January 2025 saw the birth of a new generation: Generation Beta. It will include people born in 2025 through 2038. Gen Beta, which are mostly the children of Millennials and Gen Zers, will make up 18% of the global population by 2050.
Gertrude Stein is thought to have introduced the concept of naming generations during a conversation with Ernest Hemingway, famously captured in The Sun Also Rises, when she said: "You are all a lost generation." Though speaking about a specific group of expatriates that served or lived during World War I, Stein's words established a foundation for how we define and categorize generations.
A couple of generations later, the term "Baby Boomers" was coined to describe the surge in births in the US following World War II. Now, Gen Beta will inherit a world facing climate challenges and rapid urbanization, and where technology and artificial intelligence will be embedded in everyday life.
Geography, demography, increases in income and digitalization will be the driving forces of how Gen Beta will grow, move and spend their money – and this will have a growing impact of the global economy as Gen Beta comes of age.
Recent research from World Data Lab explores four ways Gen Beta will both fit into and redefine tomorrow's world:
1. Asia’s Gen Beta population will be smaller but richer
Gen Beta will be the least Asian generation ever, in relative population terms. Declining fertility in large parts of Asia means that only around 46% of Gen Beta will be born in the Asia-Pacific region (APAC). Gen X was the most Asian generation, with 61% of the population from the region. Gen Beta will see the largest relative population increase in Sub-Saharan Africa. One in every three Gen Betas born will be African.
Even as the birth rate in APAC declines, however, the region’s population is becoming richer. Nearly 40% of Gen Beta’s spending will occur in APAC, the largest share ever, with two-thirds of Gen Beta consumers that spend over $12/day (in 2017 purchasing power parity) concentrated in India and China.
Fewer births in Asia, but increasing purchasing power, means that spending will continue to move East. The Gen Beta market in APAC will be comparable to that of Europe and the US combined. Even though the US and Europe will account for just 8% of the Gen Beta population, they are projected to remain the dominant markets by contributing 41% of overall spending.
2. Gen Beta's wealth won't be concentrated in high-income countries
Historically high-income countries such as the US, Japan, Australia and Europe have traditionally dominated global spending. These economies represented 85% of Baby Boomers’ spending in 2000, according to World Data Lab's research. Since then, every generation has seen a shift away from high-income countries.
As Gen Beta starts to spend, these markets will see a further declining share of global spending – dropping from about 65% today to 48% within the Gen Beta consumer class.
3. Gen Beta will be the most urban generation ever
Newborns often enter the world in rural areas. Not only do families in rural areas in countries such as the US generally have more children, but working-age adults and wealthier populations are also more likely to live in cities.
Even so, Gen Beta is on track to become the most urban generation ever. While only half of Gen Beta babies are born in cities today, by 2040 58% of Gen Beta will live in cities, surpassing Gen Alpha’s 53% and Gen Z’s 45% at comparable ages.
Cities are hubs of prosperity, as Edward Glaeser wrote in Triumph of the City, an exploration how economic forces shape urban areas. The density in cities leads to economies of scale and so people living in cities are able to enjoy a greater selection of both products and jobs. This creates greater prosperity in urban areas, where many Gen Beta members will live.
4. Gen Beta will be a ‘bridge generation’ for technology
Members of Gen Z and Gen Alpha have already grown up digitally. Now, AI-based automation coupled with global uncertainty, extreme weather events, resource pressures, war and political turmoil will shape the way Gen Beta grows up. Their parents’ post-pandemic mindset, as well as demographic and geographic shifts, will explain Gen Beta’s spending patterns.
Gen Beta will grow up with online gaming and electronics rather than toys. World Data Lab projects that Gen Beta will spend $113 billion on consumer electronics by 2035, which is 2.4 times greater than Gen X’s expected spending on electronics over the next decade. Plus, members of Gen Beta will generally be more prosperous than their Gen Z parents when they reach their current age.
The growing importance of Gen Beta spending
It’s also important not to overlook the generations fueling global expenditure right now. Most Gen Beta spending will be driven by their parents for at least the next two decades before they begin making their own consumer decisions. Even by 2050, Gen Beta will represent 18% of the population but only 12% of total spending.
In fact, Gen X deserves the most attention in the near term: They are set to inherit wealth from the Boomers and, although this generation is roughly the same size as Gen Beta, Gen X is at its peak career stage and spending capacity right now. Our projections show Gen X leading global consumption until at least 2033, primarily because they will hold the largest share of spending in high-income countries.
It’s tempting to focus on today’s babies, but it’s important to avoid placing undue economic emphasis on them just yet. To understand the world Gen Beta will enter, we must consider the environment they will inherit from other generations, where they are being born, where they might move and what their priorities will be. This will help us to understand how Gen Beta will shape the world in the future.
Originally Posted: on WEF Forum
