Russia’s Middle Class
Who are its members and how do they spend their money?
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The HSE Centre for Studies of Income and Living Standards studied the dynamics of the middle class and its behaviour with regard to paid services. The study was based on data drawn from the HSE Russian Longitudinal Monitoring Survey (RLMS-HSE) for the years 2000 to 2017, and the results were presented at the 20th April International Academic Conference hosted by HSE.
Between the rich and the poor
There is no clear definition of what constitutes the middle class, and this lack of generally accepted criteria means that estimates concerning its size can vary widely.
The HSE researchers applied three criteria for their study:
- Material well-being;
- Social and professional status;
- Self-identification.
1. Material well-being
The middle class is identified according to the following factors: income, savings, property (durable goods), real estate and assets typical of villagers (land and farming revenue).
According to these parameters, 21% of Russian households belonged to the middle class in 2017—a figure that has remained almost unchanged since 2000.
2. Social and professional status
According to this measure, a member of the middle class has a higher education and a regular white-collar job or small business.
In 2017, 29.4% of Russians fit this description, up from 19.3% in 2000.
3. Self-identification
Subjective estimates of income, self-respect and social status are also considered. The RLMS-HSE gauges these on a nine-point scale. A member of the middle class is defined as someone who considers themselves ‘above average’ on two or more of the indices.
By this measure, almost 50.8% of all Russian families belonged to the middle class, up from 41.8% in 2000.
Three-in-one
The middle class is heterogeneous and includes several different groups:
The core. This includes those who satisfy all three of the above-listed criteria.
The semi-core. Those who satisfy two of the three criteria.
The periphery. Those who satisfy only one of the criteria.
The generalized middle class consists of those households belonging to the core and semi-core, while the overall middle class also includes those in the periphery.
In 2017, 28.4% of the Russian population belonged to the generalized middle class. The overall middle class comprised 67.6% of the population, including the following:
The core — 5.5%;
The semi-core — approximately 23%;
The periphery — a little more than 39%.
The economic downturn in Russia caused a small decrease in the size of the core in recent years, with members who had lost this or that status shifting to the semi-core, the size of which not only did not decline but grew significantly between 2013 and 2017.
Apart from the crisis years, the size of the periphery group had not changed much in size as of 2017, ‘In part because the group consists of families belonging to the middle class only on the basis of self-identification,’ the study explains.
Although the overall middle class grew continually from 2000 until 2015 and levelled off only in the lead-up to 2017, the generalized middle class continued to expand right up until 2017.
Consumption demand
The middle class is distinctive for its active use of paid services. Members of the middle class invest more than other groups in human capital (education for themselves and their children as well as medical services), insurance, banking products, recreation and leisure.
Did Russia’s economic troubles affect this picture? Yes, according to the results of this study, but the middle class retained its lead in this area, with the use of paid services reaching or exceeding previous levels by 2017. This includes:
Education for children
Members of the middle class consume twice as much as the average citizen in this area. In 2015, one-fourth of the core and semi-core (the generalized middle class) and 18.5% of the periphery reported spending money on kindergartens, schools and various extracurricular activities, with that number rising significantly by 2017.
Adult education
Depending on the group, only 4.7% to 9.3% spent money on adult education in 2017. Those numbers, however, represent a 66% and 81% increase since 2000 among the generalized middle class and periphery respectively.
Medical services
The core and semi-core groups were more active than the rest of the population in their use of medical services, while the periphery more closely resembled the non-middle class members. The greatest difference between them occurred in 2015 in terms of the number of hospital patients. Unsurprisingly, the crisis in the cost of medical treatment affected most Russians, although the number of those using all types of paid medical services increased again in 2017.
Insurance
The number of those purchasing insurance increased by 270% among the generalized middle class, and by 200% among the periphery.
Leisure and recreation
The generalized middle class leads other groups in this area but reacts more sharply to economic difficulties: spending on recreation and entertainment fell in 2013-2015 but rebounded beyond even the 2013 pre-crisis level in 2017.
IQ