There is no consensus definition of  middle class,  neither is there an official government definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point in the distribution is the median, and in 2007 the median household income was $50,233. How far above and below that amount the middle stretches remains an open question. The U.S. Census Bureau has published figures for 2007 breaking the income distribution into quintiles, or fifths. The narrowest view of who might be considered middle class based on that presentation would include those in the middle quintile, which includes households with income between $39,100 and $62,000. A more generous definition might be based on the three middle quintiles, those households with income between $20,291 and $100,000. Surveys suggest that from 1% to just over 3% of the population consider themselves to be upper class. Comparing those figures with the income distribution would put the dividing line between middle and upper class close to, if not above, $250,000. Similarly, survey responses suggest that the lower end of the middle class might be close to $40,000

Cashell, Brian W.

Government and Finance Division

English

[Excerpt] There is no consensus definition of  middle class,  neither is there an official government definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point in the distribution is the median and in 2005 median household income was $46,326. How far above and below that amount the middle stretches remains the question. The Census Bureau publishes figures breaking the income distribution into quintiles, or fifths. The narrowest view of who might be considered middle class would include those in the middle quintile, those households with income between $36,000 and $57,660. A more generous definition might be based on the three middle quintiles, those households with incomes between $19,178 and $91,705. Surveys suggest that 1% to 3.3% of the population consider themselves to be upper class. Comparing those figures with the income distribution would put the dividing line between middle and upper class close to if not above $250,000. Similarly, survey responses suggest that the lower end of the middle class might be close to $40,000

Cashell,  Brian  W.

DigitalCommons@ILR

Cornell University ILR School 
DigitalCommons@ILR 
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March 2007 
Who Are the “Middle Class”? 
Brian W. Cashell 
Congressional Research Service 
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Who Are the “Middle Class”? 
Abstract 
[Excerpt] There is no consensus definition of "middle class," neither is there an official government 
definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point 
in the distribution is the median and in 2005 median household income was $46,326. How far above and 
below that amount the middle stretches remains the question. The Census Bureau publishes figures 
breaking the income distribution into quintiles, or fifths. The narrowest view of who might be considered 
middle class would include those in the middle quintile, those households with income between $36,000 
and $57,660. A more generous definition might be based on the three middle quintiles, those households 
with incomes between $19,178 and $91,705. Surveys suggest that 1% to 3.3% of the population consider 
themselves to be upper class. Comparing those figures with the income distribution would put the 
dividing line between middle and upper class close to if not above $250,000. Similarly, survey responses 
suggest that the lower end of the middle class might be close to $40,000. 
Keywords 
congress, legislation, government, definition, distribution, income, household, population, value, views, 
middle income, census bureau, federal 
Comments 
Suggested Citation 
Cashell, B. W. (2007). Who are the “middle class”? (RS22627). Washington, DC: Congressional Research 
Service. 
http://digitalcommons.ilr.cornell.edu/crs/34/ 
This article is available at DigitalCommons@ILR: https://digitalcommons.ilr.cornell.edu/crs/34 
Order Code RS22627
March 20, 2007
Who Are the “Middle Class”?
Brian W. Cashell
Specialist in Quantitative Economics
Government and Finance Division
Summary
There is no consensus definition of “middle class,” neither is there an official
government definition.  What constitutes the middle class is relative, subjective, and not
easily defined.  The mid-point in the distribution is the median and in 2005 median
household income was $46,326.  How far above and below that amount the middle
stretches remains the question.  The Census Bureau publishes figures breaking the
income distribution into quintiles, or fifths.  The narrowest view of who might be
considered middle class would include those in the middle quintile, those households
with income between $36,000 and $57,660.  A more generous definition might be based
on the three middle quintiles, those households with incomes between $19,178 and
$91,705.  Surveys suggest that 1% to 3.3% of the population consider themselves to be
upper class.  Comparing those figures with the income distribution would put the
dividing line between middle and upper class close to if not above $250,000.  Similarly,
survey responses suggest that the lower end of the middle class might be close to
$40,000.  
Much of the legislation considered by Congress is in the name of the so-called
“middle class.”  But there is no consensus definition of middle class.  Neither is there an
official government definition, and it is not the aim of this report to establish one.  What
constitutes the middle class is relative, subjective, and not easily defined.  Most people
likely have decided views as to whether they are middle class.  At the same time, those
who refer to the middle class have a rough idea whom they have in mind.  How closely
these two definitions correspond is another matter.
In some contexts, the term middle class may refer to a group with shared values or
views, but much of the time it is intended to refer to those who fall within a particular
range of incomes.  For example, a tax cut proposal may be promoted on the grounds that
it would benefit the middle class.  Where the distinction is based solely on income, the
term “middle income” is sometimes used.  This report will use the terms middle class and
middle income interchangeably. 
This paper attempts to put the term middle class, or middle income, in some
perspective.  It begins by presenting available income distribution data as a way of
identifying what constitutes middle income. Then, it presents the results of some
CRS-2
1
  Money income accounts for a wide range of income sources, but it is unavoidably incomplete.
Money income includes income from earnings, interest and dividends, Social Security, and other
forms of social insurance.  It does not include the value of non-money benefits such as food
stamps or housing subsidies.  Neither does it include capital gains.
2
 In 2005, there were an estimated 114,384,000 households in the United States.
subjective surveys in an attempt to identify what income levels are considered to fall into
the middle class.   Finally it discusses some economic findings that may help explain how
those in the middle class feel about their place in the distribution.
What Income Level is the Middle?
For the purposes of this report, the measure of income used is household money
income.1  The Census Bureau publishes income distributions for both households and
families, with households including slightly more of the population.  Households are
relevant to the discussion here because the members pool whatever income they have and
can be presumed to share a common standard of living.2
Any discussion of the middle income necessarily starts with the very middle.  The
mid-point in the distribution is the median household income, and in 2005 it was $46,326.
How far above and below that amount the middle stretches remains the question.
While distribution figures are available for fairly small income classes, what many
analysts find most useful are data showing the distribution by “quintile.”  The population
of households is divided into fifths, and these quintiles are arranged from lowest to
highest income.  Table 1 shows what income levels separate the five quintiles from one
another in 2005, and also show what share of total household income is accounted for by
each quintile.  In addition, the Census Bureau provides separate data for the top 5% of the
households in the income distribution.
Table 1. Household Income Quintiles, 2005
Income Range of Quintile
Income
Share of
Quintile
bottom quintile less than $19,178 3.4%
second quintile $19,178 to $36,000 8.6%
middle quintile $36,000 to $57,660 14.6%
fourth quintile $57,660 to $91,705 23.0%
top quintile more than $91,705 50.4%
top 5% more than $166,000 22.2%
Source: Department of Commerce, Bureau of the Census.
CRS-3
3
 Because the upper end of the income distribution is a small proportion of the population, it is
possible they are under-represented in surveys like this.  That would mean relatively greater
measurement error in their response.   
 These figures make it possible  to derive a more inclusive definition of the middle
than median income.  The narrowest view of who might be considered middle class would
include those in the middle quintile, those households with income between $36,000 and
$57,660.   But it seems unlikely so small an income range would correspond with many
impressions of who is middle class.  A more generous definition might be based on the
three middle quintiles, those households with incomes between $19,178 and $91,705.
That group accounts for 60% of all households and 46.2% of all household income.  The
broadest definition of middle class to be had from these numbers would be to add the part
of the top quintile just up to the point where the top 5% begins.  That would put those
households with income between $19,178 and $166,000 in the middle class.  That group
accounted for 74.4% of all household income in 2005.  One other consideration as to
where to draw the lower income limit for the middle class is the official poverty threshold.
There are multiple poverty thresholds depending on size of household and ages of
children.  Given that the average household size in 2005 was 2.6 people, the poverty
threshold for a family of three might be appropriate.  That threshold was $15,577 in 2005.
Whether a household just above the poverty threshold might be considered part of the
middle class seems subject to debate.  Clearly the further a household is above or below
the median income, the more subjective its inclusion in the middle class becomes.
Evidence from Surveys
Since who is middle class is a subjective question, the way the term is used might
help define it.  Thus, opinion surveys might provide some basis for identifying the
relevant income bounds.  A number of surveys in recent years have asked people to
indicate to what social class they consider themselves to belong.  The classes they are
usually asked to choose from are lower, working, middle (sometimes divided into lower
and upper middle), and upper.
For example, a New York Times survey, in May 2005, asked people to identify their
social class.  The results showed only 1% of those surveyed considered themselves to be
upper class, 67% considered themselves to be middle or upper-middle class, 35% were
working class and 7% were lower class.  That the official poverty rate in 2005 was 12.6%
suggests that either some who are in poverty consider themselves to be working class
(which may be because they believe their poverty status to be temporary), or there were
problems surveying those at that end of the distribution.  In the Census Bureau’s detailed
household income distribution data, the highest income class is $250,000.  The share of
households with income over $250,000 accounts for 1.5% of all households; thus, if the
survey answers correspond to the income data, then the self-reported middle class, broadly
defined, includes households with incomes over $250,000.  Similarly, comparing the
survey responses with the income data puts the lower end of the middle class just over
$38,000.3
The National Opinion Research Center (NORC) at the University of Chicago has
asked people to identify their social class in a number of surveys beginning in 1972.  The
cumulative results of those surveys can also be used to compare the income distribution
CRS-4
4
 Mary Daly and Dan Wilson, “Keeping Up with the Joneses and Staying Ahead of the Smiths:
Evidence from Suicide Data,” Federal Reserve Bank of San Francisco Working Paper 2006-12,
Apr. 2006, 41 pp.
with self-reported class divisions.  The cumulative NORC survey data indicate that 3.3%
of the population consider themselves to be upper class.  That would put the dividing line
between middle and upper class just under $200,000 in 2005.  The NORC survey
indicated that 5.3% of the population considered themselves to be lower class, and 45.8%
classified themselves as working class.  That would put the dividing line between working
class and middle class at a little over $45,000, again assuming a correspondence between
the survey data and the income distribution.
Given the income quintile data presented in the previous section, the survey
responses seem to suggest while some households in the second quintile ($19,178 to
$36,000) might be considered middle class, the term middle class might be more likely
to refer to those in the middle and fourth quintile ($36,000 to $91,705), and many of those
households between the 80th and 95th percentile ($91,705 to $166,000) in the distribution
as well.
Economic Considerations
Among the many assumptions economists make to facilitate analysis is that of
diminishing marginal utility of income.  This concept refers to the assumption that as
income increases each additional dollar yields less satisfaction than the one that came
before.  With respect to middle income it is meaningful because, if true, it means that
there are greater gains in satisfaction to be had moving up into the middle class than there
are to be had moving up from the middle to the upper end of the income distribution.
It might not be unreasonable to say that those who consider themselves middle class
are relatively content, at least with their economic situation.  But while a middle-income
household may be well above a subsistence level of income, the satisfaction or happiness
afforded by that income may also depend on where that income level fits into the overall
income distribution.  The idea that happiness depends on both the absolute and the
relative level of income is known as the relative income hypothesis.  If individuals care
about where they are situated in the overall distribution, that would seem evidence of the
economic importance of a middle-income group with a shared stake in the health of the
economy.
Interest in the economics of happiness has led to a number of studies that have found
evidence of the importance of one’s place in the overall distribution of income.  While
ultimately happiness is subjective, one study analyzed what would seem to be an objective
measure of happiness (or more accurately unhappiness).  Daly and Wilson looked at how
changes in income may have influenced suicide rates.4  They found evidence that changes
in relative income had a significant influence on suicide rates.
The authors used three measures of relative income: the ratio of income at the 90th
percentile to median income, the ratio of median income to income at the 10th percentile,
and the ratio of income at the 90th percentile to income at the 10th percentile in the
distribution.  Among their findings was that an increase in the 90/10 ratio, interpreted as
CRS-5
5
 Erzo F. P. Luttmer, “Neighbors as Negatives: Relative Earnings and Well-Being,” Quarterly
Journal of Economics, Aug. 2005, pp. 963-1002.
6
 Richard A. Easterlin, “Income and Happiness: Towards a Unified Theory,” The Economic
Journal, Jul. 2001, pp. 465-484.
an increase in overall income inequality, was not associated with an increase in suicide
rates. However the study also suggested that an increase in the 50/10 ratio was associated
with a decline in the suicide rate, and that an increase in the 90/50 ratio was associated
with an increase in the suicide rate.
This was considered evidence that relative income had an important influence on
happiness.  In particular those at the middle (50th percentile) were happier the larger the
gap was between them and those at the lower end (10th percentile) of the distribution.  At
the same time those at the middle were less happy the larger the gap was between them
and those at the upper end (90th percentile) of the distribution.
Luttmer also presents evidence that relative income is an important determinant of
happiness.5  He used survey data that matched individuals’ self-reported happiness with
income data.  He found that an increase in one’s own income raised reported happiness,
but that an increase in one’s neighbors’ income had a negative effect.  Further he found
that a decline in one’s own income resulted in about the same decrease in happiness as
occurred when one’s neighbor experienced an increase in income. 
Easterlin surveyed the literature addressing the connection between happiness and
income and developed a model to explain it.6  He found  a number of studies showing that
at any given time cross section comparisons were likely to show that higher income is
correlated with greater happiness.  But, it was also typical that as incomes rose over the
course of one’s lifetime there was no corresponding increase in happiness.  Easterlin
suggested that self assessments of happiness at a particular income level are dependent
on aspirations.  As incomes rise, so do aspirations.  The rise in aspirations has an effect
on happiness that tends to offset the effect of rising income.  That would explain the
apparently contradictory evidence that in cross section analysis, happiness rises with
income, but that over time as income rises happiness is relatively stable.
The conclusions of these studies might not seem robust since they are based on crude
self assessments of happiness or well being, but if they are on to something it may be
relevant to any notion of a middle class.  Together they suggest strongly that happiness,
insofar as it is determined by income, depends on one’s status in the overall distribution.
The Daly and Wilson study looked at specific points in the distribution to reach their
findings and related them to median income (50th percentile).  But it might not be
unreasonable to apply their conclusions to a larger group at the middle of the distribution.
In other words, the happiness of the middle class, however that might be defined, could
be argued to depend on both keeping up with the Joneses and staying ahead of the Smiths
as they put it in their article.  That suggests that those in the middle have identified who
the Smiths and Joneses are, which would be part of what distinguishes them as middle
class.  Moreover, the Easterlin article relates the happiness afforded by a given level of
income to the corresponding  aspirations.  It may be that the middle class share not only
similar incomes but also similar aspirations, and those are what set them apart.
CRS-6
7
   If those who consider themselves to be upper class were under-represented in the survey, since
they are a relatively small group, then that would lower the upper income limit for the middle
class.
Conclusions
No attempt to identify the middle class in the income distribution can be expected
to yield a precise answer.  But the term is used so often, it is worth the effort to attach
some numbers to it.  If the middle class is taken to be those who have more than enough
to afford the basic necessities, it can be presumed to exclude those at or near the poverty
thresholds.  Surveys indicate many people felt an income near $40,000 was the minimum
to be considered middle class.  On the other end, surveys suggested that those with
incomes approaching $200,000 might still be considered middle class.7
Whatever else they may have in common, those who constitute the middle class may
have, more or less, similar sentiments regarding their position in the income distribution.
Being well above the bottom is a source of satisfaction.  But, when those at the upper end
of the distribution fare better than they do, it is a source of consternation.


Who Are the “Middle Class”?

[Excerpt] There is no consensus definition of "middle class," neither is there an official government definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point in the distribution is the median and in 2005 median household income was $46,326. How far above and below that amount the middle stretches remains the question. The Census Bureau publishes figures breaking the income distribution into quintiles, or fifths. The narrowest view of who might be considered middle class would include those in the middle quintile, those households with income between $36,000 and $57,660. A more generous definition might be based on the three middle quintiles, those households with incomes between $19,178 and $91,705. Surveys suggest that 1% to 3.3% of the population consider themselves to be upper class. Comparing those figures with the income distribution would put the dividing line between middle and upper class close to if not above $250,000. Similarly, survey responses suggest that the lower end of the middle class might be close to $40,000.Who_are_the_Middle_Class.pdf: 1557 downloads, before Oct. 1, 2020

eCommons@Cornell

There is no consensus definition of "middle class," neither is there an official government definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point in the distribution is the median, and in 2007 the median household income was $50,233. How far above and below that amount the middle stretches remains an open question. This report explores the various definitions of the middle class and what salary ranges those definitions encompass, as well as related statistics and surveys that support this information

UNT Digital Library

Order Code RS22627Updated October 22, 2008Who Are the “Middle Class”?Brian W. CashellSpecialist in Quantitative EconomicsGovernment and Finance DivisionSummaryThere is no consensus definition of “middle class,” neither is there an officialgovernment definition.  What constitutes the middle class is relative, subjective, and noteasily defined.  The mid-point in the distribution is the median, and in 2007 the medianhousehold income was $50,233.  How far above and below that amount the middlestretches remains an open question.  The U.S. Census Bureau has published figures for2007 breaking the income distribution into quintiles, or fifths.  The narrowest view ofwho might be considered middle class based on that presentation would include thosein the middle quintile, which includes households with income between $39,100 and$62,000.  A more generous definition might be based on the three middle quintiles,those households with income between $20,291 and $100,000.  Surveys suggest thatfrom 1% to just over 3% of the population consider themselves to be upper class.Comparing those figures with the income distribution would put the dividing linebetween middle and upper class close to, if not above, $250,000.  Similarly, surveyresponses suggest that the lower end of the middle class might be close to $40,000.  Much of the legislation considered by Congress is in the name of the so-called“middle class.”  But there is no consensus definition of middle class.  Neither is there anofficial government definition, and it is not the aim of this report to establish one.  Whatconstitutes the middle class is relative, subjective, and not easily defined.  Most peoplelikely have decided views as to whether they are middle class.  At the same time, thosewho refer to the middle class have a rough idea whom they have in mind.  How closelythese two definitions correspond is another matter.In some contexts, the term middle class may refer to a group with shared values orviews, but much of the time it is intended to refer to those who fall within a particularrange of incomes.  For example, a tax cut proposal may be promoted on the grounds thatit would benefit the middle class.  Where the distinction is based solely on income, theterm “middle income” is sometimes used.  This report will use the terms middle class andmiddle income interchangeably.  What defines the middle class is discussed here solelyin terms of income.This paper attempts to put the term middle class, or middle income, into someperspective.  It begins by presenting available income distribution data as a way ofCRS-21  Money income accounts for a wide range of income sources, but it is usually incomplete.Money income includes income from earnings, interest and dividends, Social Security, and otherforms of social insurance.  It does not include the value of non-money benefits such as foodstamps or housing subsidies.  Neither does it include capital gains.2 In 2007, there were an estimated 116,783,000 households in the United States.identifying what constitutes middle income. Then, it presents the results of somesubjective surveys in an attempt to identify what income levels are considered to fall intothe middle class.   Finally it discusses some economic findings that may help explain howthose in the middle class feel about their place in the distribution.What Income Level is the Middle?For the purposes of this report, the measure of income used is household moneyincome.1  The Census Bureau publishes income distributions for both households andfamilies, with households including slightly more of the population.  Households arerelevant to the discussion here because members pool whatever income they have and canbe presumed to share a common standard of living.2Any discussion of the middle income necessarily starts with the very middle.  Themid-point in the distribution is the median household income, and in 2007 it was $50,233.How far the middle stretches above and below that amount is the issue.While distribution figures are available for fairly small income classes, what manyanalysts find most useful are data showing the distribution by “quintile.”  The populationof households is divided into fifths, and these quintiles are arranged from lowest tohighest income.  Table 1 shows what income levels separate the five quintiles from oneanother in 2007, and also show what share of total household income is accounted for byeach quintile.  In addition, the Census Bureau provides separate data for the top 5% of thehouseholds in the income distribution.Table 1. Household Income Quintiles, 2007Income Range of QuintileIncomeShare ofQuintilebottom quintile less than $20,291 3.4%second quintile $20,291 to $39,100 8.7%middle quintile $39,100 to $62,000 14.8%fourth quintile $62,000 to $100,000 23.4%top quintile more than $100,000 49.7%top 5% more than $177,000 21.2%Source: U.S. Department of Commerce, U.S. Census Bureau.CRS-33 The New York Times published a series of articles in May 2005 under the title “Class Matters,”which are available at  [http://www.nytimes.com/indexes/2005/05/15/national/class/index.html].4 Because the upper end of the income distribution is a small proportion of the population, it is(continued...) These figures make it possible  to consider a more inclusive definition of the middlethan median income.  A narrow view of who might be considered middle class wouldinclude only those in the middle quintile, those households with income between $39,100and $62,000.   But it seems unlikely that so small an income range would correspond withmany impressions of who is middle class.  A more generous definition might be based onthe three middle quintiles, those households with income between $20,291 and $100,000.That group accounts for 60% of all households and 46.9% of all household income.  Perhaps the broadest definition of middle class to be had from these numbers wouldbe to add the part of the top quintile just up to the point where the top 5% begins.  Thatwould put those households with income between $20,291 and $177,000 in the middleclass.  That group accounted for 75.4% of all household income in 2007.One other consideration as to where to draw the lower income limit for the middleclass is the official poverty threshold.  There are multiple poverty thresholds dependingon size of household and ages of children.  Given that the average household size in 2007was 2.6 people, the poverty threshold for a family of three might be appropriate.  Thatthreshold was $16,530 in 2007.  Whether a household just above the poverty thresholdmight be considered part of the middle class seems subject to debate.  Clearly the furthera household is above or below the median income, the more subjective its inclusion in themiddle class becomes.Evidence from SurveysSince who is middle class is a subjective question, the way the term is used mighthelp define it.  Thus, opinion surveys might provide some basis for identifying therelevant income bounds.  A number of surveys in recent years have asked people toindicate to what social class they consider themselves to belong.  The classes they areusually asked to choose from are lower, working, middle (sometimes divided into lowerand upper middle), and upper.For example, a New York Times survey, in May 2005, asked people to identify theirsocial class.3  The results showed only 1% of those surveyed considered themselves to beupper class, 67% considered themselves to be middle or upper-middle class, 35% wereworking class and 7% were lower class.  That the official poverty rate in 2007 was 12.5%suggests that either some who are in poverty consider themselves to be working class(which may be because they believe their poverty status to be temporary), or there wereproblems surveying those at that end of the distribution.  In the Census Bureau’s detailedhousehold income distribution data, the highest income class is $250,000.  The share ofhouseholds with income over $250,000 accounts for 1.9% of all households.  If the surveyanswers correspond to the income data, then the self-reported middle class, broadlydefined, includes households with income over $250,000.  Similarly, comparing thesurvey responses with the income data puts the lower end of the middle class just over$40,000 in 2007.4CRS-44 (...continued)possible this group is under-represented in surveys like this.  That would mean relatively greatermeasurement error in their response.   5 Pew Research Center, Inside the Middle Class: Bad Times Hit the Good Life, April 2008,available at [http://pewsocialtrends.org/pubs/706/middle-class-poll].The National Opinion Research Center (NORC) at the University of Chicago hasasked people to identify their social class in a number of surveys beginning in 1972.  Thecumulative results of those surveys can also be used to compare the income distributionwith self-reported class divisions.  The average of the NORC survey data between 1972and 2006 suggests that 3.3% of the population consider themselves to be upper class.That would put the dividing line between middle and upper class at just over $200,000in 2007.  The NORC surveys indicated that 4.8% of the population considered themselvesto be lower class, and 47.8% classified themselves as working class.  That would put thedividing line between working class and middle class at about $52,500, again assuminga correspondence between the survey data and the income distribution.The Pew Research Center sampled opinions regarding middle class attitudes.5  Theyfound that 53% of Americans considered themselves to be middle class. Comparing theproportion of those who identified themselves as middle class could include incomes fromabout $25,000 up to $95,000.  When those who considered themselves to be either loweror upper middle class the income range expanded to include those with income near$10,000 up to just under $250,000.Given the income quintile data presented in the previous section, the surveyresponses seem to suggest that while some households in the second quintile ($20,291 to$39,100) might be considered middle class, the term middle class might be more likelyto refer to those in the middle and fourth quintile ($39,100 to $100,000), and to many ofthose households between the 80th and 95th percentile ($100,000 to $177,000) in thedistribution as well.Economic ConsiderationsAmong the many assumptions economists make to facilitate analysis is that ofdiminishing marginal utility of income.  This concept refers to the assumption that asincome increases, each additional dollar yields less satisfaction than the one that camebefore.  With respect to middle income it is meaningful because, if true, it means thatthere are greater gains in satisfaction to be had moving up into the middle class than thereare to be had moving up from the middle to the upper end of the income distribution.It might not be unreasonable to say that those who consider themselves middle classare relatively content, at least with their economic situation.  But while a middle-incomehousehold may be well above a subsistence level of income, the satisfaction or happinessafforded by that income may also depend on where that income level fits into the overallincome distribution.  The idea that happiness depends on both the absolute and therelative level of income is known as the relative income hypothesis.  If individuals careabout where they are situated in the overall distribution, that would seem evidence of theeconomic importance of a middle-income group with a shared stake in the health of theeconomy.CRS-56 Mary Daly and Dan Wilson, “Keeping Up with the Joneses and Staying Ahead of the Smiths:Evidence from Suicide Data,” Federal Reserve Bank of San Francisco Working Paper 2006-12,April 2006, 41 pp.7 Erzo F.P. Luttmer, “Neighbors as Negatives: Relative Earnings and Well-Being,” QuarterlyJournal of Economics, August 2005, pp. 963-1002.8 Richard A. Easterlin, “Income and Happiness: Towards a Unified Theory,” The EconomicJournal, July 2001, pp. 465-484.Interest in the economics of happiness has led to a number of studies that have foundevidence of the importance of one’s place in the overall distribution of income.  Whileultimately happiness is subjective, one study analyzed what would seem to be an objectivemeasure of happiness (or, more accurately, unhappiness).  Daly and Wilson looked at howchanges in income may have influenced suicide rates.6  They found evidence that changesin relative income had a significant influence on suicide rates.The authors used three measures of relative income: the ratio of income at the 90thpercentile to median income, the ratio of median income to income at the 10th percentile,and the ratio of income at the 90th percentile to income at the 10th percentile in thedistribution.  Among their findings was that an increase in the 90/10 ratio, interpreted asan increase in overall income inequality, was not associated with an increase in suiciderates. However the study also suggested that an increase in the 50/10 ratio was associatedwith a decline in the suicide rate, and that an increase in the 90/50 ratio was associatedwith an increase in the suicide rate.This was considered evidence that relative income had an important influence onhappiness.  In particular, those at the middle (50th percentile) were happier the larger thegap was between them and those at the lower end (10th percentile) of the distribution.  Atthe same time those at the middle were less happy the larger the gap was between themand those at the upper end (90th percentile) of the distribution.Luttmer also presents evidence that relative income is an important determinant ofhappiness.7  He used survey data that matched individuals’ self-reported happiness withincome data.  He found that an increase in one’s own income raised reported happiness,but that an increase in one’s neighbors’ income had a negative effect.  Further he foundthat a decline in one’s own income resulted in about the same decrease in happiness asoccurred when one’s neighbor experienced an increase in income. Easterlin surveyed the literature addressing the connection between happiness andincome and developed a model to explain it.8  He found  a number of studies showing thatat any given time cross section comparisons were likely to show that higher income iscorrelated with greater happiness.  At the same time, it was also typical that as incomerose over the course of one’s lifetime there was no corresponding increase in happiness.Easterlin suggested that self assessments of happiness at a particular income level aredependent  on aspirations.  As incomes rise, so do aspirations.  The rise in aspirations hasan effect on happiness that tends to offset the effect of rising income.  This hypothesiswould explain the apparently contradictory evidence that in cross section analysis,happiness rises with income, but that over time as income rises happiness is relativelystable.CRS-69   If those who consider themselves to be upper class were under-represented in the survey, thenthe actual number of those who consider themselves to be upper class would be larger.  If thatis the case, the actual level of income that divides the middle from the upper class would be lowerthan is suggested by the survey.The conclusions of these studies might not seem robust, since they are based oncrude self assessments of happiness or well being.  But if they are correct, they may berelevant to the notion of a middle class.  Together they suggest that happiness, insofar asit is determined by income, depends on one’s status in the overall distribution.  The Dalyand Wilson study looked at specific points in the distribution to reach their findings andrelated them to median income (50th percentile).  But it might not be unreasonable toapply their conclusions to a larger group at the middle of the distribution.  In other words,the happiness of the middle class, however that might be defined, could be argued todepend on both keeping up with the Joneses and staying ahead of the Smiths as they putit in their article. The happiness of those who identify themselves as middle class wouldseem to depend on what happens to those with less as well as those with more income.ConclusionNo attempt to identify the middle class in the income distribution can be expectedto yield a precise answer.  But the term is used so often that it is worth the effort to attachsome numbers to it.  If the middle class is taken to be those who have more than enoughto afford basic necessities, it can be presumed to exclude those at or near the povertythresholds.  Surveys indicate many people felt an income near $40,000 was the minimumto be considered middle class.  On the other end, surveys suggested that those withincome approaching $200,000 might still be considered middle class.9Whatever else they may have in common, those who constitute the middle class mayhave, more or less, similar sentiments regarding their position in the income distribution.Being well above the bottom is a source of satisfaction.  But, when those at the upper endof the distribution fare better than they do, it is a source of consternation.

Who Are the "Middle Class"?

There is no consensus definition of "middle class," neither is there an official government definition. What constitutes the middle class is relative, subjective, and not easily defined. The mid-point in the distribution is the median, and in 2007 the median household income was $50,233. How far above and below that amount the middle stretches remains an open question. The U.S. Census Bureau has published figures for 2007 breaking the income distribution into quintiles, or fifths. The narrowest view of who might be considered middle class based on that presentation would include those in the middle quintile, which includes households with income between $39,100 and $62,000. A more generous definition might be based on the three middle quintiles, those households with income between $20,291 and $100,000. Surveys suggest that from 1% to just over 3% of the population consider themselves to be upper class. Comparing those figures with the income distribution would put the dividing line between middle and upper class close to, if not above, $250,000. Similarly, survey responses suggest that the lower end of the middle class might be close to $40,000.RS22627_20081022.pdf: 1589 downloads, before Oct. 1, 2020

https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1557&amp;context=key_workplace

Who Are the “Middle Class”?

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