Monday, April 28, 2014

Searching for the Middle Class

How do you define the middle class—is it a number or a feeling? In a recent study, the Congressional Research Service examined both approaches to defining the middle class.

The number. One way to define the middle class is statistically, such as dividing households into fifths based on their income. Everyone in the middle three quintiles, say, is defined as middle class. In 2012, this includes households with incomes between $20,591 and $104,087.

The feeling. Alternately, the middle class can be defined as a psychological pat on the back—the sense of satisfaction obtained when comparing your income to the income of those around you. Studies have found a strong link between relative income and self-reported happiness. "Relative income most affects well-being when a group's income is above the average in its state but not at the top (90th percentile) of the income distribution," notes the report. That feeling of well-being defines the middle class. If you don't feel it, you're not in it.

Source: Congressional Research Service, The Distribution of Household Income and the Middle Class (PDF)

1 comment:

Edward Scott Hofland said...

My opinion:
The lowest 20% is poor;
The next 20% is working poor;
The middle 20% is lower middle class;
The next 20% is middle class;
The next 15% is the upper middle class;
The top 5% includes the well-off, wealthy, rich, ultra-rich and beyond.