Subjective versus objective well-being in urban India

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.

Relational well-being 

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