Latin American Middle Classes: The Distance between Perception and Reality

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The main contribution of this paper with respect to previous work is the use of data on subjective perceptions to identify the Latin American middle classes. This paper provides a set of comparisons between objective and subjective definitions of middle-class using data from the 2007 W orld Gallup Poll. Seven objective income-based definitions of social class are contrasted with a self-perceived social status measure. Mismatches between the objective and the subjective classification of social class are the largest when the objective definition is based on median incomes. Mismatches result from the fact that self-perceived social status is associated not just with income, but also with personal capabilities, interpersonal relations, financial and material assets, and perceptions of economic insecurity. Objective definitions of the middle class based on absolute incomes provide the lowest mismatches and the most accurate differentiation of the middle class from other classes. Terms of use: Documents inJEL Classification: D3, I3, D6

The Distance between Perception and Reality in the Social Domains of Life

“…Individuals in all income groups recognize that social ranking is determined not just by current income, but by all forms of wealth. Indeed, a striking finding in my own econometric work with Johanna Fajardo (Lora and Fajardo, 2013) using the Gallup data was that individuals' judgment of their social ranking is affected in a statistically significant way by their human capabilities (age, education, health status 21 ), different forms of relational capital (family, friends, religion), and material conditions of life, which include not only income but also a variety of physical and financial assets, as well as perceptions of economic vulnerability. The results are striking because they are entirely in line with the predictions of standard economic theory, which seldom happens with subjective data.…”

“…The mode is rung 5 for all deciles, except the two lowest ones, where the mode is rung 3. Although objectively richer people place themselves on higher rungs, the distribution of responses is not close to a hypothetical NW-SE 45-degree Lora and Fajardo (2013). The ladder question is one of three alternative ways that have been used in surveys to elicit perceived social rankings.…”

“…For instance, while 81 percent of Latin Americans express satisfaction with their jobs, only 35 percent are satisfied with what their government is doing to "increase the number and quality of jobs available." Similarly, while 85 7 In my own econometric studies, I have assessed the influence of optimism on job satisfaction (Chaparro and Lora, 2013), on health satisfaction (Lora, 2011), and on subjective social rankings (Lora and Fajardo, 2013). percent of Latin Americans are satisfied with their health, only 61 percent are satisfied with the availability of quality health care in the city or area where they live.…”

The Distance Between Perception and Reality in the Social Domains of Life

“…Perceived social rankings are strongly skewed toward the middle of the scale, not the top. However, in other social domains, some evidence of self-enhancement is found when comparing individuals' assessment of their own conditions with their assessment of the situation of the country as a whole in the same domain (IDB, 2008 In my own econometric studies, I have assessed the influence of optimism on job satisfaction (Chaparro and Lora, 2013), on health satisfaction (Lora, 2011), and on subjective social rankings (Lora and Fajardo, 2013).…”

Entrepreneurship, Entrepreneurial Values, and Public Policy in Argentina

“…The EPH does not include recall questions. 18 See Castellani and Parent (2011) for a discussion in defining and measuring middle class, and Lora and Fajardo (2011) for mismatches between subjective and objective measures of middle class. 19 We restrict the population to those between 18 and 64 years old: 16.4 percent of the employed population comes from a high-income family, 60.4 percent comes from a middle income family, and 23.2 percent comes from a lowincome family.…”