In Search of the Global Middle Class: A New Index

Uri Dadush, Shimelse Ali 
Carnegie Paper, July 2012

The swelling middle class in emerging economies has received much attention in recent years, as it well should. The implications of its rise are far-reaching, from expanding economic opportunity to transforming the political landscape in some of the world’s most populous countries. Measuring the middle class, however, is no easy task. There is no widely accepted definition of what constitutes the middle class, and the commonly used income-based measures suffer from a number of deficiencies.

Yet, there is an easy-to-understand and as-yet-overlooked metric available: the number of passenger cars in circulation can act as a direct measure of the middle class in developing countries.¹ Whereas in advanced countries, even households classified as poor own cars, in developing countries, car ownership is almost synonymous with at least middle-class status. It separates those with the ability to purchase nonessentials from the wider population. Moreover, car statistics are generally reliable and frequently updated and contain information by type of car that can be used to further segment the middle class.

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