How financial stress is shaping a generation’s happiness

In a world considered 'best' in terms of tech advancements and comfort, a troubling trend is emerging among young adults. Research by the National Bureau of Economic Research reveals that happiness among young adults has sharply declined in recent years.

The study, spanning 6 English-speaking countries - Australia, Canada, Ireland, New Zealand, the UK, and the US, shows a stark reversal in the U-shaped happiness curve. According to this curve, people are considered the happiest in their youth, face a dip in middle age, and then rebound as they grow older.

However, the new data paints a sombre picture. Today's youth is experiencing their lowest levels of well-being. In the United States, for example, life satisfaction among young adults has dropped significantly since 2016, while older adults' happiness has remained stable. This downward trend suggests deeper societal shifts at play.

Mental health crisis

The decline in happiness goes with the troubling surge in mental health issues worldwide. Rates of anxiety, depression, and self-harm among young people have skyrocketed across the 6 countries analysed. This dents the illusion that people in developed countries are happier than the rest. Their struggles simply take different forms or, as we like to call them, 'first-world problems'

In Australia, mental disorders among young people have spiked 40 per cent for men and 60 per cent for women in just over a decade. Similar patterns are visible in the US and the UK. Young women are particularly affected, with nearly half of them aged 16-24 reporting mental health struggles in recent years. 

Happiness in times of financial uncertainty

Economic stability is a key factor contributing to the declining happiness trends. Today's youth faces rising housing costs, student debt, and a disrupted job market. Student debt has been a major issue in the US, along with the rising cost of homeownership. Students are caught in the debt trap long after their education, limiting their options to expand.

To reverse this decline, experts suggest the need for economic reforms that address the financial struggles of young adults. But for now, unhappiness seems to be the only constant in the increasingly volatile geopolitical landscape.