The rich, the poor, and the middle class: Thresholds and intensity indices

This paper contributes to the literature on the measurement of social classes by providing a wealth threshold for distinguishing the rich from the middle class and an intensity index for measuring the extent of affluence within a country. The empirical applicability of this approach is then illustrated with household-level survey data from the Bank of Italy; the results show an unambiguous decline in poverty and an increase in affluence in Italy between 2002 and 2004. Moreover, the findings indicate that social class is statistically linked to age, gender, marital status, household size, education, employment, and geography.

Research highlights
► A wealth threshold for distinguishing the rich from the middle class is developed.
► An intensity index is developed to measure the extent of affluence among the rich.
► Poverty fell and affluence rose in Italy during 2002–2004, in rate and intensity.
► Social class is statistically tied to age, gender, education, job, family and location.