet their families’ most basic need shaped Perez and others in his generation for the rest of their lives. Many became adults who valued a steady job and spent conservatively.
Following World War II Perez worked in construction and recalls times when he took on two or three part-time jobs on top of his regular work. Even today, he shops around for deals on everything from cars to Kleenex.
“That’s the way I am, and why? My life, that everything was so hard. It was hard to make money and you had to be careful about the way you spend your money," Perez said. "And now that I don’t have to be that way because I have enough of an income that I could do anything I want to do, I’m still very careful about the way I spend money.”
Today, Americans are experiencing the highest rates of unemployment and loss of personal wealth since the Great Depression. We’re saving more than we have in recent years and paying down our debts. But, are these changes lasting? Will we forget the lessons sub-prime mortgages taught us when the next fool-proof investment comes along?
“There’s been a lot of talk about hitting the reset button," said Dr. Jean Twenge, a psychologist at San Diego State University who studies changing attitudes across generations. "That we’re going to change our culture based on this recession and that we’ll have less debt, more people scaling back on things. Maybe we’re not spending quite as much and realizing the folly of taking out a big mortgage and not saving. And we have some of this, but it hasn’t really changed the underlying psychology of Americans, so far as we can tell.”
Twenge draws that conclusion partially from an annual study of high schoolers that measures attitudes about the importance of work and material possessions. She says her research shows we are still obsessed with celebrity culture and the idea of overnight success, so current changes to spending and saving habits probably won’t stick.
But others argue adjustments made today are exactly what it takes for lasting change to take place.
"We are very habitual and so if people change their behavior even theoretically temporarily, what you will find is a lasting change," said On Amir, an associate professor at the University of California San Diego who studies consumer behavior. "If somebody now, because of the situation has decided to check out Wal-Mart for some purchases and they get used to buying stuff from Wal-Mart, they’re likely to continue doing that.”
Amir said historically generations that had to learn to be careful with their money remained careful and Perez believes he sees people learning that lesson now.
“Already, I've talked to people that said, ‘I should have known better than to take on a house and take on a new car,'" he said. "There’s only one way, hard work, steady work. It keeps you going. You never go wrong if you work hard, and you save money and have money.”
With the country’s unemployment rate hovering stubbornly near 10 percent and 1 million expected home foreclosures this year, we may not be done learning our lesson any time soon.
