Lifestyle and living standards provide a tangible indicator the development of the consumer class: so what happens when you compare them to income data?

We took data on ten areas for 2014: household penetration of some selected household assets, internet penetration, how households cook and whether they have electricity and water, as well as rates of tertiary education enrollment and urbanization. We compared that data with income data on the share of the population in the consumer class – that is those consumers on incomes above $4 per day (in 2005$PPP). The data only look at the development of the consumer class – they do not measure its overall size.

We expected the data to show a correlation between income and the development of the consumer class, and it does.

But there are several countries where income data doesn’t do such a great job at predicting the penetration of the consumer class.

Among them are some of Africa’s largest economies – Nigeria and Egypt. Their consumer classes are much more developed than income data suggest. In Egypt’s case, the fundamentals of asset ownership, access to media, living standards, education and urbanization all point to consumer class development ahead of wealthier countries.

Comparing income with Trendtype’s Consumer Class Index

Why?

Because while income growth drives the development of the consumer class, it does not by itself create a consumer class. We have to look at how consumers live, where they live, what the companies, institutions and governments that serve them are also doing.