Millennials will be the richest generation ever, but who gets that wealth is down to luck | Martha Gill

What have millennials been complaining about? Far from languishing in poverty as society’s lost stepchildren, they are on course to become the richest generation in history. That’s according to a report from the estate agent Knight Frank, which tells us that in the next 20 years there will be a “seismic” transfer of wealth assets from older cohorts to people born between 1981 and 2000.

Generational unfairness solved? Well, no, of course not. These assets will be distributed to millennials entirely according to how rich their parents are. This will make one of this cohort’s biggest problems worse. Which is that the determining factor of millennial success is, increasingly, whether or not you come from a rich background.

This problem is vastly underrated. Headline figures about how this cohort is doing overall, or in comparison with older people, tend to miss something important, which is that human beings are wired to care not just about how rich they are but about how they are doing in comparison with their peer group. We care about relative success. The social contract – work hard and get on – is really a contract about peer competition. It says that the most talented and hardest working in any cohort should rise to the top. It is an idea about meritocracy. And this is now being torn up.

This matters. If, as a boomer, you came top in every class, aced university, and spent your 20s slogging 14-hour days at some grim financial rock face, you’d expect to pull out, financially, in front of your peers. But the equivalent millennial could well be overtaken in their 30s and 40s by less talented friends – or friends who chose a nice, balanced lifestyle, or a badly paid creative career – who happened to luck out with a windfall from their parents.

The path to economic success is no longer paved with clear rules. It has become more arbitrary, and more unfair. It’s difficult to overstate the impact this shift in fairness will have – is already having – on society. Let’s use an analogy. Imagine if A-level grades were allocated not on the basis of individual achievement but according to an algorithm that assigned a higher score to pupils from richer backgrounds.

Now, we don’t have to work too hard to put ourselves in this scenario; it actually happened, briefly, during the Covid pandemic. For a moment, a cohort of pupils had A-level results that corresponded not to the quality of their work but to the socioeconomic profile of their schools.

There was public outcry, and this policy was quickly reversed. But imagine if it had stuck, and this was now just the way A-levels were scored. What would that do to the mindset of exam candidates? Would it make them work harder, or less hard? Would they develop healthy, can-do attitudes about their ability to overcome obstacles, maximise their talents and achieve things?

Or would they fall into a state of despondency (in the case of the already poor) or complacency (in the case of the already rich), noting that the system was rigged and that nothing they could do would make a difference? Would they be more likely to develop burnout, depression or anxiety – or less likely?

Back to millennials. When it comes to economic success, evidence is growing that younger generations are indeed developing a radically different mindset from those that came before.

These differences show up, for example, in an analysis of the 2022 England-wide survey on fairness and social mobility by the economist Ben Ansell. He shows that younger people are much less likely than older ones to think that economic success is down to individual effort – and more likely to think that it is due to outside forces.

The big difference, unsurprisingly, was over housing. Less than a third of under-30s felt that they had a fair chance at buying a house. Just under two-thirds of over-70s thought that they’d had this chance. “The old think they did it on their own (or at least that others should),” Ansell writes. “The young think success is outside their control.”

This isn’t just psychological bias. Both groups are right. Boomers certainly benefited from economic luck, but they also benefited from a more meritocratic society. The hardest working and most talented among them could indeed take home the spoils at the expense of their peers. Their success was affected by individual effort. Not so much in the case of millennials and generation Z.

This perfectly rational shift in attitudes explains all sorts of puzzles when it comes to younger generations. It has been linked in the UK to the unprecedented support among millennials for the Labour party; they have broken the pattern of becoming more conservative as they get older.

But the social consequences are far wider than this, and are only just beginning to be understood. The idea that the system is rigged against you is, for example, a hard one to grapple with while preserving motivation and your mental health. Could this partly explain why millennials and generation Z suffer from depression and anxiety at far greater rates than their parents?

The demotivating idea that extra effort is not rewarded is also likely to be damaging to the economy in general. There is already some evidence that young people are less entrepreneurial and less innovative than their elders were. After all, the belief that life is fair is the credo on which all successful societies with happy citizens are built. In coming decades, as older generations tip their wealth into the pockets of their children, it will be worn further away.

Ideas for solving the problem float around. Last week Tory peer David Willetts suggested we hand all 30-year-olds a ”citizens inheritance” of £10,000. But this won’t do much for millenials, who have mostly passed that age, nor will it really close the yawning inequalities between them. In fact, there is really only one way to grasp the issue: bumping up inheritance tax. It’s politically impossible, of course, but may be the only answer.