What is 'Middle' About the 'Middle Class'?

Renowned film actor Manoj Bajpayee, in a recent interview, spoke at length about how he lives and maintains a ‘middle class life’ despite having refined tastes and a love for champagne.In the same interview, the actor said that he deliberately bought himself a small car without any fancy features because he couldn’t teach himself how to operate his other vehicle, which is expensive and fully equipped. He further added that there is no limit to human ambition and one’s desire to accumulate more wealth than one needs.The self-defined perception of maintaining a ‘comfortable’ and ‘dignified’ life, sans luxury-lifestyle pursuits, with restrained human ambition (of accumulating more), is identified with a ‘middle class’ thinking that Bajpayee seeks to define here (more so for himself).In the economic context, the same group (what one loosely calls the middle class) has been defined by scholars like Birdsall, Graham, and Pettinato (2000) as the “backbone of both the market economy and of democracy in most advanced societies” in the face of ever-expanding globalisation.Of course, there is nothing new about this undistilled faith attributed to the need for and creation of a middle class for a capital-oriented market economy to thrive. In developmental thinking and academic discourse, there is a long line of theorising around the criticality of the middle class (its political, social, and economic importance) going back, at least, to Max Weber (1905).At least three distinct arguments are traditionally made, echoed in a 2008 study by Nobel Laureates Abhijit Banerjee and Esther Duflo.In the first set of arguments, new entrepreneurs armed with the capacity and tolerance for delayed gratification emerge from the middle class and create employment and growth in productivity for the rest of society (for a formalisation of this argument, see Acemoglu and Zilibotti, 1997).In a second, perhaps more conventional theoretical view, the middle class is primarily a source of vital inputs for the entrepreneurial class: it is their "middle class values" and their emphasis on the accumulation of human capital and savings that make them central to the process of capitalist accumulation (for example, Doepke and Zilibotti, 2005, 2007).The third view, a staple of the business press, emphasises the middle class consumer as someone who is willing to pay a little extra for qualityIn the Indian scenario, one is also made to ask a larger question: Who is the middle class? And what is ‘middle’ about this identified middle class?In a country where levels of income, wealth, and consumption inequality are perhaps at their worst historical level (see a recent 2024 study on inequality levels in India by Bharti, Piketty et al), and is currently one of the worst in the context of growing developing economies, the ‘middle class’ category—and its definition itself—remains quite disputed and stratified. There is an upper middle class, a middle middle class, and lower middle class, each of which has its own unique pattern of income, consumption levels, and socio-economic preferences. But, there is more to this debate.There is a significant amount of nuanced academic discussion—at least in the development studies and economics literature—on ‘who’ can be defined as ‘middle class’.Duflo and Banerjee, in their 2008 paper, attempted to look into the ‘middle class’ question (in the context of India and 12 other developing countries) and what it means in the context of the income-consumption levels of populations living in low- and middle-income developing countries (from an internationally comparable and measurable perspective). Household surveys and (micro-level) consumption data help provide good estimates. Even though the quality of data on income, wealth, and consumption (in the Indian context) is not of the best (most frequent) quality, a lot —based on what’s available—can still be said about our question.In their study’s data on 13 studied countries (including India), except for the rural parts, those living on $2 to $4 per day (on a purchasing parity basis) were roughly between 23-40 percent of the overall population, i.e., composed of those between the 20th and 80th percentiles of consumption. Duflo and Banerjee felt it reasonable (more than 15 years ago), according to an Easterly (2001) estimate, to define this group (those living in the $2-$4 per day category) as the ‘middle class’. The $6-$10 group is much smaller in most countries (i.e., those who are above the 90th percentile of income in India).Other definitions of the middle class provide similar results. For example, Birdsall, Graham, and Pettinato (2000) define the ‘middle class’ as those between 75 percent and 125 percent of median per capita income.By this category too, the $2-$4 category fits their scale to represent the middle class (including for countries like Mexico and Peru). In the current context, when one accommodates for inflation and the average rise of the standard of living, these lines (and ranges) would definitely deviate from their previously calculated estimates (similar to my earlier discussion on the nature of ‘The Great Poverty Debate’ afflicting India’s socio-economic policy landscape).Asked about his relationship with money, Manoj Bajpayee, in the same interview, said, “You need to have enough money for medical expenses and for your children’s education. You need to be able to live a comfortable, dignified life, where you don’t have to borrow money from anybody. That’s it.”This statement, more reflectively, helps us (then) ask another critical question: Who can be called a middle class consumer based on their eating, food consumption, and other preferences?Almost 120 years ago, Ernst Engel (1895) argued that the share of our household budget spent on food (and other inelastic/necessary items spending) falls with increases in the standard of living.In rural Guatemala, for example, the share of the budget spent on food falls from 65 percent among the extremely poor on less than $1 per day to 13.5 percent among those with daily per capita expenditures between $6 and $10.As incomes rise, some of the resources (considered inelastic/necessary) are freed up by the lower share of income going towards them (on categories like food) and may go towards other overheads like entertainment.The share of expenditure devoted to entertainment rises with income, according to Duflo and Banerjee (2008), increasing from next to zero among the extremely poor to between one percent and five percent among those with daily per capita expenditures between $6 and $10, both in rural and urban areas.The increase, according to the authors, is about half as much among those with daily per capita expenditures between $2 and $4. The share of income spent on festivals increases with the standard of living as well. Similarly, more recent consumption data helps us ascertain the consumption preferences (and allocative importance in spending) assigned to areas like education, healthcare, and housing (including rental costs) by rural-urban households, and these patterns (among different income groups) have changed over time.Notwithstanding the inequalities in income-wealth accumulation that persist (and continue) to grow across households and groups in India, still, from the Banerjee-Duflo study, it seems clear that the middle class pursues what is conventionally known as a better "quality of life" (they are not poor and realise their limits to not being—or capable of being—rich either); with better health care for the family and more expensive education for the children, as well as more and better housing, more expensive eatables, and more entertainment, tobacco, and alcohol.Despite the middle class's reputation for thrift, some "frivolous" consumption is as middle class as a commitment to education or health care. No wonder Bajpayee’s refined tastes—in food, entertainment, and champagne—can last while he can safely relate to a perceived ‘middle class’ category lifestyle.The middle class also lives distinctly healthier lives than the poor. In Duflo-Banerjee’s study, the so-called categorised ‘middle class’ population goes to the doctor more often and spends more per visit. They are also much more likely to have access to running water, latrines, and electricity. As far as children's education is concerned, they spend much more per child, partly on more years of schooling and partly on better quality.They also argue:“Nothing seems more middle class than the fact of having a steady well-paying job. While there are many petty entrepreneurs among the middle class, most of them do not seem to be capitalists in waiting. They (the middle class) run businesses, but for the most part only because they are still relatively poor, and every little bit helps. If they could only find the right salaried job, they might be quite content to shut their business down. If the middle class matters for growth, it is probably not because of its entrepreneurial spirit.”The middle class (as observable in urban areas) also have fewer children and spends much more on the education and health of these children as well as on their own health. It is interesting to speculate whether this has something to do with the kind of jobs they have—or if there is a time endowment crisis they face.Perhaps the sense of control over the future that one gets from knowing that there will be an income coming in every month, and not just the income itself, is what allows the middle class to focus on building their own careers and those of their children.The reason why this matters is indeed close to what leads us to the idea of a "good job"—an argument this author also expanded on here (in a discussion on Rodrik’s productivism framework to India’s jobless growth problem). A good job for an aspiring middle class citizen is a steady, well-paid job; a job that allows one the mental space needed to do all those things the middle class does well.This is an idea that many development economists have often resisted on the grounds that good jobs may be expensive jobs, and expensive jobs might mean fewer jobs. But if good jobs mean that children grow up in an environment where they can make the most of their talents, one might start to think that it may all be worth it.Unfortunately, a vanishing middle class in India (with increasing lower-income and higher-income groups) is similarly evident in the deep regression-decline of ‘good’ jobs available across sectors, underscoring the rise of unemployment-underemployment, especially amongst the aspiring, educated youth (who otherwise remain the root source of a developing nation’s ‘future’ growing middle class).(Deepanshu Mohan is a Professor of Economics and Director of the Centre for New Economics Studies (CNES), Jindal School of Liberal Arts and Humanities, OP Jindal Global University. The author would like to thank the InfoSphere team (Aditi, Amisha, Aryan, Vasudevan, Jheel, Aman) for contributing to this edition. This is an opinion piece and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)

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What is 'Middle' About the 'Middle Class'?

Those belonging to the middle class live distinctly healthier lives than the poor.

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