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I seriously hope none of you majored in economics. If you didn't I can understand you all making the above statements. If you did there are no excuses for the statements made above . You all are referring to the article in the context of microeconomics. The article is a study of MACROeconomics so it's irrelevant what you define as upper middle class (although you are correct in the sense of microeconomics) in specific areas of the USA. The article is referring to what the definition of upper middle class is in general in the USA. The only flaw with the article is their definition of what income level upper middle class in general starts at. However, a few renowned economists have differing opinions on that figure as well. So the article probably went by someone who defines it at a lower number.
Hold on a second…
Microeconomics is the study of the behavior of individuals and firms, and focuses on the supply-demand-price system.
Macroeconomics is the study of the behavior of nations, regions, and other large groupings of people, and focuses on economic growth rates, fiscal and monetary policy, and trade.
Microeconomics is the study of the behavior of individuals and firms, and focuses on the supply-demand-price system.
Macroeconomics is the study of the behavior of nations, regions, and other large groupings of people, and focuses on economic growth rates, fiscal and monetary policy, and trade.
What are you talking about?
(I am a trained economist.)
Your absolutely correct but your narrowing down the definition of those words. Micro and macro have border meaning beyond just what you stated.
Microeconomics: Microeconomics is a branch of economics that studies the behavior of individuals and small impacting organizations in making decisions on the allocation of limited resources
Meaning is a case where we are talking about supply, demand, spending habits (basically what the article is about) of consumers on a LOCAL level etc. microeconomics would apply. The aritcle on the otherhand is referring to habits on a macro level.
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making (basically what the article is referring to) of an economy as a whole, rather than individual markets.
To put it in another way, if a corporation is trying to figure out supply and demand for a particular product in a particular region (microeconomics) they would use household income for that region only. However, using that data on a macro level would be nonsensical. If a study was being done regarding inflation in the USA and how it effects consumer habits in the USA (macroeconomics) overall national household income would have to be used.
If that is what the article is referring to, then what's the point of the article? It seems like an irrelevant article to me. If a household of 4 is making $75K/year in Manhattan, of course they're not going to be saving money. It would be significantly more relevant if they looked into people who are making good money for their location. The average household income in Manhattan is close to $70K, and very few people would consider $75K to be Upper Middle Class there.
If that family makes a good salary for the USA as a whole, then so what? You don't pay rent, bills, daycare, etc, based on country-wide averages. You pay based on where you live.
Quote:
Originally Posted by JasonF
You don't need an econ degree to understand that statistics like this are often meaningless. If the claim is that people who earn 75-100k aren't saving, then fine. But to then call all those people upper middle class is completely silly. It is irrelevant. It lumps people into a meaningless group and then tries to say something about that group. It may be factually accurate, but it's completely irrelevant and doesn't actually convey any useful information.
Its not meaningless if you look at the article for what it is. Its not talking about LOCAL regions. Its talking about the USA as a whole. Again everything you guys are stateing regarding a family of 4 in manhatten not being able to realistically save and not everyone making $75-100K is upper middle class is correct. However, these statements are only correct on a LOCAL level. On a national level they are incorrect. Here is what I mean.
The article is defining the definition of upper middle class as "what income level IN GENERAL is considered upper middle class in the USA." Approximately 33% of the population live in a household with an income of $75K+ as of 2012. Although 75K is NOT middle class in high cost of living areas, there aren't enough high COL areas in the USA to justify defining upper middle class by using the high COL as a standard for the whole of the USA.
High COL account for approximately 23% of the USA population. The average median household income for those states is about $62K. So I will skew the numbers in favor of people claiming high COL areas matter on a national level and assume that EVERY person in those states that are above the 50th percentile make over 75K. Even with these absurdly skewed numbers the total population making over 75K in high COL areas comes to only 36 million. That leaves 80 million people in normal/low COL areas that make 75K+. That is why the article is defining that level as upper middle. That is why the data is meaningful AS A WHOLE. Because although the high COL areas are more talked about, known, more popular etc. it does not mean that they actually matter when it comes to national statistics as whole. When looked at it from that level (as the article is) these areas are just part of the data and not significant enough to dominate statistics.
Th relevance of the article comes from the fact that 55% of those making $75K+ don't save. Meaning even if you take the 36 million out of the equation because you can excuse them not saving because of high COL areas; that still leaves about 28 million who don't save in low COL areas. Plus many of those 36 million do make enough to be considered middle class in high COL areas and they still don't save.
That leaves 80 million people in normal/low COL areas that make 75K+. That is why the article is defining that level as upper middle. That is why the data is meaningful AS A WHOLE. Because although the high COL areas are more talked about, known, more popular etc. it does not mean that they actually matter when it comes to national statistics as whole. When looked at it from that level (as the article is) these areas are just part of the data and not significant enough to dominate statistics.
But the implication is that (on national average) a household making over 100K is upper class. Is a household making 105K, for example, really a part of the upper class in the United States? I don't think so.
Even putting aside the reality that determining class is far more complex than just a matter of counting money, the idea that "upper class" starts at 100K strikes me as being absurd (and no, I don't live in an area where the COL is especially high).
But the implication is that (on national average) a household making over 100K is upper class. Is a household making 105K, for example, really a part of the upper class in the United States? I don't think so.
Even putting aside the reality that determining class is far more complex than just a matter of counting money, the idea that "upper class" starts at 100K strikes me as being absurd (and no, I don't live in an area where the COL is especially high).
Not upper class but upper middle class. IMO that's a big difference but doesn't change the fact people will always argue over what these lines actually are. If you earn twice the median hh income for your area that IMO puts your on the upper end of middle class. 100k+ in most areas in the country would do that
But the implication is that (on national average) a household making over 100K is upper class. Is a household making 105K, for example, really a part of the upper class in the United States? I don't think so.
Even putting aside the reality that determining class is far more complex than just a matter of counting money, the idea that "upper class" starts at 100K strikes me as being absurd (and no, I don't live in an area where the COL is especially high).
I completely agree with you. As I stated in a previous post, even economists tend to tend to differ what income level defines upper middle and I believe the limit stated by this article is a bit low. They say the 66th percentile constitutes upper middle class. I tend to stick to the majority opinion of the 80th-85th percentile as the threshold for upper middle and 95th percentile for upper class.
I completely agree with you. As I stated in a previous post, even economists tend to tend to differ what income level defines upper middle and I believe the limit stated by this article is a bit low. They say the 66th percentile constitutes upper middle class. I tend to stick to the majority opinion of the 80th-85th percentile as the threshold for upper middle and 95th percentile for upper class.
I think some function of age and assets is a better way to measure wealth than income. A 21 year old with a 7 figure trust fund is wealthy, even if he or she makes $25K/year. On the other hand, my friend and his wife who are lawyers have a household income around $180K, but between loans, childcare for their kids, and their busy work schedules, I don't consider them wealthy at all.
I understand that it is much more difficult to measure assets than income, but I feel that conclusions about spending, wealth, and lifestyle that are drawn based on income statistics are incredibly flawed.
Yes, there's the hidden bugaboo of debt. High income, high debt, and consequently low net worth does not mean "wealthy."
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. You all are referring to the article in the context of microeconomics. The article is a study of MACROeconomics so it's irrelevant what you define as upper middle class (although you are correct in the sense of microeconomics) in specific areas of the USA. The article is referring to what the definition of upper middle class is in general in the USA. The only flaw with the article is their definition of what income level upper middle class in general starts at. However, a few renowned economists have differing opinions on that figure as well. So the article probably went by someone who defines it at a lower number.
