Checkpoint Asia

Wealthier Countries Have a Bigger Middle Class… Except the US

Share of middle-income class in the US no greater than in Russia, China

New research reported by the Deutsche Bank Research shows that, on average, there is a positive (albeit non-linear) relationship between the per capita income and the share of middle class in total population:

US as the outlier; a much smaller middle-income class than other similarly wealthy countries

There is an exception, however, although DB’s data does not test formally for it being an outlier, and that exception is the U.S. Note, ignore daft comparative reported in chart, referencing ‘levels’ in the U.S. compared to Russia, Turkey and China: all three countries are much closer to the regression line than the U.S., which makes them ‘normal’, once the levels of income per capita are controlled for. In other words, it is the distance to the regression line that matters.

Another interesting aspect of the chart is the cluster of countries that appear to be statistically indistinguishable from Russia, aka Latvia, Estonia and Lithuania.

All three are commonly presented as more viable success stories for economic development, contrasting, in popular media coverage, the ‘underperforming’ Russia.

And yet, only Latvia (completely counter-intuitively to its relative standing to Estonia and Lithuania in popular perceptions) appears to be somewhat (weakly) better off than Russia in income per capita terms.

None of the Baltic states compare favourably to Russia in size of the middle class (Latvia – statistically indifferent, Lithuania and Estonia – somewhat less favourably than Russia).

Source: True Economics

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