A new way of measuring the middle-class in South America

“According to the latest OECD Development Center “Latin American Economic Outlook 2011: How middle class is Latin America?,” the relative size of the middle class in each country is: 55 percent in Uruguay, 49.9 percent in Chile, 47.7 percent in Brazil, 46.8 percent in Peru, 44.9 percent in Ecuador, 43.7 percent in Argentina, 38.5 percent in Colombia, and 36 percent in Bolivia. To determine those figures, the study established the median per capita income of the country, then defined 50 percent and 150 percent of that number as the range of the middle class.

“Households below that range are ‘the disadvantaged’, and households above that range are the ‘the affluent’. This represents an innovative way to define the middle class. Previous, deficient methods of defining the middle class include setting aside the middle two-fifths of the population as middle class or all people who live on US$2 to US$10 per day. Using this measure, the study indicates that middle class in Latin American countries has an average of 8.3 years of education, social mobility is more common between middle-class and the disadvantaged, education level of parents is the main cause of social mobility, and having a growing middle class has helped Latin America reducing the impact of the financial crisis.”

Implications from IFTF:

Just as there has been a movement to redefine the way we define poverty, so should we make this adjustment. The very generalized idea that middle class is everyone living on 2USD to 10USD a day does not take purchasing power, community standing, or access to education and other institutions generally considered middle class cornerstones into consideration; important factors that have directly influenced the American middle class. It would be interesting to see what the average daily USD income is these new middle class calculations.