Millennials’ Support for Liberal Democracy is Failing. An Investor Perspective

23 Pages Posted: 28 Jun 2017 Last revised: 15 Jul 2017

See all articles by Constantin Gurdgiev

Constantin Gurdgiev

Trinity College, Dublin; Monfort College of Business, University of Northern Colorado

Date Written: July 12, 2017


Recent evidence shows a worrying trend of declining popular support for the traditional liberal democracy across a range of Western societies. This decline is more pronounced for the younger cohorts of voters. The prevalent theories in political science link this phenomena to a rise in volatility of political and electoral outcomes either induced by the challenges from outside (e.g. Russia and China) or as the result of the aftermath of the recent crises. These views miss a major point: the key drivers for the younger generations’ skepticism toward the liberal democratic values are domestic intergenerational political and socio-economic imbalances that engender the environment of deep (Knightian-like) uncertainty. This distinction – between volatility/risk framework and the deep uncertainty is non-trivial for two reasons: (1) policy and institutional responses to volatility/risk are inconsistent with those necessary to address rising deep uncertainty and may even exacerbate the negative fallout from the ongoing pressures on liberal democratic institutions; and (2) investors cannot rely on traditional risk management approaches to mitigate the effects of deep uncertainty. The risk/volatility framework view of the current political trends can result in amplification of the potential systemic shocks to the markets and to investors through both of these factors simultaneously. Despite touching on a much broader set of issues, this note concludes with a focus on investment strategy that can mitigate the rise of deep political uncertainty for investors.

Keywords: Knightian uncertainty, hedging, safe havens, risk, volatility, geopolitical risks, geopolitical uncertainty, liberal democracy, demographics, Millennials, Generation X, Baby Boomers

JEL Classification: F02, F51, F52, F60, F66, G11, G12, H10, H12, I31, J10, J11, J18, J20, J24

Suggested Citation

Gurdgiev, Constantin, Millennials’ Support for Liberal Democracy is Failing. An Investor Perspective (July 12, 2017). Available at SSRN: or

Constantin Gurdgiev (Contact Author)

Trinity College, Dublin ( email )

Trinity College
Dublin 2

Monfort College of Business, University of Northern Colorado

800 17th St Campus Box 128
Greeley, CO 80639
United States

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