I can still picture that shop vividly. It was in Rome, on Via Parigi—Paris Street, which held an extra allure for me, being enrolled at the French school in the city. Two floors packed with toys of every kind, and yet my heart belonged to the model railways. As my birthday drew near, or if I brought home school results that exceeded his expectations, my father would look me in the eyes and ask, "It appears it is time to visit the shop on Via Parigi." My heart would leap, my eyes would light up with excitement, and I'd throw my arms around his neck in pure joy.
Years have passed since then, and that shop is just a memory now, swept away by the tide of e-commerce and digital entertainment. Now I have a daughter, around the same age I was during those magical trips to Via Parigi. She too has birthdays and occasionally brings home grades that surprise me in the best way. "You deserve a reward," I tell her. "What would you like?"
“Nothing,” she replies. But it’s not just her words—it’s the blank stare that accompanies them. This isn’t a clever ploy to negotiate for a better toy. She genuinely wants nothing. And each time, I’m left wondering how much has changed.And it’s not because she has already too much–she certainly went through her amount of spoiling, but with attentions and care more than toys; neither it is the teenaging ennui that kicked in surreptitiously, giving me no notice.
It’s something deeper. She genuinely can’t pinpoint what she needs, what she wants, or what would bring her joy.
She’s not an ascetic, nor particularly spiritual, frugal, or self-effacing (world peace isn’t on her wishlist either). It has to be something else. But what?
As a self-aware, critical economist, I often think in terms of utility—a term that, in economic jargon, refers to personal satisfaction rather than how to be useful to the world. We all have our own "utility function," a theoretical construct that measures our happiness based on various factors—like being full after a good meal, owning a model train, or experiencing love (I did warn you about economists…). So, at any given moment, my happiness can be measured by this utility function, a weighted sum of all the things that matter to me.
As a child, my utility function predicted pure joy whenever my father drove me to Via Parigi. But what about my daughter?
What makes her happy?
I still have time, I think, to ask her this question—in two or three years, it might be too late, and I’ll dread the answer. What’s different now?
The most obvious difference is that my daughter, like many kids today, lives in multiple worlds, and her physical one often demands less of her time and energy than the others. She has two utility functions, or rather, one that’s divided in two: one part determines her happiness in the physical world, and the other in the meta-worlds where she’s an active citizen.
And those worlds are fascinating: there’s no fixed truth, no clear fiction, everything and nothing coexist, it rains while the sun shines, and elephants can fly—sometimes.
So, what should we expect when this generation (at the tail end of Gen-X and fully within Gen-Alpha) reaches the most critical age for our hyper-consumption-driven society—23 to 28—when the consumption-to-income ratio is at its peak?
Will we see a decline in consumption rates? In the US, they’ve consistently hovered around 90-95% (except during COVID—meaning US households spend almost all their income). In Europe, they’re slightly lower (82-88%). I look into my daughter’s eyes: can I see a 75% there? I definitely can.
Let’s say I got a bit ahead of myself just now. But let’s assume for a moment that we see consumption rates in wealthy countries drop to 80% in ten years. It might seem like a minor adjustment, but in reality, it is USD 2tn less spending in consumer goods per year only in the US. This would have seismic implications for everything: from economic models to policy, from incentive structures to tax rates, from manufacturing to supply chains. Over the past two decades, we’ve been focused on building the infrastructure for massive production, refining processes, and extending supply chains to achieve a seamless global system of "united production." But if consumption rates were to dip to 80% a decade from now, our entire production system would struggle to find enough demand. Meanwhile, demand for energy could skyrocket, making it the most sought-after commodity of all.
Every generation is touted as "fundamentally different" from the one before—perhaps a reflection of our deep-seated dissatisfaction with society. But this generation’s defining difference—the creation of parallel worlds where the adults of tomorrow will derive part of their happiness—is here to stay.
And it truly is different.
One of my favorite quotes from *Ready Player One* goes, "People come to the OASIS for all the things they can do, but they stay because of all the things they can be." Mark Zuckerberg may have been onto something with his push for the metaverse. As their influence in the real world diminishes, today’s kids have a fundamental need to inhabit other worlds. But his vision failed spectacularly because he assumed these online worlds would be governed by the same economic laws, thinking it would be cool for kids to buy a GUCCI bag for their avatars.
The OASIS and other virtual realms operate by different rules. Occasionally, I catch a fleeting glimpse of those rules in my daughter’s eyes. But just as quickly, they slip away as she turns her gaze elsewhere.
Let’s find out what they are together.