By Charrlotte Adelina, Shriya Anand, Jyoti Koduganti
Charrlotte Adelina works as a Research Assistant with the Urban Informatics Lab at IIHS.
Shriya Anand is a Senior Consultant and leads the Urban Informatics Lab at IIHS.
Jyothi Koduganti works as a Senior Research Associate with the Urban Informatics Lab at IIHS.
How do urban Indians perceive their well-being? Is income an adequate determinant of well-being? Based on a survey of 1,700 households in Bengaluru, this column shows that a majority of households perceived themselves as belonging to the middle classes, irrespective of their incomes. This suggests significant divergence between household perception of their socioeconomic class and actual incomes. Relational aspects like status in the community and infrastructure deprivations significantly impact well-being along with income.
There is emerging consensus across the world on the limitations of using income to draw conclusions about a population’s well-being. While income remains an important measure of well-being, a unidimensional measure based on income or its proxies omits several other aspects of our social and economic lives which deeply impact our notions of well-being. In this column, we use the subjective well-being approach, which offers a methodological framework to assess the perceptions of well-being among individuals, moving away from more objective measures such as income, and considering subjective dimensions of satisfaction, relational well-being, and infrastructure deprivations. More specifically, we look at the gap between the reported incomes and perceptions of well-being in Bengaluru, to obtain a deeper understanding of well-being and deprivation in metropolitan India.
In a household survey conducted in 2016, we surveyed 1,700 randomly sampled households on their absolute monthly income and expenditure, along with their perceptions of current living standards and socioeconomic status, in comparison to their past economic conditions, and with respect to their neighbourhoods. We have found a significant divergence between perceived well-being and objective measures such as reported income, highlighting a gap in our understanding of personal welfare.
The elusive middle class
When asked about their present economic status1, a majority of the survey households perceived themselves as belonging to the middle classes as shown in Figure 1. The categories of ‘poor’, ‘lower middle class’, ‘upper middle class’ and ‘rich’ reflect the notional understanding of income classes and are viewed to hold deep aspirational connotations in the Indian context.
Figure 1. Self-assessment of economic status
Our findings are in line with the findings of other similar studies. Many researchers have struggled to define the highly heterogenous, ‘neither poor nor rich’ category of the Indian middle class. Surveys like the ‘Lok Survey’ by the Center for the Advanced Study of India (CASI) at the University of Pennsylvania, in 2013 find that 49% of the sample in India self-reports as belonging to the middle class; 68% of the respondents in Karnataka identify as middle class A similar trend has been observed in other countries. The Pew Research Center in a 2012 study found that 89% of all surveyed Americans said they belonged to different categories of the middle class. Similarly, in 2007, the average density of the self-reported middle class in the seven countries of Latin America was 80.7%.
Figure 2. Actual income and self-perception of economic status
There, however, is a clear divergence between perceptions of household’s socioeconomic class and actual incomes, that is, the subjective and the objective measures of well-being. For example, in general, when we split the sample into four equal groups by an increasing order of income, we assume that the class with the lowest income − in this case those with an income below Rs. 15,000 per month − is the most deprived.
However, the results shown in Figure 2 point to a different reality. Twelve per cent of those respondents who classify themselves into the category of ‘poor’ fall in the two upper income categories. 34%,16%, and 7% of those who classify themselves as ‘lower middle class’, ‘upper middle class’ and ‘rich’ respectively, actually fall into the lowest income quartile. Interestingly, respondents from the third income quartile (monthly incomes between Rs. 22,000 and Rs. 35,000) are almost equally likely to self-report as ‘middle class’ or ‘rich’2.
Studies have also drawn attention to the mismatch between an individual’s actual income and perceived socioeconomic class, especially in India where most people who identify as ‘middle class’ fall in the ‘poor’ category considering international scales of poverty. In a 2010 study, NCAER (National Council of Applied Economic Research) estimated the size of the Indian middle class to be 12.8% of the country with a majority of the population falling into the ‘poor’ category, earning less than Rs. 200,000 per year (at 2000-01 prices).
While the definition of the middle class in India remains elusive, it is recognised as a monetary measure to assess and understand social and economic mobility and prosperity. However, like other absolute or monetary tools to measure well-being, it has its shortcomings.
Absolute vs. subjective well-being
Absolute methods of computing poverty and inequality such as the poverty line, which gives us the share of population below a minimum subsistence income level, or the Gini coefficient3, which quantifies the level of inequality in any given society, are traditionally used to assess the level of a society’s well-being. Using the poverty line of urban Karnataka to compute the incidence of absolute poverty in our sample, we find that 3.41% of the sample would be considered ‘poor’ or ‘below the poverty line’ based on per capita consumption expenditure. More recent measures like the Human Development Index or the Multidimensional Poverty Index, which incorporate indicators of health and education, were developed to get a wider understanding of deprivation. These measures retain their ‘objectivity’ as they are still absolute, even with the multiple yardsticks considered.
Subjective well-being on the other hand, is a relative measure based on an individual’s self-assessment of their living standards. It pushes the idea of a single, deterministic measure of poverty or inequality to accommodate other factors which determine the life satisfaction of an individual, critical to the idea of overall well-being. The Well-being in Development Countries Research Group (WeD) at the University of Bath, England, defines well-being as a concept which emerges at the interplay between not only the material aspects derived from conventional income poverty measures but also what people think or feel of their economic situations and relational aspects that include what people do or cannot do with what they have. It challenges the notion of poverty stemming simply from low incomes, seeking a broader definition of deprivation emerging from lack of access to basic services to self-perceptions stemming from deep-seated societal norms. The well-being approach offers a framework to understand economic decisions as enmeshed with these dimensions as an alternative to more deterministic economic models.
We got an interesting set of responses when we asked people about their relational well-being (See Figure 3). We find that close to 35% of the respondents consider themselves to perform averagely when asked how they would describe ‘the economic status of their own household compared to other households in the community’. Forty two per cent of the surveyed households perceive themselves as worse off in the community compared to 25% who consider themselves better off. Literature on the subject emphasises the importance of relational aspects to overall well-being, pointing to the tendency of individuals to compare themselves with others in their neighbourhood, community, workplace, and so on (Guven and Sorenson 2011) . There is substantial evidence backing the impact of an individual’s perceived rank in comparison to the community on one’s well-being, irrespective of income.
Figure 3. Perceptions of socioeconomic status compared to other members in the community
Lived urban deprivation
Figure 4. Access to urban services
Figure 5. Self-perceptions of respondents living in informal settlements
Only a quarter of the respondents in the lowest quartiles of income live in informal settlements. However, half (50.8%) of those who self-reported as ‘poor’ live in such dwellings. What the numbers in Figure 5 seem to suggest is that individual perception of well-being is linked closely to lived experiences of lack of/inadequate access to infrastructure.
Expectations of income mobility
This in turn affects the way income mobility is experienced, as we note in Figure 6. We observe consistent patterns looking at the future economic expectations of respondents. Those who self-reported as ‘poor’ are most pessimistic about the expected change in their economic condition in the next 10 years, with the optimism increasing as we go up the ladder. Most households identifying as ‘poor’ or ‘lower middle class’ also report that their economic condition has remained the same or that it has worsened over the last ten years. Only 17% of the ‘poor’ feel that their economic conditions over the past decade have improved compared to 43% of the ‘lower middle class’, 77% of ‘upper middle class’ and 96% of the ‘rich’. At the same time, only 45% of the poor expect their conditions to improve in the future compared to 79% of the ‘lower middle class’, 87% of ‘upper middle class’ and 90% of the ‘rich’.
Figure 6. Past conditions and future expectations
Vakulabharanam and Motiram (2012) rightly observe that ‘it is probably true that the poor perceive their condition in myriad ways, some of which are different from those of ‘experts’ and policymakers’. We note in this column that inadequate access to infrastructure or basic services impacts self-perceptions of economic well-being. The precarious nature of employment or housing, social networks, and dynamics such as caste or gender or vulnerability to health or environmental risks among many others causes, are likely to influence household self-assessment of well-being.
- This question in the survey was worded as follows: ‘How do you assess your household’s economic status?’. Four responses were provided to the respondents: ‘Poor’, ‘Lower middle class’, ‘Upper middle class’ and ‘Rich’.
- We acknowledge the limitations of using reported incomes to understand economic distribution in our sample. We found closely similar distribution trends using both reported incomes and household consumption expenditure in our sample after which we decided to use income in our analysis.
- Gini coefficient is the most commonly used measure of inequality. The coefficient varies between 0 (reflecting complete equality) and 1 (reflecting complete inequality).
Featured Image Credits – Joey Lu
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