Is Mexico a middle class country? This idea has gained quite a number of adepts in recent years, initially within a certain segment of the Mexican intellectual establishment but by now taken almost as a dogma of faith by the current government as well as the global media. According to this logic, Mexico's transformation into a middle class society has been reflected through changing patterns of consumption as well as voter preferences. How else to explain Felipe Calderón's victory in the 2006 through his focus on job creation and economic stability, versus the pro-poor agenda of his rival, Andrés Manuel López Obrador? Or Mr López Obrador's toning down of his own fiery left-wing rhetoric during his second run at the presidency in 2012?
The debate on whether Mexico had been transformed over the past decade into a middle class country was largely sparked by the publication of a study, Mexico: A Middle Class Society (Clasemediero in its original Spanish version), by local economists Luis de la Calle and Luis Rubio. The study attempted to show how Mexicans had changed their attitudes, preferences and habits into those more resembling middle class behavior. The result was the creation of an aspirational class with access to many of the same consumer goods and technologies as its global counterparts, and which was strongly infused with the values of democracy and economic liberalism. The idea of Mexico as a middle class society resonated strongly with intellectuals such as Jorge Castañeda and the current government has been keen to wield it as a major weapon in its global PR arsenal. Nowadays, hardly any article on Mexico's glowing economic prospects begins without some anecdote of a "typical" Mexican now living a pseudo-American dream (driving his car, shopping at a hypermarket, paying with his credit card) in the comfort of his own country.
The problem with all of this is that there's more to being middle class than shopping.
Growing in recent years, but still not the majority
A recent study by INEGI (the national statistics office) has come as a bucket of cold water on those who have been painting a vision of Mexico which still doesn't fully match reality. The study estimated that the middle class in Mexico represented only around 39% of the population and 42% of households in 2010. Instead, the majority of Mexicans -- 59% of individuals and 55% of households -- belong to the lower class (not all of them necessarily poor), while a much smaller percentage of 1.7% of people and 2.5% of households conforms the upper ranks. Fortunately, the middle has been growing: it was just 35% of the population in 2000. It also represents roughly half of urban households.
Although the methodology differs, the results are broadly consistent with other similar studies done in recent years, some of which were mentioned in the INEGI study. One of these, by World Bank researchers Luis Felipe López Calva and Eduardo Ortiz Juárez used a vulnerability approach to define the middle class as one where the risk of falling into poverty was around 10%. Under this methodology, the middle class in Mexico was estimated as 42% (compared to 53% in Chile). A mean income-based study by Steven Pressman for the Universidad Nacional Autónoma de México (UNAM) also estimated a much lower share of the middle class, representing anything between 20% and 31% of households. Lastly, the CONEVAL (the national social policy evaluation council) estimated poverty alone at 46% of the population in 2010, of which just over 10% were extreme poor. It went on to suggest that as many as three quarters of households faced at least one type of socio-economic deprivation (mostly access to social security), and that over half had an income below a certain threshold of well-being.
Resilience to shocks, not owning a mobile phone, defines the middle class
If the numbers don't lie, then it is clear that studies like Clasemediero are missing something. While the authors go to great lengths to show how the change in consumer patterns and household behavior justifies Mexico's transition to a middle class status, they fail to account for the changing goalposts in defining the characteristics of middle class status over time, or to consider that certain goods and services can be valued differently by different societies. Is near-universal ownership of a mobile phone a defining characteristic of a middle class society these days given that many cost less than a meal at a restaurant? A more telling indicator would be ownership of a top of the line smartphone or a tablet, something that most middle class people in the US and Europe can easily afford. Does higher car ownership reflect higher discretionary spending or simply a more inelastic demand for cars? Can the same be said about private healthcare? Is an undergraduate university degree enough to live a middle class life in this day and age?
Instead, what the other studies claim is that a country like Mexico cannot be considered a predominately middle class society when the majority of its people still remain at a real risk of plunging into poverty through events such as sickness or accidents to household members, death of the main income earner, as well as macroeconomic shocks. The cause of these vulnerabilities are varied but include precarious labor conditions (6 out of 10 jobs in Mexico, after all, are informal), the lack of social benefits like unemployment insurance and universal healthcare, and -- most obviously -- low incomes. On the positive side, if the government stays firm in its commitment to address many of these shortcomings and if the benefits of the structural reform agenda eventually materialize, Mexico could indeed go a long way into becoming a country where the middle class is a visible and measurable majority in the coming decade. It's an achievable goal. For now, however, this defining moment will have to wait.
This article is modified from a featured analysis piece written for the Economist Intelligence Unit on June 18.