Feeling Poor, Feeling Rich, or Feeling Middle-Class : An Empirical Investigation
Based on their objective economic situation and comparing with their peers, individuals form perceptions of their economic position in a society. Data from the three waves of the Life in Transition surveys of European countries show that these perc...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/939251603805617928/Feeling-Poor-Feeling-Rich-or-Feeling-Middle-Class-An-Empirical-Investigation http://hdl.handle.net/10986/34689 |
| Summary: | Based on their objective economic
situation and comparing with their peers, individuals form
perceptions of their economic position in a society. Data
from the three waves of the Life in Transition surveys of
European countries show that these perceptions
systematically deviate from the rankings obtained using
consumption levels. People position themselves in the middle
ranks in larger numbers than those who are in the middle
ranks according to their consumption levels.
Correspondingly, many people who objectively are classified
in the top, richest, or bottom, poorest, ranks subjectively
feel that they are in the middle class. This puzzling
"bunching in the middle" is the focus of this
paper. Explanations are tested and discarded that consider
subjective perceptions as misperceptions or the result of
other mistakes due to data limitations (such as tail bias).
The paper concludes that rather than reflecting a subjective
assessment of the distribution of welfare, subjective
rankings reveal subjective economic well-being. The paper
show that monetary consumption is a strong predictor of
subjective economic well-being, but that the latter is
influenced by many other factors, including economic
security, proxied by employment status or other measures of
human capital, such as health and education. These findings
have policy relevance, since redistribution measures aiming
at simply protecting consumption levels may not be
sufficient to restore the economic well-being provided by
having full-time secure types of employment. |
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