Growth versus Security: Choice and the Generational Difference in Preferences

The choice of an optimal economic system can be viewed as a problem linked to preferences of individuals with respect to the income that might need to be forgone in order to enjoy a desirable level of job or income security. A highly competitive, market-oriented economic system has proved to be more innovative and more efficient, thus also more productive, than any centrally planned system. Therefore, the expected lifelong income of any individual in a competitive system is higher than it would be otherwise. However, the microeconomic fundamentals of such a system rest on the widespread use of strong incentives: both positive — such as bonuses, promotions and higher status, as well as negative — such as loss of income, demotion and loss of job. The result of such an incentive system is the prevalence of high uncertainty with respect to incomes, jobs and social position.