The Unassuming Economist

Discussions about welfare and development often revolve around the usage of income thresholds to analyze changes in living standards and the well-being of individuals. While many studies emphasize the growing gap between those falling under the upper and lower tails of the income distribution table, it is the middle that is often dismissed in such development stories, and perhaps wrongfully so.

In a recent column for the Brookings Institution (2021), economists Kimberly Blair Bloch and Luis F. Lopez-Calva bring this issue into the spotlight and discuss considering median, rather than the mean income, as an insightful estimate of the “middle”. Their findings highlight three major points- (a) the mean and median incomes have risen steadily over the years in all countries (2002-2019); (b) median income has grown more rapidly than mean income in all countries; (c) and, the ratio of mean to median income has fallen in all countries.

Thus, they observe that income distributions in all countries are gradually tending towards a more normal distribution than a positively skewed one, which has the very important policy implication that the “middle” class can simply not be ignored by policymakers any longer.

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