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A Consumption-Based Definition of the Middle Class

Author

Listed:
  • Melissa Haller

    (University of California)

  • Jeffrey B. Wenger

    (The RAND Corporation)

  • Melanie A. Zaber

    (The RAND Corporation)

  • George W. Zuo

    (The RAND Corporation)

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.

Suggested Citation

  • Melissa Haller & Jeffrey B. Wenger & Melanie A. Zaber & George W. Zuo, 2022. "A Consumption-Based Definition of the Middle Class," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(3), pages 1249-1270, December.
  • Handle: RePEc:spr:soinre:v:164:y:2022:i:3:d:10.1007_s11205-022-02977-8
    DOI: 10.1007/s11205-022-02977-8
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    References listed on IDEAS

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