Much of the recent attention by journalists, researchers and others to the economic role of middle sectors in economic development has referred to these people as "middle class". We have chosen not to use the middle-class terminology for various reasons. In sociological terms, a social class is expected to have a certain homogeneity of characteristics, and possibly a consciousness of its identity and role as a group. Marx emphasised property ownership; Weber educational credentials; and Erikson and Goldthorpe employment status.21 The Latin American middle sectors described in the preceding sections of this chapter, in contrast, are heterogeneous, both within a country and in comparison with the middle sectors of other Latin American countries. This heterogeneity within the middle sectors is particularly pronounced in the area of labour-market behaviour and informality. As such, it would be imprecise to equate the middle sectors as identified in this Outlook with the Latin American middle class.

Historians of the middle class, meanwhile, have emphasised the values and perceptions of the group as much as its income level. This sort of middle-class dynamism is the cornerstone of the "Protestant ethic" identified by Max Weber as the source of capitalist development.22 As this chapter has shown, middle-sector Latin Americans are not the most likely to be entrepreneurs; affluent Latin Americans are more likely to be business owners (Box 1.1). Similarly, the political attitudes of middle-class members – in favour of democratisation and moderately progressive political platforms, for example – are a feature of many histories of the group in other parts of the world. Chapter 4 will show that the political preferences of the Latin American middle sectors are considerably more complicated. In general, the attitudes and perceptions of the middle sectors are heterogeneous and not generally consistent with stereotypically middle-class values (Box 1.3).

Box 1.3 Being middle-class and feeling middle-class

Being middle-class is not the same as feeling middle-class.23 In Latin America only 40% of people who consider themselves middle-class would be classified in the middle sectors as developed in this Outlook. The remaining self-identified middle-class Latin Americans are, with almost equal probability, disadvantaged or affluent. If you ask Latin Americans where they fall on a ten-step ladder where 1 is “the poorest of their country”, and 10 is “the richest of their country”, 37% place themselves on steps 4 and 5; while 42% put themselves on the lowest steps and only 20% on the highest. Compare this with the 50-150 definition – those earning between 50% and 150% of median income: on this measure 42% of Latin Americans are in the middle sectors.24
It turns out that there are important differences between people in the middle sectors, and those who regard themselves as middle-class – and it may be the latter group which is more important for economic performance. Survey data complementary to national household surveys can be used to reveal characteristics of people who fall outside the 50-150 definition but nonetheless regard themselves as middle-class: typically they are relatively young and have completed at least secondary education, they have smaller families than the disadvantaged but larger than the affluent, they have managed to accumulate some durable household assets – although not as many as the affluent – and they work in a company under a boss or supervisor.

Middle-class motivations

It is difficult to be sure that the virtues often ascribed to the middle class — entrepreneurial energy, higher propensity to save, political progressivism — are really characteristic unless it can be shown that the middle class is motivated by factors different from the other income categories.
Gallup World Polls asked people how happy they feel with their life and about their economic situation and personal concerns. These data confirm that Latin Americans who put themselves in the middle class do indeed have different motivations from their disadvantaged or affluent compatriots. In particular, certain features of their lives make middle-class people happier than those same features do other people. Having one or more children makes them happier than those who consider themselves poor, for whom the family is a burden.
They derive great satisfaction from being bank customers, and having a cheque book or a credit card in their pocket. Paradoxically, however, their happiness is less dependent on possession of assets and they do not let economic concerns embitter their lives too much – in contrast to the poor (from need) and the rich (perhaps from ambition or fear).
Most importantly, people who consider themselves middle class do not think like people in the middle sectors. The former enjoy modernity – not just use of the financial system, but also being connected to each other through mobile phones and the Internet. Their satisfaction with life is less dependent on income level and economic uncertainties than that of people in the middle sectors, and their happiness depends less on the security of having a stable marriage. All this reveals that people who say that they are middle-class are more self-assured and satisfied with their economic situation and less slaves to income and possessions than the objectively identified middle sectors.
Arguably, the ideal for a society is not simply to have many people in the middle sectors, but rather many people who really identify with the post-modern and non-materialistic values of the self-described middle class. If being middle-class is seen as feeling middle-class, then it is educators, opinion formers, thinkers and artists – rather than just economists or governments driven by material well-being or economic growth – who will be the agents of effective change.
Source: Fajardo and Lora (2010).

Common to both the sociological and historical objections to equating the middle sectors with the middle class is the problem that the middle class is typically defined with respect to variables only imperfectly correlated with income: attitudes, values, human capital levels, employment status. Indeed, middle-class people might have the same income as those in a lower stratum, and Latin American history provides examples.

Take the empleocracia movements of the first half of the 20th century in Peru. Organisations of office workers struggled for higher wages, eight-hour days and other improvements in their working conditions precisely because their social station "obliged" them to spend more on clothing, housing and other markers of status than manual labourers – whose income was often in fact quite close to that of the empleados.25

Related to the question, "Are the middle sector and the middle class the same people?" is the question "Are the disadvantaged and the poor the same people?" Our interest in the middle sectors is explicitly motivated by the distinction between their economic role and that of people at the bottom of the income distribution. While many studies of OECD economies use 50% of median income as a relative poverty line, such a cut-off may be too conservative in the Latin American context. If so, our disadvantaged group will be smaller than the poor, as measured by national or international poverty lines, for some countries.

In fact, the relationship of the lower middle-sector income cut-off and national poverty lines measuring the incidence of both extreme and moderate poverty varies from one country to another (Figure 1.10). In Chile and Costa Rica, 50% of median income is close to or even exceeds the moderate poverty line. In Mexico and the Dominican Republic, meanwhile, the lower middle-sector income cut-off is similar to the extreme poverty line. For Argentina, Brazil and Peru, the middle-sector income cut-off lies between the extreme and moderate poverty lines. For the region as a whole, 50% of median income is a not unreasonable poverty line, but tends to be conservative relative to national poverty lines; put another way, this Outlook’s measure of the disadvantaged population is, for many if not most countries in the region, a smaller and poorer group than the moderately poor.26

Figure 1.10. Disadvantaged population and national poverty lines

Figure 1.10. Disadvantaged population and national poverty lines