CGD in the News

Who's in the Middle? (Economist)

February 17, 2009

The Economist cites CGD president Nancy Birdsall's research on the definition of the middle class in developing countries.

From the article:

There are two main ways to define a middle class: in relative terms, as the middle income range of each country; or in absolute terms, using a fixed band for all countries. An influential exponent of the first approach was Lester Thurow of the MIT’s Sloan School of Management, who took as his reference point the median income in America—where there is an equal number of people above and below the line—and defined the American middle class as the group with incomes lying between 75% and 125% of the median. Nancy Birdsall of the Centre for Global Development applied the same idea to developing countries. Bill Easterly of New York University selected those who were in the three middle quintiles of income (leaving out the poorest 20% and the richest 20%). The problem with this approach is that each country has a different median income, so the definition of what is middle class shifts from place to place.

Read the article