The poor and the middle class
A recent article on Tehran Bureau’s website portrayed urban Iran as “a sea of poverty”. This stark description was based on the calculations made by three Iranian researchers that showed as many as 55% of urban Iranians were below a poverty line set at 58,035 rials per person per day (more on the methodology of the paper later). For an unpublished study that was relegated to the poster sessions of a conference in Tehran it has been hugely successful, getting quoted in dozens of Persian and English language websites. The reason is not the study’s novelty of techniques or approach, which is standard, but is its extravagant claim about Iran’s poverty rate, which appeals to those who think the news portends political change. Although I have seen even higher claims of poverty rates for Iran (as high as 90%), those did not make it to the prestigious TB, which is part of the PBS/Frontline website. So I decided to write a reply to set the record straight.
In my reply, I tried to argue two points: First, most of the people the study in question considers poor are actually middle class (by standards of access to basic services and household amenities), a point that I addressed in an earlier post. Second, ignoring or denying the difference was to fundamentally misunderstand Iran’s economic and political dynamics. A country in a “sea of poverty” after the expenditure of some $300 billion of oil revenues is fundamentally different from one with a rising middle class. One is a fertile ground for populist politics and craves redistribution, the other receptive to policies that promote economic growth. Forty years ago, a misunderstanding of similar magnitude had led groups on the Left to believe that Iran was ready for a peasant or a proletarian revolution.
The Islamic Revolution of 1979 was a tectonic shift in Iran’s class structure, displacing the old social classes, demoting the nobility while offering those at the bottom, especially the rural poor, significant upward social mobility through education, sacrifices made in the war effort, or mere political connection (I develop this point further in a short article published in the Radical History Review). A large section of the middle class is the product of this upward mobility. For the most part they like to think of their gains in education and economic status as personal achievement rather than a gift from some bureaucrat. I realize the temptation of some to use extravagant claims of poverty as a political tool, but, besides being untrue, calling this rising middle class poor is condescending and unfair because it denies their achievements and portrays them as helpless bystanders unable to pull themselves out of poverty when their country was inundated with oil money. It is also misleading because it shifts attention from a serious problem that is being neglected –jobs for youth – and focuses attention on a problem that is relatively under control.
As for the future, exaggerating the extent of poverty implies that the populist and redistributive turn in Iran’s politics is what the country needs. Poor people are more likely to favor redistributive policies than push for pro-growth reforms. The middle class, on the other hand, is more likely to favor such reforms because reforms improve the return on its huge investments in education. It is important to know where in the process of social change Iran stands.
Back to methodology. I have tried to reproduce the results of the study in question using the same data they use– the expenditure survey for 2009. So far I have not been able to reproduce their results, so I rather doubt that in urban Iran in 2009 a person with less than $12.55 (58,035 rials converted at the PPP rate published by the World Bank) is unable to get decent nutrition (2300 calories per person per day according to the study). Choosing a poverty line based on calorie intake is problematic for Iran because Iran’s average calories consumption is high and the relationship between income and calories is not precise. You will find in the survey data many people with different income levels — rich and poor — consuming the same amount of calories, or persons with the same income consuming different amounts of calories. In other words, the distribution of calories conditional on income has a large variance. So, it’s hard to pick a calorie-based poverty line and be sure that everyone below that line is actually poor.
In the end, choosing a poverty line is rather arbitrary, like choosing a minimum level of height to calculate what percentage of a population is short. Poverty lines are useful in comparing the incidence of poverty across countries or track it for the same country over time. Most of the studies that come out of Iran do not do either of these. With survey data more widely available to researchers, it is ever so important that the results of studies that use such data be more closely scrutinized by peer reviewers so the data and the studies based on them inform us about how the poor in Iran live rather than turn into political football.