People don’t read, or so I am told. Business people doubly so. Those who inexplicably do, do not read fiction. And those rare few who do read fiction, do not read 19th century fiction.
And yet it occurs to me that buried in a 19th century novel was an insight into a better way to think about class – and therefore, how to market to people – than anything I’d read in more recent, or business-related, books. And it was this:
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
I know what you’re thinking. You’re thinking “Duh.” You’re thinking “Spend more than you have and you’re unhappy. Spend less and you aren’t. What could be more obvious?”
And I agree with you.
So why aren’t we applying that to how we define economic classes?
Because our current terminology is frankly meaningless. Virtually every person I have ever met has told me that they had a “middle class” upbringing. And I can tell you categorically that what each of them meant by “middle class” was wildly different from a financial perspective.
That doesn’t mean they were lying. Instead, I think they were measuring based on the simple fact that they had friends or acquaintances or neighbors who had more money than they had, and they had friends and acquaintances and neighbors who had less money than they had. Which meant that from where they stood, they were in the middle. Thus, middle class.
And of course in America, where there has always been a vast mixing of classes (significantly less so now than in the past, to be sure), one could almost always see oneself “in the middle”. A situation only exacerbated by popular culture and – wait for it – advertising, which shows everyone every great thing they can, and cannot, afford, cheek-by-jowl with a level of soul crushing poverty in parts of the nation one would never otherwise encounter. Are you “Real Housewives of New Jersey”? No? Are you “The Wire”? No? Then you must be middle class.
But Micawber’s observation in Dickens’ 1850 novel may provide us with a better path. What if we measure less by context, and less even by raw dollars, and more by receivables and expenditures.
What if we said – broadly speaking – that anyone making one dollar and more than they needed to meet their expenses, was rich. And that anyone making one dollar – and less – than what they needed to pay their bills, was poor. And that anyone making exactly the same as their expenses – was middle class.
This would do two things right off the bat (three if you count annoying every economics teacher I ever had). First, it would speak better to psychological drivers than the old model by disconnecting the definitions from dollar amounts. The lawyer pulling down a cool million a year – but who has annual expenses of 1.5 is living paycheck to paycheck as much as any “poor” person you would normally think of. And the pizza delivery guy who paid off his house and his car, and who has no credit card debt and no loans, and whose favorite vacation is camping down the road and fishing – that guy’s got more income than he can spend. And how else would you describe a “rich” person?
And sure, you can quibble with their decisions – look at all that alimony the lawyer is paying! Three x-wives? Wow! - or - Why doesn’t the pizza guy take a trip to Italy or buy a newer car? But practically speaking, their decisions are only relevant if we measure class purely by acquisitions and attainments. Of course, it may sound odd for a guy in advertising – the front line of consumerism – to advocate such an approach. But people in advertising know probably better than anyone how fleeting and ephemeral are the purchases people use to identify their success – so measuring anything meaningful by them is, um, meaningless. Which is probably why we push them so hard, I suppose.
And second, a taxonomy like this disconnects the groupings from geography. Every day, people are managing their personal finances in terms of national if not global economic trends. Your class isn’t really based on where you live any more than your entertainment choices are. Sure, sure, it’s more expensive to live in Manhattan New York than it is to live in Manhattan Kansas, but inflation, medical costs, grocery, gas and housing prices tend to trend similarly everywhere, even if they differ in degree specifically. A measurement that thinks of those broad trends in the context of personal economics is necessarily more useful to understanding why the people in those groups do what they do than one that says “you make more than X? Congratulations, you are no longer poor.” With ramifications professional, political and personal.
Look, I’m no economist. I’m just a simple copywriter who’s trying to understand why people do what they do. Perhaps I’m wrong. Perhaps I am not. Or perhaps we should just use this new model until, as Micawber himself would advise, something better turns up.