A Consumption-Based Definition of the Middle Class

Melissa Haller (), Jeffrey B. Wenger (), Melanie A. Zaber () and George W. Zuo ()
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Melissa Haller: University of California
Jeffrey B. Wenger: The RAND Corporation
Melanie A. Zaber: The RAND Corporation
George W. Zuo: The RAND Corporation

Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, 2022, vol. 164, issue 3, No 10, 1249-1270

Abstract: Abstract Research on the middle class has typically defined middle class membership in terms of income. In this paper, we develop a consumption-based measure of the middle class that closely follows economic theory of constrained optimization. Overall, we find that only 55% of those considered middle-class by income are also classified as middle-class by consumption, with the remaining 45% divided between the consumption working class (34%) and the consumption upper class (11%). Put differently, a sizable share of Americans—16% of the overall population—are characterized as middle-class but consume like they are working-class, with little capacity to save. We find substantial differences in the demographic makeup of the consumption-based middle class compared to the income-based middle class. Notably, fewer Black and Hispanic Americans are included in a consumption-based measure of the middle class, reinforcing distinctions between income and wealth drawn by prior literature.

Keywords: Middle class; Income distribution; Household consumption (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s11205-022-02977-8

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