UNIVERSITÀ COMMERCIALE LUIGI BOCCONI - MILAN

Graduate School

Master of Science in Economics and Management for

Public Administration and International Institutions

The twenty millions phenomenon: how low- and middle-income

Brazilians changed their consumption during the economic boom

Advisor Eliana La Ferrara

Discussant Rubera Gaia

Master of Science Thesis of Niccolò Natali

ID 1610518

Academic Year 2012/2013

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To  nonna  Marta  and  nonno  Sesto.    

Thanks  to  my  family,  my  friends  and      Veronica,  to  whom  I  owe  the  inspiration  for  this  work.  

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1.  INTRODUCTION   1  

2.  LITERATURE  REVIEW   5  

3.  SOCIO-­‐ECONOMIC  CLASSES  IN  BRAZIL   17  3.A  COMMISSION  FOR  THE  DEFINITION  OF  THE  MIDDLE  CLASS  IN  BRAZIL   18  3.B  ABEP  AND  THE  CRITÉRIO  BRASIL   22  

4.  THE  “20  MILLIONS  PHENOMENON”   25  4.A  THE  MACROECONOMIC  FRAMEWORK   25  4.B  MICRO  PERSPECTIVE   26  

5.  METHODOLOGY   30  5.A    DATASET  PRESENTATION:  POF  AND  PNAD   30  5.B    POF  METHODOLOGY   32  5.B.1  GENERAL  CONSIDERATIONS   32  5.B.2  DEFINITION  OF  SOCIO-­‐ECONOMIC  CLASSES   32  5.B.3  COMPARISONS   33  5.B.4  TABLES   36  5.C  PNAD  METHODOLOGY   41  5.C.1  TABLES  AND  COMPARISONS   41  

6.  BUDGET  SHARES  ANALYSIS   43  6.A  INTRODUCTION   43  6.A.1  PRELIMINARY  CONSIDERATIONS   43  6.B  EVOLUTION  OF  BUDGET  SHARES   45  6.B.1  FOOD  AND  DRINK   45  6.B.2  PERSONAL  CARE   51  6.B.3  HOUSING   53  6.B.4  TRANSPORTATION   56  6.B.5  HEALTH   58  6.B.6  EDUCATION   61  6.B.7  CULTURE  AND  LEISURE  TIME   63  6.B.8  HOUSE  PURCHASING  AND  DEBTS   66  6.C  PORTRAITING  NEW  CONSUMPTION  HABITS   67  6.C.1  EXTREMELY  POOR   68  6.C.2  POOR   69  6.C.3  VULNERABLE   70  6.C.4  LOWER  MIDDLE  AND  MIDDLE   71  

7.  DISCUSSION   72  7.A  COMMON  HABITS   73  7.A.1  FOOD  AND  DRINK   73  7.A.2  PERSONAL  CARE   75  7.A.3  MOBILE  PHONES   76  7.A.4  HEALTH   77  7.A.5  LEISURE  ACTIVITIES   79  7.A.6  DEBTS   79  7.B  CLASS-­‐SPECIFIC  HABITS   82  7.B.1  FOOD  AND  DRINK   82  7.B.2  HOUSING   83  7.B.3  TRANSPORTATION   85  7.B.4  EDUCATION   86  7.B.5  CULTURE  AND  LEISURE  TIME   88  

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8.  INTER-­‐CLASS  GRADIENTS  ANALYSIS  AND  DISCUSSION   89  8.A  FOOD  AND  DRINK   90  8.B  LEISURE  TIME,  PERSONAL  CARE  PLUS  OTHERS   93  

9.  CONCLUSIONS   97  

REFERENCES   109  

ANNEXES   115  ANNEX  I:  2008  MEAN  PER-­‐HOUSEHOLD  EXPENDITURES  COMPLETE  TABLE   115  ANNEX  II:  PNAD  ANALYSIS   117  ANNEX  III:  EXPENDITURES  CATEGORIES  EXPANDED  (IN  PORTUGUESE)   118  ANNEX  IV:  INTER-­‐CLASS  GRADIENTS   120  

   

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1. Introduction    

Brazil has achieved the first Millennium Development Goal (MDG) set for 2015 four

years earlier, by reducing extreme poverty by half, achieving full and productive

employment and decent work for all and finally reducing hunger by half. The

extraordinary performance of the Brazilian economy during the years of the

commodities boom played a relevant role and, as a result, millions of Brazilian

households across the first ten years of this century joined higher standards of living.

With respect to this topic, much of the attention of the economic and political

sciences research has been focused on the mechanisms through which so many

people have been lifted up from poverty; for instance, the Bolsa Família program, a

governmental program of conditional cash transfer, is still the object of numerous

studies. Development studies are mainly concerned with all the aspects of poverty

ranging from its structural causes to possible solutions for its eradication. Less

attention has been given to what there is after poverty, or in other words, when

poverty just ends. In developing countries such as Brazil, India, China, South Africa

and Indonesia, extreme poverty has been seriously tackled down by a combination of

government-driven social programs and positive economic outlooks. Whichever

definition we may adopt to define the middle class of each of these countries, a

migration of millions of poor households – if not to the middle class – towards the

middle class has taken place. During this transition, we can suppose that households

have changed their behaviour as economic agents, mainly due to their better

financial prospects. We could start by saying that once-poor households increased

their number of interactions with the public sector and with the (formal and informal)

economic system.

With regard to the increased interaction with the public sector, some examples

could be: the official registration of a new business activity, children attending to

public schools, the use of public transportation to go to work, taxes, hospitalizations

etc. New relevant fluxes of people direct towards public infrastructures and services

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that are often not structured for the new size of the demand, results in congested

accessibility and lowered quality. Consequences like these seem to have been

underestimated by the Brazilian government, as to the booming demand for public

services has not corresponded an equal increase in related investments. Last

summer, the fuse of the violent protests that took place all over the country, was a

slight plus 20 centavos (less than € 5 cent) of the bus fare in the cities of São Paulo

and Rio de Janeiro (in which metropolitan areas live respectively 12 and 20 millions

people). Protesters were asking to the Brazilian government the end of corruption,

better health, education and public transportation instead of massive investments for

the World Cup and for the Olympic Games. They were perceived as a clear signal of

the malcontent of the population for low quality public services, a quality

compromised mainly by the increased number of users.

Moving now to the economic system, once-poor households, due to their

augmented income, can now exchange money for a new variety of goods and/or

services or, alternatively, purchase more of the previous ones. The act of consuming

coming from a relatively worse-off condition contains information that go beyond the

quantified monetary disbursement or the modalities akin to the transaction. When an

individual become a consumption entity he/she automatically acquires bargaining

power or, literally, purchasing power, towards the products offer: he/she has money

and decides how to spend it. He/she now carries the responsibility/enjoys the

opportunity of taking much more purchasing decisions than before when

consumption was limited to a restricted number of possibilities. For some, new

consumption options will integrate basic necessities such as food or the acquisition of

some essential goods like a fridge or a washing machine. For some others it is the

very first time they deal with, and give a name to, a surplus; the first time they are

finally less constrained in their purchasing decision; the first time they can think about

a loan; the first time they experience a contemporary version of freedom. It does not

matter how little the discretionary income might be; it has a strong symbolical value,

being an important sign of having finally crossed the poverty line. As underlined by

Van Binsbergen ‘Consumption - and the attainment of income levels by specific

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individuals, households, and social groups that will enable them to engage in more

than mere virtual or symbolic consumption (e.g. ethnic and religious fundamentalism)

- is the necessary implication of a development discourse aiming to alleviate poverty’

(Van Binsbergen 1999).

This said, how Brazilians ex-poor new consumption habits do look like? Are

them a surrogate of what richer classes are consuming or are they tailored to new

needs and wanting? Has consumerist life-style rooted up to the poor? This work will

address these questions by exploring which are the most purchased items by

extremely poor to middle class Brazilian households, what are their needs and

wanting and it will try to give possible explanations to why certain products whether

than others have been purchased. With these information we will be able to gain

some insights on what implies for Brazilians being out from poverty from a

consumption perspective, of what is finally constituted (object and services) such

desired freedom.

In order to answer the above cited questions, we have analysed households

expenditures data available for two years, 2002/2003 and 2008/2009, covering a

period that perfectly suites our research scope. Along those years, in fact, millions of

households have improved their wealth status passing from being poor to joining the

middle class. Unfortunately these are not longitudinal data, and the principle

limitation of our study is that, even by analysing households’ consumption just up to

the middle class, we cannot totally attribute changing in consumption trends to new

consumption choices made by once-poor households. On the other hand, the quirk of

analysing Brazilian households expenditures is that no such country in the world

have lifted up from poverty so many people in such a short time. Therefore, the

impact of the entrance of twenty millions people (distributed in 6 years) in the

consumer market is, in our opinion, the principle cause in explaining changing in

consumption trends. Nonetheless, this is just a hypothesis and further studies are

needed to confirm it.

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We now pass to briefly illustrate the backbone of this work anticipating, in

short, the contents of the following chapters. In chapter two we will review the

literature concerning the analysis of household expenditures, adopting a wide angle

and, thus, not limiting our analysis just to low-income household within the Brazilian

scenario. Then, critical for this study is finding a criteria for the definition of

socioeconomic classes and, being itself a puzzling issue, we dedicated chapter three

to illustrate two different ways to define them and explain the choice made for this

study. In chapter four we explain the mechanism through which millions of families,

the so called “twenty millions phenomenon”, were lifted up from poverty and started

to enjoy higher standards of living. In order to have the most satisfying picture

possible, we will analyse this issue from two perspectives: a macro economic

perspective and a micro economic perspective. Follows chapter five where we

present the data, its limits and the methodology adopted, which lastly results in two

kinds of analysis each one appropriately commented. In chapter six we present the

first kind, consisting in the analysis of which fraction of households’ mean total

disbursement is dedicated to the purchasing of a battery of expenditures items

previously selected. Then, in chapter eight we proceed with the second analysis,

performed for both years, where we define consumption aspirations by calculating

every spending variation (in percentage terms) that occurs from one class to the next

upper class. Finally chapter nine is where we explain our final opinion about the

study’s results and, lastly, we conclude with some “policy”1 suggestions that we

found consistent with the quirks related to low-income Brazilians’ consumption

highlighted throughout the analysis.

           

 

                                                                                                               1  More than policies we could say that are ideas or best practices

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2. Literature Review  

 

  The analysis of household expenditures has been and still is the focus of

several different branches of the economic and sociologic literature. Depending on

the field of interest we have, for example, marketing studies using longitudinal data to

evaluate households expenditures in order to describe the evolution of consumer

preferences; analysis that depict consumer behaviours of specific households;

epidemiological surveys focusing on food expenditure to study diabetes, obesity and

other pathologies coming from an unbalanced diet; development economics studies

aiming at understanding the economic lives of low-income individuals and purely

descriptive studies, mainly produced by research centres, to support and orientate

policy makers. Moreover, anthropological and sociological studies inspect

households or individuals’ budget with the intention to understand peculiar aspects of

their lives through the objects they purchase or they want to purchase.

Our analysis is focused on the evolution of consumption patterns during a

period of economic expansion. We are interested in looking at all the possible

aspects describing the act of consuming, from the pure amount of monetary

disbursement to the symbolic meaning it has. Therefore we have decided to proceed

with our literature review by adopting two discriminating factors: first, being low-

income Brazilian households our subject, we explored the literature dealing with any

analysis of Brazilian households expenditures; second, since we have decided to

analyse a period of strong economic expansion (2000-2009), we have studied

publications on this period. Nonetheless, we have expanded our research to non-

Brazilians subjects and to periods of economic crisis too, aiming at having a larger

picture of the phenomenon.

Two milestone studies over low-income household expenditures are those of

Duflo and Banerjee, published in 2007 and 2008. By analysing households

expenditures of individuals living with two or less dollars a day in thirteen different

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countries (but Brazil), they present a clear picture of which are the purchasing

choices of those people. Their findings, although having some commonalities, differ

from country to country not only for cultural and geographical reasons, but also for

the diverse provision of public services that depend on the characteristics of each

welfare system. In all the countries analysed public schools are present and are free

of charge, therefore, poor households spending on education is usually small, and

despite these schools being often dysfunctional, households are normally lacking the

competencies to judge if their offspring is learning or not (Duflo and Banerjee 2007).

For this reason, and for the fact that in least developed areas of the world private

schools are not necessarily better than public ones, poor households keep sending

their kids to public schools, although valuing considerably education (Duflo and

Banerjee 2007). With regard to food their spending reveals a curious pattern: ‘Even

for the extremely poor, for every 1 percent increase in the food expenditure, about

half goes into purchasing more calories, and half goes into purchasing more

expensive (and presumably better tasting) calories’ (Duflo and Banerjee 2007). This

finding is in line with what previously observed by Deaton: ‘Even if the expenditure

elasticity of food were unity, the elasticity of calories need not to be, since the

composition of food will change as the income rise’ (Deaton 1997). Continuing their

analysis, they notice that poor households seem to dedicate large fractions of their

spending to festivals and ceremonies or alternatively to purchase a TV and/or a

Radio. Moreover, they do not show propensity to save but for acquiring these leisure

items (or services) (Duflo and Banerjee 2007). For their living in precarious hygiene

conditions, lacking of food, and under the risk of the occurrence of a natural disaster,

poor people are subject to strong stress pressure, and, probably this is the case of

why their alcohol and tobacco consumption is usually high2 (Duflo and Banerjee

2007). Duflo and Banerjee in 2008 further extended their research to middle-income

individuals (from 4 to 10 dollars a day) by using the data of the same thirteen

countries. They showed how when income rises, on the one hand expenditures on

                                                                                                               2 When is not is because sometimes other locally more diffuse intoxicants may be preferred (Duflo and Banerjee 2007).

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food decrease and on the other those for entertainment rise with an impressive surge

in TV purchasing (Duflo and Banerjee 2008). From a certain point of view this could

be seen as an expansion of the Engel’s law that states that the poorer the household

the more it will spend on nourishment (Engel 1857): here the richer the household

the more will spend on TV. Middle-income people seem to be aware of the problems

affecting public services and for this reason they start spending on private education

and private healthcare (even though their quality often remain a conundrum) (Duflo

and Banerjee 2008). It seems, then, that their savings are mostly dedicated to the

purchasing of durables and to private health and education instead of to the

acquisition of assets to expand their business activity (Duflo and Banerjee 2008).

Moreover, they found that a salaried, stable job is much preferred, and somehow,

more typical of middle class individuals than the activity of running a business (Duflo

and Banerjee 2008). This is in sharp contrast with Acemoglu and Zilibotti’s ideas

about the entrepreneurial spirit of the middle class being a source of employment and

productivity growth (Acemoglu and Zibilotti 1997).

Moving to analyse how consumption changes during economic shocks,

Micheal Hurd and Susan Rohwedder (2011) have analysed how Americans have

adjusted their consumption during the current economic crisis. 2500 people who

reported to be unemployed or to have their partner unemployed have been asked to

explain how they coped with their limited budget. 85% answered that their response

to the crisis was that of reducing spending instead of, for example, dissaving (Hurd

and Rohwedder 2011). Some expenditures categories have been then individuated

as being easier to ‘cut’ than others. Food, clothing and gasoline were among the

most reduced while highly priced durables, cars and contracted services (insurance,

mobile phones, etc.) were at the opposite (Hurd and Rohwedder 2011). The reason

for highly priced durables inflexibility is their usage, which is distributed over a long

period of time (Hurd and Rohwedder 2011). Conversely, Dutt and Padmanabhan

(2010) analysed households’ expenditures during the economic crisis of 2008 for 22

OECD countries and 32 non-OECD countries and their findings are in sharp contrast

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with those of Hurd and Rohwedder (2011). In OECD countries they observed a fall in

the expenditure shares of Durables (audio-visual equipment, furnitures, carpets,

households appliances, jewellery, medical appliances etc.) and an increase in the

share of Services (financial, telecommunication, transport, recreation, insurance etc.)

while the shares of Non-durables (alcoholic drinks, food, tobacco, electricity,

household maintenance etc.) and Semi-durables (clothing, footwear, households

utensils, recreational equipment, personal care items) are not affected (Dutt and

Padmanabhan 2010). In non-OECD countries they observed a significant drop in the

share of Durables, Semi-durables and a significant surge in Non-durables (Dutt and

Padmanabhan 2010). From their work, it seems that a common strategy emerged to

cope with the effects of the economic crisis for both sets of countries: postponing

(renouncing to) the consumption of Durables. Moreover, their results indicate that for

OECD countries Services are considered as necessities while in non-OECD

countries are Non-durables. This implies that consumers in developing countries

substitute, for instance, clothing for food. In line with this conclusion is the work of

Browning and Crossley (1999) that by analysing the expenditures of unemployed

individuals during a period of unemployment spell, they found that ‘agents who have

to cut back temporarily on total expenditure will choose to postpone replacing worn

but serviceable clothing (socks, for example) rather than go hungry’ (Browning and

Crossley 1999). McKenzie (2006) too found support to this hypothesis analysing

Mexican household expenditures during the 1994 crisis. He found that: ‘households

were reducing their expenditures on clothing, glassware, bedding and entertainment

equipment, in order to allocate a relatively higher share of their budget to basic foods,

such as cereals and grains, eggs, oils and fats and vegetables’ (McKenzie 2006).

The most complete Brazilian publications concerning households expenditure

are probably those issued in 2003 and in 2009 by the IBGE (Brazilian Institute for

Geography and Statistics) that is also responsible for the production of the most

comprehensive database containing information on Brazilian households

expenditure: the POF (Pesquisa de Orçãmentos Familiares). POF is the database

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upon which this study is based, and, for this reason, the analysis of the IBGE

publications will be presented in details. We have two kinds of IBGE publications:

one over some specific clues resulted from a first data analysis and the other is the

complete analysis of all the expenditure voices. Unfortunately in year 2002/2003 just

commentaries and not the complete analysis were produced which, instead, was

produced (together with commentaries) for the year 2008/2009. The complete

analysis of 2008/2009 presents a detailed picture of household expenditures divided

by income classes with the only limitation that the poorest class had an upper

boundary relatively too high (R$840) for the aim of this study. Moreover, even by

having the poorest class split in more classes, the study ignores their 2002/2003

counterparts, making it impossible to compare expenditures across time.

Commentaries for 2002/2003 and for 2008/2009 show some expenditure analysis

done according to classes of income, but not consistent with our main research

scope since they systematically exclude the income distribution segments we are

interested in. On the other hand, many authors have used the POF dataset to

describe the evolution of household expenditures. An interesting work from the

Boston Consulting Group (BCG) (2013), studied Brazilian household expenditures in

relation to their income for the year 2008/2009. By putting on the Y-axis average

spending and on the X-axis household income, they individuated four groups of

products that have the same average spending-income relation3. The first group

accounts for the 39% of the total spending and shows continuous growth with

income. Typical products are: salty snacks, fresh fruit and vegetables, wine,

children’s clothing, health insurance, small appliances and skin care products (BCG

2013). The second group accounts for the 32% of the total expenses and it presents

a trend to plateau, which means that individuals increase their spending in relation to

income with a steeper slope, until they reach a threshold where spending is levelled

off. Products from this group are: fresh meat, biscuits, beer, beverage concentrates,

sneakers and deodorants (BCG 2013). The third basket of items represents the 27%

                                                                                                               3 In short, they create a series of Engel curves  

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of spending for Brazilian households and this is better described by a line with

multiple inflection points, meaning that consumers will keep buying this product until

their basic needs are met then, when they can afford it, suddenly increase their

spending for the same product. Women’s clothing, language schools, ice creams,

ready-to-drink juices, perfumes, imported automobiles, medical consultations, private

education belong to this category (BCG 2013). The last group contains products

whose purchasing remains stable with income. They are flour, starches, pasta, sugar

and sweeteners, cereals, pulses, oilseeds, powdered milk, eggs for example (BCG

2013). Furthermore, by using a sample of 1440 households they concluded that

when households enter new income segments spending on certain products surges.

For example, households earning les than $3000 a year, when they pass to earn

from $3000 to $15000 they start spending in white goods, electronics, juice

concentrates, fresh foods, prepaid mobile and motorcycles (BCG 2013).

Another study, still on the POF database, done for the FeComercioSP4 (2012)

focuses on the evolution of the middle-class and its impact on the retail market. By

dividing the Brazilian society in classes according to the minimum salary, it highlights

how the middle class5 expansion occurred from 2000 to 2010 was accompanied by:

first, increased purchasing of home appliances, electric appliances and cars (mostly

via credit); second, increased spending on services such as cable-TV subscriptions,

mobile phones contracts, private health services, private education, beautician

services and holiday trips (FECOMMERCIOSP 2012). Dos Santos (2013) too, in his

analysis over the expansion of the credit sector among low-income households

showed how, between 2009 and 2011, purchasing of consumer durables blew up

(Dos Santos 2013, pp. 39). Spers, Wright and Castro (2007) analysed changes in

consumptions among individuals earning from 2 to 5 minimum salaries in the 2003-

2007 period. Their results highlighted a conspicuous raise in spending in the car

                                                                                                               4 FeComercioSP is the Federation for Commerce in São Paulo. It represents many different company unions. 5 Here defined as those households earning from R$1400 to R$7000 monthly  

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sector, culture, education and tourism; minor increasing accounted for hygiene and

personal services (Spers et al. 2008).

In their study Da Silva and De Paula (2003) explored how food consumption

changed after the implementation of the Plano Real (1994) that led to sensible price

stability after years characterized by hyperinflation. They conclude that, thanks to the

effects of augmented minimum salary and the already mentioned price stability,

household consumption increased and to a certain extent homogenized against class

differences (Da Silva and De Paula 2003). In addition, they registered a strong

demand for quality and healthy food accompanied by the explosion of frozen and

ready-packed food. In particular, chicken meat and yogurt products increased

impressively in sales (Da Silva and De Paula 2003).

Monteiro, Levy, Claro, de Castro and Cannon have classified food items

present in the POF according to three criteria: unprocessed or minimally processed

food, processed food and ultra-processed food products6 (Monteiro et al. 2010). They

then have analysed food consumption with the aim at seeing how consumption of

these three food groups was distributed along the percentiles of the income

distribution, and found that in 2002/2003 consumption of ultra-processed food

increased with income (Monteiro et al 2010). In a later study they compare their

results with older data on food consumption and they conclude that In Brazil, ready-

to-eat or ready-to-heat ultra-processed foods are displacing unprocessed/minimally-

processed foods and processed culinary ingredients (Monteiro et al. 2010). In the

authors’ view, one of the principal reasons explaining this behavior is the ‘amplified

and aggressive advertising and marketing of branded products belonging to group

three, many of which are produced by transnational companies and many other by

very big manufacturers and caterers’ (Monteiro et al. 2010). Levy, Claro, Mondini,

Sichieri and Monteiro (2011) have used the POF database of 2008/2009 to describe

                                                                                                               6  Group one products examples are: fresh fruits, vegetables and meats, etc. Group two: vegetables olis, butter, noodles, food containing preservatives, etc. Group three: cakes and pastries, ice-cream pre-prepared meat, hot dogs, oil canned fish etc. The first group is the healthier, the third the unhealthier.    

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the regional and socioeconomic distribution of households food availability in Brazil.

Their findings reveal that if on the one hand the amount of energy from protein was

adequate in all regional and socioeconomic strata, on the other an excess of free

sugars and fats was observed in all the regions of the country especially in the

Southern and Southeastern. Finally they observe an increase in the fat content and

reduction in carbohydrate content of the diet with the increase in income (Levy et al.

2011). Their conclusions are in line with those of Bueno, Marchioni, César e Fisberg

that reveal how in São Paulo added sugar intake is higher among younger adults of

higher socioeconomic level, with soft drinks and table sugar accounting for 50% of

the sugar consumed (Bueno et al. 2012).

As we said at the beginning of this chapter, consumption is a multifaceted

concept and among the aims of this study there is to understand the key

determinants that drove the purchasing decisions from low- to middle-income

Brazilians households. If we think at the act of purchasing as the final result of a sum

of exogenous and endogenous forces operating at an inner level of every individual,

we could attribute these forces to two macro-elements: one is individuals’ past as

consumer entities and the second is their future, meaning with that the “ever-coming”

new modalities and new products that shape their consumer behaviour. Looking at

the past, Brazilians were coming from a period of deep recession and hyperinflation,

which characterized the last years of the 80’s and the first half of the 90’s. During

those years the high volatility of prices induced consumers, especially those who

were responsible for frequent buying—women7, to elaborate complex purchasing

strategies in order to cope with prices that were changing within the same day

(O’Dougherty 2002). Moreover, according to O’Dougherty, the effects of

hyperinflation, would have fostered the practice of “immediatism” setting people’s

mind on a short-period vision of time (O’Dougherty 2002, pp. 72). The act of

                                                                                                               7  According to Scirè among Brazilian households, purchasing decisions were this structured: the “woman of the house” (dona da casa) was responsible of everyday acquisition typically items for the kitchen and food; the man, in turn, was in charge of asset-purchasing decisions such as durables or a car (Scirè 2009, pp. 40)  

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consuming during those years was constrained when not totally impeded, causing a

severe frustration among Brazilians households who saw in this, as O’Dougherty

noted, ‘a serious threat to the foundation of their identities’ (O’Dougherty 2002 pp.

53). With the advent of the Plano Real in 1994, prices stabilized, the Brazilian

economy was at the very beginning of its path of growth and companies offering new

products and services were mushrooming, searching new and safe market

segments. As a consequence, O’Dougherty reported a popular support for the trends

into small business, services and sales at the expenses of “nobler” professions for

which a higher cultural level was required. (O’Dougherty 2002 pp. 92). This brief

summary is useful to understand the background of the consumerist thirst of the

Brazilian society approaching the late 90’s which will subsequently exert a strong

influence on consumers.

During the first years of the XXI century companies started to look for the first

time at low-income households as a potential target for their products. Lemos and

Santos (2010) proved it by showing how advertisement campaigns directed towards

low-income consumers started to intensify exactly in those years (Lemos and Santos

2010, pp. 55-58). They further expand this concept analysing in 2007 two

advertisement campaigns created by two different companies selling the same

product: a computer. The most effective advertisement campaign had this successful

mix of elements: a testimonial who was very popular among low-income consumers;

a short list of advantages coming from the acquisition of the machine; the creation of

a “club” of satisfied consumers; an instalment strategy that allowed them offer the

product for less R$2 per day (R$ 57 per month) (Lemos and Santos 2010, pp. 53-

65). In only one advertisement the company concentrated the principal desiderata of

a low-income consumer: sense of inclusiveness and reliability; the symbolic

opportunity of social ascension and a captivating pricing strategy (Lemos and Santos

2010, pp. 60-65). Regarding this latter issue, Godoy and Nardi (2006) have showed

how among people coming from the lower classes and older than 25, instalment

values and modalities of payments are respectively the second and the third most

  14  

important things to consider when they decide to buy something—the first is discount

(Godoy and Nardi 2006).

McKinsey&Company (2012) has tried to depict low-income Brazilians

consumer behaviour through a series of interviews conducted with consumers on

one side, and executives of large companies, retailers and owner of small shops on

the other. Their findings reveal that contrarily to common thoughts, low-income

consumers do not seek just low-priced products (McKinsey 2012). In line with their

conclusion is the work done by Kantar World Panel that in 2008 showed how over a

basket of 65 categories, 31% of low-income consumer purchased leading premium

brands with prices that were 10% higher than the average for that category (Kantar

2008). The rationale behind this apparently illogical behaviour is their need to

compensate for a dignity deficit and often low-self esteem, which sublimates through

the act of buying in better furnished, more expensive supermarkets (McKinsey 2012).

The Economist (2014) reports a curious phenomenon currently going on in the

outskirts of the main Brazilian cities called rolezinho. It basically consists in large

group of youngster (thousands) gathered via social network, to meet in big shopping

malls to do collective shopping (even though sometimes it ended up in robbery). As

the Economist points out: ‘As well as air-conditioning, shopping centres also confer

something no open-air space can: status’ (The Economist 2014). The shopping

experience seems to be one of the few possibilities that low-income individuals have

to choose a better treatment for a relatively smaller marginal cost. For example in

their everyday life poor people have to deal with low-quality public services, and

switching to the private sector would cost too much leaving them with no options,

therefore, whenever they can choose what to buy their aspirations expand greatly

(McKinsey 2012). Moreover, personalised relationships, face to face contact8 and

                                                                                                               8 In this merit we must say that the advent of the e-commerce is changing the relationship retailer-customer, at least for young cohorts and for specific items, transforming it into a face to interface contact where the web design plays a crucial role in making customers comfortable.

  15  

social inclusiveness make them feel at home, transmitting serenity and thus willing to

buy (McKinsey 2012).

Another important determinant in shaping the consumer behaviour of low-

income Brazilians is the expansion of the credit market towards this sector of society.

According to Zouain and Barone (2007) Brazil has an extensive penetration of credit

cards when compared to other countries of South America. In 2004, Brazil had a

penetration of 0.293 credit card units per capita, while Chile, that has a higher

income per capita, had a penetration of 0.166 per capita (Zouain and Barone 2007).

In order to understand the dimension of this phenomenon, the number of credit

cards9 issued in Brazil passed from being 127 millions in 2004 to 628 millions in 2010

(BFA 2012). The rapid penetration of this new payment method among low-income

households, has drastically changed the way in which they manage their budgets

and, consequently, has a strong influence over their consumption practices. As Scirè

points out in her work, credit cards by giving the possibility to pay in installments and

by having generous credit limits, seem to have fused a process of ever-postponing

payments, sacrificing the well known delayed gratification to the immediateness of

possession (Scirè 2009, pp. 53). She continues saying that by using credit cards this

kind of “virtual money to spend” entered into their budget as if it were an actual

source of income (Scirè 2009, pp. 53). Debts, therefore, are no longer perceived as a

flaw, a shortcoming or a deficiency, but they constitute the element that structures

consumption practices and, lastly, the life of low-income households. Since

households’ initial financial situation is that of having debts, all the calculation

required to manage their total income, is, in a certain sense, altered. Given these

conditions, having access to credit seems to impact on popular consumption

practices with, at least, an instigation effect. (Scirè 2009, pp. 54). A proof of this fact

comes from a study done for the Bankable Frontiers Association (BFA) that has

followed financial transactions of two low-income households, Brazil and South Africa

                                                                                                               9 Including credit card issued by retailers that, as Scirè explains in her work, allows cardholders to make payments also in other stores up to a certain threshold.  

  16  

and then compared it. In their graph (see Figure 1) is clearly showed how for the

Brazilian household, payday allows for debts to be repaid and new debts to begin

accumulating. Saving to meet daily cash flow needs is much less common. In

contrast, they have found that in South Africa, a household tends to receive a large

income inflow, such as a monthly salary or government grant payment, which the

recipient saves and spends down slowly as consumption needs arise over the month.

(BFA 2012)

Figure 1: Consumer spending in Brazil and in South Africa among households with similar income levels

Source: BFA 2012

At minimum, a constant and accurate calculation is thus required in order not

to be insolvent and to continue spending, but as Dos Santos (2013) highlights in his

study, low-income households are lacking the cultural capital that would enable them

to plan and effectively manage their debts (Dos Santos 2013, pp. 104). A previous

study from CNDL10 (2012) further proofs this by showing how 60% of the total low-

income individuals surveyed have demonstrated to have no planning skills (CNDL

2012). This would lastly demonstrate the impulsivity and the irrationality that often

lies behind the consumer behavior of low-income Brazilians probably driven by what

Dos Santos called the joy of a momentary euphoria (Dos Santos 2013, pp. 28).

                                                                                                               10 Confederação National de Dirigentes de Lojistas—National Association of Business Executives

  17  

3. Socio-economic classes in Brazil

Dividing the society in socio-economic classes had always been a

controversial issue in social sciences. Literature is split in two main branches using

either a subjectivist or an objectivist approach. The subjectivist approach considers a

class as a socially constructed attribute in which membership is mainly determined

by the psychological attachment to it, that is part of an individual’s overall self-

concept (Walsh, Jennings and Stoker 2004). The idea of belonging to a certain class

is, in turn, dependent firstly on the individual’s knowledge of class options, and thus

class divisions, and secondly on the criteria with which these divisions place

him/herself in one specific class (Walsh et al. 2004). Aristotele, for example, was in

line with the subjectivist approach saying that membership in a class is mostly

generated by shared ways of thinking, shared opinions over major issues more than

other characteristics. In other words, classes are social categories sharing

subjectively-salient attributes used by people to rank those categories within a

system of economic stratification (Wright 2003).

Alternatively, the objectivist approach is based on the elaboration of

socioeconomic indicators such as income, education, occupation etc. to which are

attached qualitative information. This approach is thus double: first we have

quantitative indexes identifying one person’s social class, then the qualitative

properties of the various indexes ‘derived directly from some key modern

occupations in a society, such as private entrepreneurs of small/medium firms,

managerial personnel, white collar professionals etc.’ (Lu 2012). The definition of a

class in this sense is a gradational concept and the names are accordingly upper,

upper middle, middle, lower, lower, and under. There is another branch of the

objectivist approach based on indexes that explain inequalities in economically

defined life chances and material standards of living (Wright 2003). Classes in this

sense are relational more than gradational concepts, where individuals are classified

according to their relation with income-generating resources or assets of various

  18  

types. This concept is characteristic of both the Weberian and Marxist traditions of

social theory.

We decided to use a Brazilian publication (Commissão para a Definição da

Classe Media no Brasil) that first defined the middle class and then divided the entire

society in the other socio-economic classes. We can ascribe the methodology used

by these researchers as purely objectivist, of the first type. It is, in fact, based on an

index that results through the combination of three indicators. Nonetheless, we will

also illustrate another classification method, also developed by a Brazilian institution

(Associação Brasileira de Empresas e Produtores-ABEP), which we found interesting

for our research purpose and which is recalling the relational approach.

3.a Commission for the definition of the middle class in Brazil

The Brazilian government have commissioned to its Secretary of Strategic

Affairs (Secretaria dos Assuntos Estrategicos-SAE), a project which aim was to

define the middle class in Brazil. Many experts and researchers on the Brazilian

society, coming from the most prestigious Universities of Brazil, had participated and

their final work was published in paper issued in 2012; given its relevance we here

summarise how they proceeded.

First, income had been judged to be the more synthetic, wealth-related

indicator possible (even though in low-income countries, due to problems related with

income registration/annotation, expenditures are often taken as a better proxy of

income). Then the question was what to choose between per-capita income or per-

family/household total income. Researchers affirm that in Brazil a purely per-capita

income would underestimate the real wealth of an individual since most of the

Brazilians live in communities, being them a family or a little neighbourhood, and

because whoever is the “bread-winner” will share his/her money/assets/food,

  19  

whenever possible, with his/her reference community. These communities are

peculiar among lower-medium and low-income households and account for more

than half of the whole Brazilian population. On the other hand, per-family/household

income would be subjected to other biases, we know for example that members of a

household vary in numbers and age across the different segment of the society and

that families do have economies of scale. The decision of the Commission was to

sum up all the income sources of a family and then divide it for the members of the

household obtaining what they called a household per-capita income.

Once established the correct indicator to be linked with wealth, they passed to

explore different possibilities for measuring and dividing the Brazilian society

according to this value. A relevant branch of the socio-economic literature uses the

median of the income distribution and define the middle class as in between half and

two times the median income value. This is a relative measure that, against a non-

reduction in inequalities (Gini index), follows the economic growth of a country

leaving classes dimension as they are. What they needed was an absolute measure

capable of capturing the evolution of the classes even without drastic reduction of the

Gini Index. The rationale is that within a society that has not equalized its income

distribution, but in which people improved their relative (compared to the past) well

being, a relative measure would register just slight (if any) changes in class

composition, all due to reduction in inequalities. Conversely an absolute measure is

needed to precisely describe changes.

An absolute measure can be calculated, for example, individuating income

limits for a set year and then taking them as reference limits to be applied in other

years (adjusted for inflation). The choice of the commission was the latter and the

criteria upon which limits had been chosen were based on the concept of

vulnerability. Vulnerability is a key concept in poverty studies that had just recently

entered the academic arena11. Poor people are usually characterized by scarce

                                                                                                               11 In this merit we suggest the reading of Lopez-Calva, L. F. and E. Ortiz-Juarez (2012). ‘A Vulnerability Approach to the Definition of the Middle Class’ Journal of Economic Inequality

  20  

capacities of future planning and an accentuated short-term vision of life. The

explanation is that since poverty (here intended as a status where is necessary to

struggle for life) stays one step back the present condition of an individual, it is

unlikely for him/her to be a risk taker and to invest, or save, in synthesis, to make

plans. The primary objective among vulnerable individuals is to make end meets,

living day by day. A sudden shortage of money would pose them in serious troubles

so that, there is always the possibility for them, due to some exogenous factor, to fall

back into poverty again.

At a psychological level this makes them acting cautiously and similarly to their

poorer counterparts. In the report, the poverty line is defined according to the income

limits required to participate the two major social programs Brasil sem Miseria and

Bolsa Família at 162 R$ of household per-capita income normalised at 2012 level.

Vulnerability, thus, is the probability (that can be expressed in percentage terms), of

falling under this line. When income is sufficiently high, and thus vulnerability is

lowered, individuals leave their past-poverty burden and acquire a different mind-set

making plans and possibly investments.

In order to establish income limits, vulnerability has been realistically

transposed over three different time ranges: probability of falling back the poverty line

in one year, in five year and of being structurally poor12 . The first had been

extrapolated by data taken from PNAD that although not being panel data, has the

peculiarity of being a survey done each year in the same census sector13. They

calculated household whose income fell under the poverty line in the subsequent

year in the period 2004-2008. The same had been done for households falling back

the poverty line in a five-year period from 2005 to 2009. They then correlated each of

the above-mentioned indicators to income through a logistic regression and based on

this equation, for every respondent in PNAD it was possible to obtain the chance of

                                                                                                               12 Here for structurally poor we intend permanently poor. 13 A census sector is defined as a unit of 200 households that can be distributed in different ways (e.g. two buildings, ten floors each floor with ten apartments, a portion of an urban slum of 200 settlements).    

  21  

becoming poor as a function of per-capita income, in other words, their vulnerability

to poverty.

According to vulnerability measures the commission split the population in

three groups: high, medium and low vulnerability. The limits defining the three groups

were taken following a polarization method minimizing the distance within groups and

maximizing that between groups. Since the definition of distance could be arbitrarily

chosen and since distances (for minimum and for maximum) have to be the same,

the commission decided to use the Theil index that defines distances as the reason

between the arithmetic and the geometric mean. By doing this they obtained one

upper limit and one lower limit of vulnerability per each time range/period. The upper

limit is representing the low vulnerability group, expressed in percent, upon which the

risk of falling back to poverty is close to zero. The lower limit is the opposite: is the

edge between poverty and the middle class, under which households are concretely

exposed to the risk of falling back the poverty line (R$140) and upon which they are

sufficiently relaxed to start developing a long-period vision.

The final outputs were two limits generating three income brackets for each

period analysed (one year, five years and structurally poor). Since they were very

similar14 the final decision of the commission was to take only one household per-

capita income interval: between R$ 291 and R$ 1019 (at 2012 level). Consequently

individuals whose household per-capita income is downwardly approximating R$ 291

are increasing their degree of vulnerability from medium to high while those nearing

the R$1019 threshold are decreasing it from medium to low.

Since the degree of heterogeneity of the created classes was still high, the

decision of the commission was to operate a final subdivision; individuals falling

under the poverty line were split in two classes: extremely poor from R$81 – R$162

and poor R$162- R$291. We then have the vulnerable class whose income range

from R$162 and R$291. The middle group and the high group were divided using the

                                                                                                               14  R$ 303- R$ 1056 : vulnerability for one-year period; R$ 291- R$ 1019 vulnerability for five-years period; R$ 290- R$ 981 structural vulnerability  

  22  

polarization method above mentioned generating three middle classes and three high

classes as shown in Table 1.

Table 1: Income brackets defining socioeconomic classes in Brazil15.

Income Brackets 2012 Class

x<81 Extremely poor

81<x<162 Poor

162<x<291 Vulnerable

291<x<441 Lower-middle class

441<x<641 Middle class

641<x<1019 Upper-middle class

1019<x<2480 Lower-high class

2480<x<6448 Upper-high class

x>6448 Extremely rich Source: SAE 2012

3.b ABEP and the Critério Brasil

ABEP stays for Brazilian Association of Research for Companies specialized

in doing market researches and providing a series of other strategic services useful

to help private business flourishing in the country. The purpose of their classification

of the Brazilian society into economic classes is thus market-oriented and does not,

at least directly, describe the social aspects that this division implies. Their aim is

looking at the purchase power of urban residents, for the obvious implications that

such information has from a business perspective. They created a classification

system based on points were points are distributed according to the possession, or

not, of specific items plus the educational profile as shown in Table 2 and 3.

They then created a scale from A1 to E, based on scored points, in which they

collocate households depending on their scores. By so doing they also individuated

which was the average income corresponding to each class. In Table 4 we present

the last mentioned scheme of class distribution with related mean income.

                                                                                                               15 The inflation rate considered by SAE to deflate the income-boundaries that define the classes is the INPC – Indice Nacional de Preços ao Consumidor (National Price Consumer Index) at 2012 price level

  23  

Table 2: Household characteristics and related points

Source: CCEB 2012

Table 3: Educational profile and related points

Education Points

Illiterate/ Not completed elementary school 0

Elementary completed/ Primary not completed 1

Primary completed/ Secondary not completed 2

Secondary completed/ Tertiary not completed 4

Tertiary completed 8

Source: CCEB 2012

Table 4: Classes subdivision and related per-household income

Classes Points Income

A1 42-46 12926

A2 35-41 8418

B1 29-34 4418

B2 23-28 2565

C1 18-22 1541

C2 14-17 1024

D 8-13 714

E 0-7 477

Source: CCEB 2012

The battery of items may vary in the years to come, according to the

availability of the data and, evolution of the Brazilian society and the advent new

goods and services. The object (and services) spectrum is widening and items are

Items 0 1 2 3 4 or <4 Color-TV 0 1 2 3 4

Radio 0 1 2 3 4

Bathroom 0 4 5 6 7

Car 0 4 7 9 9

Maidservant 0 3 4 4 4

Washing machine 0 2 2 2 2

VHS or DVD player 0 2 2 2 2

Fridge 0 4 4 4 4

Freezer 0 2 2 2 2

  24  

being redistributed respecting differentials in income so that what was typically

consumed by a certain class in 2008 will not be the same of 2014.

What is interesting is that, probably without having this in mind, they used a

concept that is at the core of the sociological literature about consumption. Although

the criteria for the object selection aimed at dividing the population according to their

purchasing power, the idea of creating socio-economic classes depending on the

possession of certain object and/or services is also present in Baudrillard (1997). He

affirmed that the act of buying something and, consequently, of possessing it has

intrinsically embedded the purchasing power of an individual (real or supposed) upon

which our cultural system is based on. The reason for purchasing certain items is

extended beyond the pure necessity: objects are means charged with the purchasing

power information and thus have the power of regulating social relations (Baudrillard

1997). The author is never explicitly referring to socio-economic classes however he

individuated in the purchasing power a discriminant for regulating interactions among

individuals. In its classification, ABEP is using a system of objects (and services) to

define the purchasing power of individuals with which dividing the society in

economic classes, that is theoretically in line with Baudrillard thought.

                   

  25  

4. The “20 millions phenomenon”

4.a The macroeconomic framework

After the implementation of the Plano Real, the Brazilian economy entered a

new phase of growth. The end of uncontrolled inflation, the establishment of an

optimal inflation level with limits to primary deficit, the reformation of the banking

system, laws about fiscal responsibility and trade liberalization were the basis upon

which the growth experienced between 2002 and 2009 was rooted on. Parallel to this

we assisted to the emergence, in early 2000, of a new global player, China, whose

growth, based on exporting low-added value products, had lifted up its energetic and

commodities needs. Consequently, due to the dimension of the Chinese economy,

the world demand for these resources (and their related prices) raised consistently.

Brazil is a country rich in commodities especially soya, oil and steel and in those

years China became one of the first three Brazilian commercial partners, sharply

accelerating the country’s economic growth.

In the same years, in 2002, Luiz Lula Inacio da Silva succeeded to Henrique

Fernando Cardoso and during the early phases of his government investors were

suspicious of the monetary policies that Brazil’s new leftish president might

implement. As a consequence, the Real depreciated while exportations increased,

granting a solid economic base to the Brazilian economy. Lula de facto followed the

monetary policy previously started by his predecessor Cardoso, reassuring investors:

by so doing he started to accumulate foreign currency reserves while lowering the

interest rate. Through the fiscal system the government improved the distribution of

wealth through the implementation of social programs directed towards low- and

lowest-income families. Moreover, in the years 2002-2008 world economy also was

in expansion and Brazilian private companies registered in those years double digits

growth and business expansion in many different sectors.

In synthesis, the government (stable inflation, social protection programmes),

the private sector (ripping world economic growth, job creation) and finally the advent

  26  

of the credit market, were the principle contributors of the economic ascension of

millions of low-income families to the middle-class status.

4.b Micro perspective

“O fenomeno dos 20 milhões” is a Brazilian expression that means “The 20

millions phenomenon” and it refers to the ascension of millions of low-income

individuals to the middle class between 2002 and 2009. This way of saying includes

a figure: 20 millions. By analysing different sources we conclude that the “20 millions

phenomenon” is not only a popular say since it is close to the figures found in the

more important works dealing with this issue with differences that depends on the

economic classes definition adopted. The real numbers are around 29 millions of

individuals (Neri 2009; SAE 2010) and SAE further specifies that, by splitting this

value in two, 8 millions are due to the natural demographic growth of the “old” middle

class and 21 millions had entered the middle class from the lower strata (SAE 2010).

With regard to the causes researchers from SAE (SAE 2010) individuate four main

determinants that contributed to the growth of the Brazilian middle class, although

with different weights, as discussed below in detail:

i. Demography: leveraging on the demograp hic dividend.

ii. Government transfers: Bolsa Família, Beneficio de Prestação

Continuada, Previdência Rural.

iii. Job creation: low unemployment.

iv. Gains in labour productivity.

(i) From 2000 to 2009 the percentage of adults (more than sixteen years old)

in the country was of 79%. The age structure of Brazil that after decades of high

  27  

fertility rates experienced a gradual downfall (below replacement level in 200916), left

the country with a low dependency ratio calculated as the ratio of dependents

(people with less than 15 years old and more than 64 years old) over the rest of the

population. Brazilians were enjoying the economic benefits of what in the

Demography literature is called a Demographic Dividend. In the authors’ view this

alone had contributed to explain the 20% of the growth of the middle class. (SAE

2010)

(ii) Brazil witnessed the advent of several government programs aiming at

reducing poverty that were mostly based on government transfer so that the part of

per-capita income not originating from work had risen from R$ 85 to R$ 134 on

average17. Rather surprisingly, SAE researchers found that the government transfers

were responsible for just the 20% of the differential in income between the middle

class and the poor class18. while accounted for the 30% of the middle class growth.

(SAE 2010)

(iii) The expansion of the Brazilian economy by creating jobs sustained the

demand for workers and significantly lowered the unemployment rate. The

importance of the income from work is still preponderant among middle class, being

three quarter of their total income and this contributed to explain slightly more than

10% of the middle-class expansion (SAE 2010)

(iv) Income from work is dependent on two elements: unemployment rate and

productivity. A good measure for productivity is the average salary that has been

growing yearly at a 1.7% rat since 2000 accounting for 40% of the middle class                                                                                                                16 It passed from being 3.5 in 1985 to 1.9 in 2008. Source: World Bank 17 We refer to the 2000-2009 period 18 As Mourão and de Jesus point out in their research over the effectiveness of the Bolsa Familia program, often non-recipients’ income are lower than recipients’ income and there is still a large number of peole who is potentially a beneficiary but do not receive the transfer due to lack of availability. (Mourão, de Jesus 2011)  

  28  

income variation (SAE 2010). According to the authors the origin of the new Brazilian

middle class actually resulted from a solid process of inclusiveness in the production

side of the economy more than on generous government transfers, resulting to be its

major driver (60%). This also explains the real difference between a poor and a

middle class individuals, the latter increasing productivity factor of more than double.

Moreover, in a subsequent paper of 2012 they show that the income growth of the

poorer classes more than doubled the national average growth rate, while the income

change of richer classes has been half the national average.

Neri, from Fundação Getulio Vargas, adopts a different perspective. In his

opinion the middle class expansion is a consequence of the redistribution of wealth

as demonstrated by the GINI Index variations that passed from 0.5886 in 2002 to

0.5486 in 200819 showing a constant negative trend throughout the reference period.

Neri, although dividing the Brazilian society in five economic classes with income

thresholds different from those adopted by SAE, reports strong interclass movements

in our study period20. In agreement with Hoffman and Soares, Neri showed that inter-

class movements were explained to a large extent (67%) by variations in income

from work with programs of government transfer (mostly Bolsa Família and Bolsa

Escola) accounting for the 17% and social security programs for the 16 % (Hoffmann

2005; Soares 2006; Neri 2009). Neri continues his analysis by indicating that

education and consequently the enhanced qualification of workers contributed

substantially to enhance their productivity. This is in line with the analysis made by

SAE in 2010.

In a 2009 paper studying the consumption of Brazilian lower classes, Spers,

Wright and Castro gave a similar explanation for the inter-class movements that

occurred between 2003 and 2007. According to the classification of the economic

                                                                                                               19 Source: Neri, IBGE-CPS-FGV 20 He calculated that on average the upper three classes together A/B/C grew of 35% and the lower two shrunk of 29%. Source: Neri, PNAD-IBGE  

  29  

classes made by ABEP21 the ascension of households belonging to the lowest

classes (E and D) was associated with a reduction of the upper-middle classes (B1

and B2). The reason behind the first transition (E towards D) is the well-known

program of government transfers of Bolsa Família. In the authors’ view the amount of

money transferred by this program is sufficient to elevate households to the

subsequent class. The remaining transitions are due to the effect of augmented

minimum salary that, if on one hand had increased the purchasing power of the D

class, on the other had diminished that of the B1 and B2 classes. The reason is that

the effect of augmented minimum salary is faster in the lower part of the income

distribution where salaries are close the minimum level. In fact, adjusting salaries of

the richer classes to the augmented minimum wage is a process that takes time,

therefore, until salaries are not adjusted their purchasing power is relatively reduced.

                                                                                                               21  See  above  

  30  

5. Methodology

5.a Dataset presentation: POF and PNAD

In order to analyse Brazilians’ consumption choices we decided to use the

POF - Pesquisa de Orçamentos Familiares (Brazilians Household Budget

Expenditure) – a database available for the years: 2002/2003 and 2008/2009.

Surveys administration was conducted in a 12 months period, and prices were

corrected for the on-going inflation level and adjusted for regional disparities. In order

for the respondents to give the most detailed list of expenditure possible, surveys are

organized following a peculiar methodology. Expenditure items were first grouped

according to two dimensions: frequency of purchasing and monetary value. Normally,

expenditures of small value are more frequent than expenditures of large value, since

they capture everyday expenditures such as food, bus fares, drinks etc. Conversely

large value expenditures are occasional, often related to the acquisition of durables

and/or occasional services (ceremonies, holidays etc.) and remembered for longer

period of time by households. According to these two dimensions, they were set four

different time-periods (one week, one month, one and half month and one year)

where to distribute the complete list of expenditure items. This way we find, on the

one hand, surveys that contain items which acquisition is more uncommon (e.g.

parties and ceremonies) that ask the respondent to register (remember) the

purchasing in one and half month period and, on the other hand, others asking

spending occurred in a one-week period for more common items (e.g. food and

drink). At a later stage, monetary values of disbursements, registered in different time

periods, were proportionated to monthly expenditures.

The total number of household observations for 2002/2003 is 48,084 and for

2008/2009 is 55,532. The original database containing the answers to the survey’s

questions, was divided into sub-groups by researchers of the Brazilian Institute of

Statistics and Geography (IBGE), each one functional to a specific kind of study. In

  31  

this study we are using the unidade consumo (consumption unit) group, created to

analyse consumption expenditures.

The dataset selected contains detailed information on household’s

characteristics (income, sources of income, total disbursement etc.) and on the

following class of expenditures: Food and Drinks, Housing and related items, Clothes

and Personal Accessorizing, Transportation (services and products), Hygiene,

Healthcare (services and products), Education (services and products), Leisure Time

(services and products), Personal Care (services and products) and Current

Expenditures. Every expenditure item of every class is an aggregate of one or more

products/services (an example can be found in Annex IV). Finally, to each household

was given a weight - based on the demographic structure of Brazil - in order to allow

extrapolations to the whole population.

The period in which the 2 surveys were conducted fits particularly well with our

research question for the reasons explained in the previous chapters22.

The other database we used is the PNAD – Pesquisa Nacional por Amostra

de Domicílios (Household Survey) available for different years, including the study

periods in which we are interested. Similar to POF is surveys-based but data

collection and elaboration was done during the last three months of each year. What

is interesting about this database is that is divided in two datasets: DOM and PES:

i. DOM: household survey. Contains information about the characteristics of the

house in which a household is living in, plus some basic information about the

income, total number of people living in the house, geographical position etc.

ii. PES: individual survey. Contains socio-economic information such as number

of years studied, type of work, occupational sector in which the subject is

employed etc.

                                                                                                               22  See  Chapter  3  

  32  

The utilization of these datasets is aimed at integrating some of our analysis

whenever we are lacking data from the POF.

5.b POF Methodology  

5.b.1 General Considerations

Is not really the scope of this research to explore the origins of households’

consumption choices made in 2002 and in this respect we consider them as given.

Nevertheless, in the previous chapters we have provided a short insight over a period

of time of almost 15 years before 2002, in order to have a framework in which we

could insert our work. Summarizing we can say that, consumer confidence in 2002

was growing in parallel with a strong retail sector backed by an expanding economy.

The growth of the demand was about to start being fuelled by the entrance in the

market of the so-called bottom of the pyramid.

5.b.2 Definition of Socio-Economic Classes

The income-based subdivision of socio-economic classes operated by SAE23,

creates nine income-based categories (Table 5). We decided to focus our analysis

on the lower 5 classes from the extremely poor to middle class.

With the aim of reducing the noise we trimmed the samples at the top 1% total

expenditure of each class. By doing so, we wanted to exclude households who

registered extraordinary expenditures in order to obtain more homogenous (and

representative) samples.

Our research focus being on changes in consumption choices of households

that range from extremely poor to middle class, we deliberately decide to exclude

upper classes. On the other hand, the choice of extending the analysis from the

extremely poor to the subsequent upper four different subclasses will allow us not

                                                                                                               23 See Chapter 3

  33  

only to look at middle class variations in consumption habits, but also to highlight the

differences occurred among poorer classes from 2002 to 2008, and, given that

poorer classes of 2002 represent the pool from where the “new” Brazilian middle

class of 2008 originated (and where a large fraction of the current middle class

comes from), by including them we might gain a better insight on the evolution of the

wants and needs of the Brazilian middle class which is at the very centre of the

contemporary political discourse in Brazil. As shown in Table 6 the size of samples

reflects the structure of the whole Brazilian population.

Table 5: Income brackets defining socioeconomic classes in Brazil24.

Income Brackets 2002 Income Brackets 2008 Class

x<120 x<182 Extremely poor

120<x<343 182<x<518 Poor

343<x<546 518<x<824 Vulnerable

546<x<816 824<x<1232 Lower-middle class

816<x<1020 1232<x<1540 Middle class Source: SAE 2012

Table 6: Number of observations per each class of household

Classes

# and (%) of observations 2002

# and (%) of observations 2008

Extremely poor 857 (1.8) 686 (1.2)

Poor 7388 (15.4) 5612 (10.0)

Vulnerable 8166 (17.0) 8857 (16.0)

Lower-Middle 8499 (17.7) 10848 (19.5)

Middle 4307 (9.0) 5956 (10.7)

Source: Author’s own elaboration using POF 2002/2003

5.b.3 Comparisons

Our way to look at the data is essentially based on comparisons of values of

2002 with values of 2008. Aiming at exploring households’ expenditures25 in two

                                                                                                               24 The inflation rate considered by SAE to deflate the income-boundaries that define the classes is the INPC – Indice Nacional de Preços ao Consumidor (National Price Consumer Index) at 2012 price level 25  Prices were assumed to be the same for all households as conventionally done according to Deaton (Deaton 1997).

  34  

different periods and across classes, we made the following comparisons:

i. Inter-year variation of shares of total expenditure of the 5 classes

a. For each main item

b. For individual goods or services present in each main item

ii. Intra-year variation of actual expenditure across classes

a. Food and drinks

b. Mixed Items

The first comparison verifies whether within the same class, but across

years, there was a shift in spending on specific goods. This is essentially describing

how consumption habits changed during the economic boom. The second kind of

comparison individuates consumption trends from extremely poor to middle class

households, that once superimposed 26 from year to year allows to estimate

differences induced by class mobility. We create consumption trends by calculating

every spending variation (in percentage terms) that occurs from one class to the next

upper class; these variations will represent the “wishes” of hypothetically every

household that passes to an upper class in the same year. It answer the following

question: how much would spending on item x change (in percentage terms) if a

household moved from class p to class p+1 in the considered year?

A further clarification has to be made for the two kinds of comparisons above

proposed. First, in order to be able to compare the same classes in different years,

we need an absolute measure expressing spending preferences. In fact, if we apply

this analysis to actual per-households expenditures, it would suffer from bias due to

the different minimum salary and related prices set   in 2002 and in 2008. Spending

preferences expressed in terms of share of total budget, or total income, instead, are

                                                                                                                                                                                                                                                                                                                                                           26  When we want to compare consumption patterns we must always take as reference year the 2002.  

  35  

weighted to the once on-going minimum salary and prices level, letting us to make

comparisons between same classes in different years. We decided to take shares of

total disbursement instead of shares of income because, especially when we are

dealing with extremely poor households, income measurement are often

underestimated due to the high volatility of that part of income that derives from

working in the informal sector27. In Table 7 we observe how mean income and mean

total disbursement for the least two classes of households differs substantially in both

years. As a consequence, when we analyse expenditures for extremely poor

households, values of mean income are so small that when we calculate its shares

for many of the diverse items it unrealistically scores more than unity. For this

reason, results will be expressed in the form of percentage increment of 2002 shares

of total expenditures

Table 7: Mean Total Income and Mean Total Disbursement for the two years divided by classes

Year Mean per-household exp Poor Vulnerable Lower-Middle Middle Upper-Middle 2002   Mean Total Income 85.04 250.96 447.30 673.75 913.19

 Mean Total Disbursement 391.70 406.94 581.65 795.06 988.21

2008   Mean Total Income 133.56 381.45 668.42 1025.12 1379.04

 Mean Total Disbursement 463.65 593.89 798.80 1099.61 1425.84

Source: Author’s own elaboration using POF 2002/2008

In contrast, when we perform intra-year analysis we will directly use mean per-

households expenditure since salaries and related prices are set in the same year

allowing us to make direct comparisons.

Our limitation is that we are unable to totally attribute changing in consumption

habits to a change in class composition due to the highly heterogeneous origins of

the members forming each class and to the multiple causes that can describe such a

complex phenomenon (exogenous consumer trends, prices’ variations, the entrance

of new products, etc.). Indeed, part of the causes rely in the world’s commodities

boom that in that years permitted to Brazil to grow and to its people to gain access to

                                                                                                               27 See chapter 6 for a detailed explanation of this phenomenon

  36  

higher conditions of living that possibly brought new consumption habits among

same classes of households.

5.b.4 Tables

Tables were generated with a standard format: each row is an expenditure

item plus some extra items that will vary according to the analysis performed; each

column is a different class. Table 8 shows a subsection of a chart to give the reader

an idea about how is the standard structure.

Table 8: Sub-section of 2002 Mean per household expenditure divided by class

Mean per-household expenditures Extremely poor Poor Vulnerable Lower-Middle Middle

Mean Total Income 85.04 250.96 447.30 673.75 913.19

Mean Total Disbursement 391.70 406.94 581.65 795.06 988.21

Food and Drink 136.24 140.24 175.67 223.26 237.23

Alimentation at Home 114.35 124.83 151.89 190.23 197.19

Rice 13.32 12.82 14.40 15.88 14.01

Item x ….. ….. …. …. …..

Source: Author’s own elaboration using POF 2002

Our procedure winds around four main steps:

• first, we have created two “roots” tables, where is shown the mean per-

household expenditure of each item contained in the dataset, divided by

classes;

• second, from those charts we have derived two new tables, still indicating

mean per-household expenditure, but this time within a range of selected

items;

• third, from the charts with selected expenditure items we have created another

important table to be created in each year describing each expenditure in

terms of shares over total disbursement;

  37  

• fourth, we have finally generated charts that are obtained from the elaboration

of the previous tables which aim is to illustrate expenditures’ variations across

classes and across time.

In Figure 2 we present a graphical scheme summarizing the methodology

explained up to now using/with the structure of a genealogical tree. We further add

miniaturized samples of the graphs that will be created, linked to the different

analysis proposed.

Figure 2: The genealogical structure of the tables created with relative graphs (in miniature)

Source: Author’s own elaboration

  38  

We started performing a first descriptive statistics analysis to create the two

“root” tables, one per year, showing for each expenditure item the mean per-

household expenditure divided by classes. We then selected the most relevant

expenditure items according to two criteria:

i. Items that are present in both years

ii. Items more representative of each macro-categories of expenditure

(transportation, health, food, etc.)

Items present in both years have been automatically selected, problems arouse

when we analysed the Food and Drink category. The biggest and most detailed class

of expenditures in the database is, in fact, that related to food. The list of more than

70 different edibles, unfortunately, lacks of aggregates that cluster similar food

products in one item (diaries, vegetables, fruit) named in the same way over the two

years. Food denomination too is sometimes changing over time. As an example, in

2002 we find the item Milks that is the aggregate for the dairy products consumed in

that year. In 2008 this expenditure item is missing, but they are present some (not all)

of the products forming the 2002 aggregate for Milks. We will provide two examples

in order to shed a light on our selection criteria. First: we opted to choose cow milk

and cheese because they resulted to be the most purchased among other diary

products28 across the different classes and because they are present in both years. A

second intuitive example is that we judged being more important to know household

expenditures for rice than for pasta, based on the fact that one of the pillars of the

Brazilian diet is rice with beans.

The majority of the remaining items stay constant over time both at an

aggregate and a disaggregated level, with few exceptions. We discarded a small

number of items that we considered as neither symbolic nor relevant for our analysis.

As an example, in the category Hygiene, we considered not important to know the

                                                                                                               28 Source: Author’s own calculation using POF 2002/2008  

  39  

expenditure for hand soap if we already knew its aggregate and some similar

products. Still in the Hygiene category we conversely decided to choose the Hair

Products item due to its symbolical value. It is known that afro-descendants invest a

lot in purchasing hair products and in Table 9 we show how the most common ethnic

profile among the lower five classes is mulatto, with a significant percentage of black

skin people too.  

Table 9: Ethnic profiles by class

Ethnic Profiles 2002

2008

Black Mulatto Black Mulatto

Extremeley Poor 6% 61% 8% 62%

Poor 6% 57% 8% 59%

Vulnerable 7% 47% 8% 45%

Lower-Middle 6% 39% 5% 29%

Middle 6% 31% 4% 24%

Source: Author’s own elaboration using PNAD 2002/2008

The final output of the first elaboration are two tabs, one per year, showing

mean per-household expenditure for selected items plus two additional information:

mean income and mean total expenditures 29 . The last tabs produced can be

considered our starting point from where all the subsequent analysis will follow.

The subsequent tables shows which fraction of mean total expenditure is

dedicated to each item in percentage points according to the following formula:

𝑖    𝑆ℎ𝑎𝑟𝑒! =!"#!  !"#!

!∗ 100

                                                                                                               29  Due to the large basket of items present in the database, we opt for a colour-driven representation that helped us while reading the tables. Each colour is associated to an aggregate of expenditures and colours remain constant from year to year. See Annex I.

  40  

Where (𝑎)  corresponds to one item of the analysed class of expenditures. This

gives us important information about the relative weight that each item has over the

total expenditure for different classes of households.

Summarizing, we have created four tables (two per year) analysing two

different aspects of consumption: mean per-households expenditure and shares of

mean total disbursement dedicated to expenditure items. The next step was to

generate two final tabs that show the evolution of each expenditure item according to

the different comparisons proposed at the beginning of this chapter30.

In the first we have calculated difference  in percentage terms of fraction of

mean total disbursement as follows:

𝑖𝑖  𝑆ℎ𝑎𝑟𝑒!!""#–  𝑆ℎ𝑎𝑟𝑒!!""!

𝑆ℎ𝑎𝑟𝑒!!""!∗ 100

Where (𝑎) corresponds to one item of the analysed class of expenditures.

From this table we derived the graphs used for our analysis. We acknowledge that

this formula, when, for example, we pass from a 0.15% of total spending for mobile

phones in 2002 to 0.50% in 2008, calculates an increment of plus 260%. Even

though we recognize that in absolute terms is not weighing in a significant way on the

overall households budget, we consider this information as revealing a new spending

trend. We need also to consider the fact that the mean values calculated are

weighted down by those who did not buy the item. This, even though it could be

considered a signal of the diffusion of the item and thus of its importance among the

class of household analysed, led us to appreciate even little differences in shares on

the overall budget. The principle aim of this work is, in fact, to analyse consumer

trends and not how much single expenditures weigh on the overall budget; for this

kind of information what matters is the differential.

The second tables are based on the following formula:                                                                                                                30 See above

  41  

𝑖𝑖𝑖    𝐸𝑥𝑝!

!!!–  𝐸𝑥𝑝!!

𝐸𝑥𝑝!! ∗ 100

Where (𝐸𝑥𝑝) is mean expenditures, (𝑎)   corresponds to one item of the

analysed class of expenditures and (𝑝) to a class of households. This formula is to

be applied in both years and for each class of expenditures we are interested in.

Results have been plotted in a summary table with two columns where each column

corresponds to the consumption pattern for class p of that year, defined as the

collection of variations in expenditures from class p to class p+1.

5.c PNAD Methodology

5.c.1 Tables and Comparisons

In order to be coherent with the class subdivision made while analysing the

POF database, when we use the DOM dataset we opt to choose the same income

brackets used in POF to define the various classes. When we approach the PES

dataset, which is individual based, we will follow the instruction provided in the same

SAE’s publication (SAE 2012) from which we derived our per-household income

levels31.

We perform the second data-analysis with the DOM dataset creating one tab

per year showing the percentage of households, divided in our five socio-economic

classes, sharing the same house characteristics. The structure is similar to that of the

tables created using the POF: in each row we have an asset or something related to

the physical structure of the house; in each column we have a different class (see

Appendix II for examples).

                                                                                                               31 See Annex II to find individual income brackets used with PNAD.

  42  

Regarding the PES dataset, after having created the same socio-economic

classes used in the previous analysis, we explore some points that give us important

additional information about members of every class. The methodology is the same

illustrated above.

Our aim at using PNAD is to integrate the POF analysis, therefore,

comparisons made will coincide case by case with those forming the backbone of the

previous study.

   

  43  

6. Budget shares analysis      

6.a Introduction

Our aim is to analyse what changed and how during the 2002-2008 period.

We have adopted a methodology similar to that proposed by Ester Duflo and Abhijit

V. Banerjee in their “What is Middle Class about the Middle Classes around the

World?” (Duflo and Banerjee 2008) where they explore variations in household

expenditure following an ad hoc division per kind of expenditure: Food and Drink,

Domestic Infrastructure, Entertainment etc. They then analyse each of the categories

created and, when possible, provide explanations about why expenditures for certain

items increased or decreased. We decided not to strictly attain to their expenditures

subdivision and we opted for one that is following the POF’s structure taking some

category’s name from Duflo and Banerjee.

The analysis will be this structured as follows: we will first show how dedicated

shares of total budget evolve across time and across classes with related

commentaries; next, we pass to mean per-households expenditures creating and

examining consumption patterns.

6.a.1 Preliminary Considerations

What we have immediately noticed when we started our analysis is the

discrepancy in mean total income and mean total disbursement in both years and for

all the classes of households. Higher differentials are registered among poor and

extremely poor households and they reduce while we near the middle class.

Poor households declared income is often underestimated for two reasons:

first, as showed in Figure 3, poor and extremely poor households are mostly

employed in the informal sector that is commonly characterized by irregular

payments; second, correctly tracking down yearly financial records often requires

  44  

good mathematical skills that are rare challenged by both low educational level and

the complexity of the calculation due to intermittent jobs. More seemingly household

will multiply their last monthly income times twelve.

Figure 3: Fraction of the occupied population working in the informal sector in 2002 and 2008

Source: Author’s own calculation using PNAD

It could be also probable that the least two classes of households recurred to

borrowing money from relatives, friends or other informal lenders32 and that this

borrowing is not captured by any of the items present in the households’ sources of

income. Despite the variable we are using to calculate households’ total income is

including the balance of monthly financial transactions, informal borrowing would

most probably not enter this calculation due to its unofficial nature. For these two

reasons we thought the value of mean total disbursement as being more explanatory

of a household real financial effort.

In Table 10 we plotted mean per-household expenditure and mean augmented

income variations (in 2002 percent terms) among same classes in different years.

What we first notice is that the extremely poor in 2008, given augmented income of

57% at 2002 level, increased their total spending of just 18%. The others classes

show a markedly different behaviour augmenting their total spending at around 8%                                                                                                                32 In her work Sicrè noticed how among low-income individuals in the outskirt of São Paulo, is really common borrowing from relatives and friends by asking them to use their credit cards. (Sicrè 2009). See Chapter 2 and Chapter 7.b for a detailed explanation.

0  

20  

40  

60  

80  

100  

Extremely poor Poor Vulnerable Lower-Middle Middle

% o

f inf

orm

al w

orke

rs o

ver e

mpl

oyed

Classes of housholds

2002

2008

  45  

points less their augmented income with the exception of the lower-middle class that

it is increasing 14% points less than its augmented total income.

Table 10: Increment in 2002 percentage terms of Mean Total Income and Mean Total Disbursement divided by

classes

Extremely poor Poor Vulnerable Lower-Middle Middle

Mean Total Income 57.06% 52.00% 49.43% 52.15% 51.01%

Mean Total Disbursement 18.37% 45.94% 37.34% 38.31% 44.29%

Source: Author’s own elaboration using POF 2002/2008

As stated above, poor households are more likely to be employed in the

informal sector than their richer counterparts and irregular payments coming from

those jobs not only impede a good calculation of monthly income, but also put them

in a condition of high uncertainty when forecasting future income. The consequence

is that in order to be able to deal with eventual adversities (namely a member of the

household got sick and need health assistance or a sudden shortage of food etc.),

they will probably save money until a buffer-stock level judged sufficient to cope with

diverse kinds of shocks. Given their initial condition of scarce financial assets, when

they are working toward accumulating their target level of buffer-stock savings, their

spending is depressed (Chatterjee 2009; Carrol 1997; Deaton 1991). Extremely poor

households total disbursement is not following the pace of increased income

because they are still far from their target level of savings required to start spending

more. Coherently, what we see is that the other classes behave as if they were

closer to their buffer-stock level, increasing total spending quasi at the pace of their

increased income.

6.b Evolution of budget shares

6.b.1 Food and Drink

  46  

The first chart (Figure 4) shows mean spending shares on food and drinks

calculated as in 𝑖 33. On the X-axis we put economic classes for the two years

analysed; on the Y-axis we plotted the selected aggregate item’s spending share in

percent.

Figure 4: Shares of total disbursement for Food and Drink

Source:Author’s own elaboration using POF 2002/2008

  At first glance Food and Drink expenditures shows a decline through the

classes. As first suggested by Engel a decline in the share of income spent on food is

expected when financial disposability increases (Engel 1857). The Poor class takes

exception since in 2008 dedicates a slightly larger share of their disbursement to food

when compared with their extremely poorer counterparts. We also observe that in

2008, the mean fraction of total spending is reduced by 5 points on average for all

the economic classes considered. While Eating at Home follows a similar pattern,

Eating Out, which indicates food and drinks consumed out from home, registered a

markedly different trend, drastically diminishing for the extremely poor households in

2008 and consistently increasing in the remaining classes, with the poor and the

middle class showing the highest gradients (+30%).  

                                                                                                               33  As above anticipated, histograms charts originate from the following formula (i):  

   𝑆ℎ𝑎𝑟𝑒! =𝐸𝑥𝑝!  𝐸𝑥𝑝!

!∗ 100

 

0

10

20

30

40

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dis

burs

emen

t in

%

Classes of households

2002

2008

  47  

We then decided to draw a distributional graph to describe data contained

in the table showing the evolution of class related budget shares over time calculated

as in 𝑖𝑖 34. On the Y-axis we have the 2002-2008 variations in percentage terms; on

the X-axis the expenditure items. Expenditure elements staying onto the 0 line

registered no variation from year 2002 to year 2008 in terms of fraction of spending.

At +20% and -20% we identify a confidence interval above (or below) which the

changes can be considered relevant.

In order not to congest the graph with the five classes plotted at the same

time, we opted to divide them in two charts: extremely poor, poor and vulnerable in

one, and vulnerable, lower-middle and middle in the other. In both of the distributional

charts, the expenditure items are listed in way that, moving from the left side to the

right side, we pass from a basket of essential food items (such as Fruits, Rice,

Beans, Flours, Vegetables, Potatoes, etc.) to one of lesser essential food items (like

Spirits, Processed Sugar, Ready Made food, Beers etc.).

We first explore Food and Drink expenditures for the least three classes of

households, and we noticed how, even though with marginal inter-class differences,

there is a general trend of diminishing shares of total spending on items that stay on

the left side of the graph (see Figure 5). Parallel to this we observe significant

increases on items in the right side while the quasi majority of the items in between

remain constant over time. This indicates that, in 2008, households augmented their

spending in less essential food items, preferring them even to “tastier foods” as the

different kinds of Meats, or Cheese. More in detail, Potatoes and Cow Milk registered

the highest increments, especially among extremely poor and poor households, and

Pasta, Wheat Flour and Manioc Flour the largest negative changes in all classes.

Another issue coming out from the analysis is that we observe Soft Drinks as

                                                                                                               34 We recall here the above explained formula (ii):  

 𝑆ℎ𝑎𝑟𝑒!!""#–  𝑆ℎ𝑎𝑟𝑒!!""!

𝑆ℎ𝑎𝑟𝑒!!""!∗ 100  

  48  

the only item scoring a markedly high rise in fraction of total spending among all

classes. The remaining expenditure items keep a different trend depending on

classes. Extremely poor households slightly enhance their spending on consumed at

home Spirits meanwhile they sharply reduce consuming them out from home. They

further reduce purchasing of Ready Made Food and the Eating Out aggregate.

Conversely, poor households increased the latter category together with their

spending on consumed at home Beers. Excluding Soft Drinks (+60%) and Wheat

Flour (-55%), the evolution of fractions of total spending for vulnerable class

households follows a much balanced pattern which is indicative that from 2002 to

2008 there was no great shifts in consumption habits for the Food and Drink category

among this class of households.

In Figure 6 we plotted the remaining classes (lower middle and middle) plus the

vulnerable class in order to have a reference value with which we can make

comparisons with the first graph. What we observe is that here the lines describing

the path of the variations for the three classes are coinciding for almost the entire

graph with significant variations accounting for Soft Drinks, Pork Meat and Eating Out

just for lower-middle and middle classes. The general evolution is similar to that of

the first graph in which we saw diminishing fractions of total spending dedicated to

essential goods with the only difference that here less essential food and drinks items

register a stable trend for lower middle and middle class. Another interesting thing

coming out from the chart is that even though share of spending on Eating Out item

increased, it seems that what is consumed out is mostly food against Spirits and Soft

Drinks that contrarily registered a sharp downfall.

 

  49  

Figure 5: Variations in shares of total disbursement over Food and Drink items for Extremely poor, Poor and

Vulnerable classes

Source: Author’s own elaboration using POF 2002/2008

  50  

Figure 6: Variations in shares of total disbursement over Food and Drink items for Vulnerable, Lower Middle and

Middle classes

Source: Author’s own elaboration using POF 2002/2008

  51  

6.b.2 Personal Care35

Figure 7 and 8 show the evolution of shares of total disbursement dedicated to

Hygiene and Personal Care and we clearly see how, although accounting just for

small variations with respect to total spending, from 2002 to 2008 we observe an

overall growth for both. We also observe how the Hygiene category doesn’t seem to

be much influenced by income, remaining constant over the classes of households in

2002 and quasi declining with higher income levels in 2008.

Figure 7: Shares of total disbursement for Hygiene

Source: Author’s own elaboration using POF 2002/2008

Figure 8: Shares of total disbursement for Personal Care

Source: Author’s own elaboration using POF 2002/2008

Next, the distributional graph (Figure 9) highlights how extremely poor

                                                                                                               35 In this category we brought together elements from the two POF defined categories of Hygiene and Personal Services. For this reason we created two histograms one for each original aggreagate.

0

1

2

3

4

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dis

burs

emen

t in

%

Classes of Household

2002

2008

0

1

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

es o

f tot

al d

isbu

rsem

ent i

n %

Classes of Household

2002

2008

  52  

households increased their spending shares in almost all the items of this sub-group

apart from Jewellery which in turn has decreased.

Manicure and Pedicure registered the highest gains among the three classes

with extremely poor households ahead. Poor and vulnerable class households

seems to be more stable for the remaining items with the sole significant anomaly

accounting for Accessories that scored the highest gain in the chart with almost

+140% of 2002 dedicated budget share. Finally lower middle class households

reduced their spending on least cited item. Poor and vulnerable class households

seems to be more stable for the remaining items with the sole significant anomaly

accounting for Accessories that scored the highest gain in the chart with almost

+140% of 2002 dedicated budget share.

The subsequent chart (Figure 10), where we compare the remaining classes,

exhibits the three lines chasing a similar pattern. While the Perfume item is slightly

increasing, Accessories shows a significant decrease especially for middle class

households. The greatest gains are observed in the Manicure and Pedicure item with

the highest among vulnerable class households and progressively lesser gains for

medium and upper medium households still accounting for positive and significant

variations.

Figure 9: Variations in shares of total disbursement over Personal Care items for Extremely poor, Poor and

Vulnerable classes

Source: Author’s own elaboration using POF 2002/2008

Jewelry

Hygene Parfume

Hair Products

Personal Services

Hairdresser

Manicure and Pedicure

Accessories

-80 -60 -40 -20

0 20 40 60 80

100 120 140

Varia

tions

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure Items

Extremely Poor

Poor

Vulnerable

  53  

Figure 10: Variations in shares of total disbursement over Personal Care items for Vulnerable, Middle and Middle

classes

Source: Author’s own elaboration using POF 2002/2008

6.b.3 Housing

The first chart (Figure 11) related to shares of total disbursement for Housing,

is revealing how fraction of total spending remains constant over time and over

classes with the sole difference registered for extremely poor households that in

2008 dedicated a +4% in 2008 budget terms.

In order to plot Housing expenditure items in a way that we can detect

variations, we needed to exclude the Mobile Phone item from the distributional graph.

For this reason we create a specific chart (Figure 12) just for expenditures on Mobile

Phones expressed as shares of total disbursement. This category displays a huge

increment over time with poor households score the highest variation accounting for

a strikingly +700%36.

                                                                                                               36  To correctly interpret this result see Chapter 5.b.3  

Jewelry

Hygene

Parfume Hair Products

Personal Services Hairdresser

Manicure and Pedicure

Accessories

-80

-60

-40

-20

0

20

40

60

80

100

120

Varit

atio

ns o

f sha

res

of to

tal

disb

urse

men

t in

%

Expenditure Items  

Vulnerable

Lower-Middle

Middle

  54  

Figure 11: Shares of total disbursement for Housing

Source: Author’s own elaboration using POF 2002/2008 Figure 12: Shares of total disbursement for Mobile Phone

Source: Author’s own elaboration using POF 2002/2008

When we pass to analyse the first distributional chart (Figure 13) we notice

that shares of spending for Domestic Appliances increased among extremely poor

and poor households while the Telephone category registered a downfall over the

three classes. Spending in Gas shows a littler negative variation common to all the

classes while Home Maintenance diminished just among poor households.

The second chart (Figure 14) displays the same pattern unification for the next

three classes examined already highlighted in the previous analysis. Adding to this,

here too we observe a downfall in Telephone and Gas shares of total spending.

0

10

20

30

40

50

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dis

burs

emen

t in

%

Classes of households

2002 2008

0  

1  

2  

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dsb

urse

men

t in

%

Classes of households

2002 2008

  55  

Figure 13: Variations in shares of total disbursement over Housing items (minus Mobile Phone) for Extremely

poor, Poor and Vulnerable classes

Source: Author’s own elaboration using POF 2002/2008

Figure 14: Variations in shares of total disbursement over Housing items (minus Mobile Phone) for Vulnerable,

Lower Middle and Middle classes

Source: Author’s own elaboration using POF 2002/2008

Housing

Rent

Electric Energy

Telephone

Gas

Home Maintenance

Furniture

Domestic Appliances

-80

-60

-40

-20

0

20

40

60

80

Varia

tions

of h

sare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure Items

Extremely Poor

Poor

Vulnerable

Home

Rent

Electric Energy

Telephone

Gas

Home Maintenance

Furniture

Domestic Appliances

-80

-60

-40

-20

0

20

40

60

80

Varia

tions

of h

sare

s of

tota

l di

sbur

sem

ent i

n %

 

Expenditure Items

Vulnerable

Lower-Middle

Middle

  56  

6.b.4 Transportation

Figure 15 exhibits shares of total disbursement for the Transportation

aggregate. We first see how in 2002 it exhibits a progressive increasing while we

move from extremely poor toward middle class households.

Figure 15: Shares of total disbursement for Transportation

Source: Author’s own elaboration using POF 2002/2008

In 2008 we notice how extremely poor households were dedicating almost the

same share of total spending of middle class households in 2002. This is the

anomaly registered by the chart, in fact, we see that in 2008 poor, vulnerable and

lower middle class households dedicate minor shares if compared to extremely poor

households. If in 2002 shares of fraction of spending were proportional to increasing

income, in 2008 this is no longer valid because of the anomaly of extremely poor

households.

As evidenced in Figure 16, variations in shares of total disbursement for all the

items, scored the highest among extremely poor households with the sole exception

of Bio Fuels, which increased more for poor households. Extremely poor households

in 2008 were spending a lot more in purchasing Diesel Fuel and Bio Fuel plus, not

surprisingly, Car Purchasing and Car Maintenance. Still referring to extremely poor

households, we also observe a slight increase in the Public Transportation item. Poor

households follow almost the same pattern of vulnerable households exhibiting

0  

5  

10  

15  

20  

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dis

burs

emen

t in

%

 

Classes of households

2002

2008

  57  

higher positive variations for Diesel Fuel, Car Purchasing and Car Maintenance

differing for a markedly higher positive variation for Bio Fuel.

Figure 17 describes the evolution of the remaining classes. Lower middle

class households are visibly reducing their spending on Bio Fuel, while the two

classes taken together registered no other significant variations.

Figure 16: Variations in shares of total disbursement over Transportation items for Extremely poor, Poor and

Vulnerable classes

Source: Author’s own elaboration using POF 2002/2008

Figure 17: Variations in shares of total disbursement over Transportation items for Vulnerable, Lower Middle and

Middle classes

Source: Author’s own elaboration using POF 2002/2008

Transportation

Public Transportation

Diesel Fuel Bio Fuel

Car Maintenance

Car Purchasing

Occasional Trips

-120 -80 -40

0 40 80

120 160 200 240 280 320 360

Varia

tion

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure items

Extremely Poor Poor Vulnerable

Transportation

Public Transportation

Diesel Fuel

Bio Fuel

Car Maintenance

Car Purchasing

Occasional Trips

-120

-80

-40

0

40

80

120

Varia

tions

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure items  

Vulnerable Lower-Middle Middle

  58  

6.b.5 Health

When we analyse Health expenditures we must consider two things. First: the

purchasing of the majority of the item listed in this category is of highly discontinued

nature. The peculiarity of all Health expenditures minus one (Health Insurance), is

their minor probability to be captured since households are not asked to estimate an

year average but to register expenditures in a 90 days period for medical assistance

and 30 days period for drugs purchasing37. Second: healthcare in Brazil is universal,

free and provided by the Sistema Único de Saude (SUS), which, although being

dysfunctional, it guarantees access to medical care for everyone38.

We, first, considered this values as a sort of proxy of class related needs of

medical assistance and drugs over one and a half month, in the year in which the

surveys were administered; second, linked them directly to the purchasing of the

listed services in the private sector39 since normally they are all included in the range

of services offered by the SUS. In the following chapter we will discuss this issue

more in depth focusing on the mechanism ruling Medical Examination and Drugs.

Figure 18 is showing how shares of total disbursement dedicated to Health

increased across all the classes over time with the exception of extremely poor

households that somewhat diminished.

                                                                                                               37  There are, indeed, other expenditures that are uncommon such as those related to Car purchasing or Domestic Appliances, but for these items the related “time basket” is of twelve months. In our opinion it would have been more appropriated to extend the time range associated with Healthcare. 38  Article 6 of the Federal Constitution of 1988, and its the review done with Constitutional Reform n.64 of 2010 establish education, health, food, work, housing, leisure, safety, pension, childbearing and childhood protection, assistance to disabled as social rights.  39  Another difficulty arise from the fact that being the items themselves aggregate of more items, we cannot understand if a households is purchasing a publicly provided service such as dental medical examination or dental devices from private companies, since they are contained in the same item.  

  59  

Figure 18: Shares of total disbursement for Health

Source: Author’s own elaboration using POF 2002/2008

When we look at the first distributional graph (Figure 19) we first notice how

the share of spending for Medical Examination raised across the three classes

analysed extremely poor households ahead. Extremely poor and poor households

registered augmented spending in the Dental Care and for Treatment Material too.

The latter two classes of households reduced their shares for Hospitalization services

and finally vulnerable class households boosted their spending shares for Drugs and

depressed that for Dental Care and Ambulatory. Health Insurance seems to stay

constant, just slightly depressed for poor households.

Plotting the remaining classes in the second graph (Figure 20), we observe

the patterns relative to vulnerable and middle-class coinciding, underlining again the

fact that consumption habits defined as share of total spending, tended to uniform

with the progression of income. Here we observe how vulnerable, lower middle and

middle classes of households in 2008 spend more on Drugs and Medical

Examination and less on Dental Care, Ambulatory and, with minor intensity for the

lower middle class, in Hospitalization; here too, spending for Health Insurance

remains stable.

0

2

4

6

8

10

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dis

burs

emen

t in

%

Classes of households

2002

2008

  60  

Figure 19: Variations in shares of total disbursement over Health items for Extremely poor, Poor and Vulnerable

classes

Source: Author’s own elaboration using POF 2002/2008

Figure 20: Variations in shares of total disbursement over Health items for Vulnerable, Lower Middle and Middle

classes

Source: Author’s own elaboration using POF 2002/2008

Health

Drugs

Health Insurance

Dentist

Medical Advisoring

Ambulatory

Hospitalization

Medical Examination

Treatment Material

-120

-80

-40

0

40

80

120

160

200

240

Varia

tions

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure items

Extremely Poor

Poor

Vulnerable

Health Drugs

Health Insurance

Dentist

Medical Advisoring

Ambulatory

Hospitalization

Medical Examination

Treatment Material

-120

-80

-40

0

40

80

120

Varia

tions

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure items

Vulnerable

Lower-Middle

Middle

  61  

6.b.6 Education

Education in Brazil is a two-tier system that sees from one side public schools

and Universities and from the other their private equivalents spread at all levels of the

educational stages. Public education should be completely free for all at all levels,

but, a report40 form the Federal University of Campinas underline how 58 out of 61 of

public Universities established a monthly (or yearly) fee to be applied to their

students. 43 out of 58 are backed by court decisions, with the average fee that in

2012 was around R$300 per month reaching R$934 for a dentistry course.

Among Education items, Regular Courses contains expenditures linked with

Primary and Secondary education, University Courses those relative to upper-

Secondary education, thus, we now know that when we want to explore the

University Courses item, monetary expenditures can be attributed to the public sector

too. Contrarily, we don’t have information about public secondary schools (Colégio)

and elementary schools charging fees to their students. Nevertheless, we don’t think

to have made a mistake considering items under the Education category mainly

belonging to the private sector41.

Figure 21: Shares of total disbursement for Education

Source: Author’s own elaboration using POF 2002/2008                                                                                                                40  http://www.ufcg.edu.br/prt_ufcg/assessoria_imprensa/mostra_noticia.php?codigo=3658  41  In this we have been advised by a POF expert (Pedro Herreira Herculano –IPEA) to do so.  

0  

1  

2  

3  

Extremely Poor

Poor Vulnerable Lower-Middle Middle Shar

e of

tota

l dis

burs

emen

t in

%

Classes of households  

2002 2008

  62  

The chart in Figure 21 presents the evolution of the Education item and we

see how spending slightly increased just among the poor class. It is also clear how

shares of disbursement increase with income.

Figure 22 instead, reveals that in 2008 consumption attitudes towards education

were different for the first three classes of households considered. Vulnerable

households seem to value and invest more in higher education, while extremely poor

and poor households opted for increasing their spending on Other Courses which is

a category containing several different items related to professional courses.

Extremely poor households diminished their spending in both Regular and University

Courses seemingly opting out from the private education scheme. The three classes

together reduced their spending on textbooks. Moving then to Figure 23 we observe

a trend that is similar to that of vulnerable households in the precedent graph with

middle class households in 2008 increasing their budget share for University

Courses.

Contrarily, lower middle class households lightly depressed spending over

University Courses and finally, like extremely poor households, middle and lower

middle class households spend more in Other Courses. School’s Books scored a

negative variation too and for the remaining items we observe a stable trend

Figure 22: Variations in shares of total disbursement over Education items for Extremely Poor, Poor and

Vulnerable classes

  63  

Source: Author’s own elaboration using POF 2002/2008 Figure 23: Variations in shares of total disbursement over Education items for Vulnerable, Middle and Middle

classes

Source: Author’s own elaboration using POF 2002/2008

6.b.7 Culture and Leisure Time

Figure 24 shows how if in 2008 and 2002 fractions of spending for Culture and

Leisure Time grew together with income, in 2002 extremely poor households

represent an anomaly spending more than their 2008 counterparts. In 2008 poor and

vulnerable households scored the higher variation for spending in Culture and

Leisure Time.

Education Regular Courses

University Courses

Other Course

Books

School Material

-120

-40

40

120

200

280

360 Va

riatio

ns o

f hsa

res

of to

tal

disb

urse

men

t in

%

Expenditure items

Extremely Poor

Poor

Vulnerable

Education Regular Course

University Courses

Other Course

Books

School Material

-120

-40

40

120

200

280

360

Varia

tions

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure items

Vulnerable

Lower-Middle

Middle

  64  

Here we used the same strategy adopted when we have analysed

households’ expenditure in the Housing category. We have excluded the “Others”

category in order to draw our graphs in a way that we can better highlight differences.

The Others item, in fact, contains a large number of goods ranging from a camping

fire to a vinyl disc, that can be regarded as leisure goods. This basket of items is

capturing how much budget Brazilian households decided to dedicate to leisure

accessories (but not sports equipment since has

a dedicated item) and it is, together with the aggregate for the category, a good

indicator to evaluate changing in consumption habits that could reveal a preference

for leisure. All the classes of households analysed, poor households ahead, scored

high gains in 2008 share of spending dedicated to this item (even though with little

absolute value).

Figure 24: Shares of total disbursement for Culture and Leisure Time

Source: Author’s own elaboration using POF 2002/2008

In Figure 25 we plotted the remaining items in a distributional chart, and we

clearly see how the trend is similar for the three classes, although with different

intensities. We observe how extremely poor households of 2008 dedicated much

more of their 2002 share of total spending to the purchasing of Mobile Phones and

Mobile Phones Accessories. The item presented in this category differs from the

Mobile Phone present in Housing, because the former refers to the physical object

and the latter to the monetary value of the contracted service in order for the mobile

phone to work. We then notice how Books and Magazines increased just among

0  

1  

2  

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l dis

burs

emen

t in

%

Classes of household

2002

2008

  65  

poor households and contrarily how Sports decreased for all the three classes

considered. Smoking and Sports Game remains constant for all classes and finally

we observe that in 2008 they spend more in Parties and Ceremonies than in 2002,

poor households ahead. Concluding, extremely poor households reduced their

spending for Toys.

The two leftover classes show an almost identical evolution to that of the first

three classes. Figure 26 is evidencing how lower middle and middle class

households here do not modify their shares from 2002 to 2008 apart from Sports and

Mobile Phone Accessorizing.

Figure 25: Variations in shares of total disbursement over Culture and Leisure Time items for Extremely poor,

Poor and Vulnerable classes

Source: Author’s own elaboration using POF 2002/2008

Figure 26: Variations in shares of total disbursement over Culture and Leisure Time items for Vulnerable, Lower

Middle and Middle classes

Culture & Recreation

Toys

Mobile Phone Accessorizing

Books and Magazines

Sports

Smoke Sports Game

Parties

-120

-40

40

120

200

280

360

440

Varia

tions

of s

hare

s of

tota

l di

sbur

sem

ent i

n %

Expenditure items

Extremely Poor

Poor

Vulnerable

  66  

Source: Author’s own elaboration using POF 2002/2008

6.b.8 House purchasing and Debts

The last chart illustrated is relative to House (and land) purchasing and to

debts. The Debts item includes, together with various typologies of debt repayments,

also an element related to lending money. This is little ambiguous and could possibly

alter the magnitude of the debt load level. Nonetheless there are two things that lead

us to consider this item as a proxy for debt spreading among the classes of

households analysed: first, the majority of the items composing Debts are relative to

solving; second, it’s reasonable to imagine the ratio lenders/borrowers at this level of

the income distribution as very low.

Figure 27 and 28 exhibit how in 2008 extremely poor households dedicate a

substantial larger part of their total spending to the purchasing of a house meanwhile

for the other classes of households seems to remain constant. Moreover in 2008 the

Debt category gained higher fraction of spending for all the classes considered

Figure 27: Shares of total disbursement for House Purchasing

Culture & Recreation

Toys

Mobile Phone Accessorizing

Books and Magazines

Sports

Smoke Sports Game

Parties

-120

-80

-40

0

40

80

120

160

200

240 Va

riatio

ns o

f sha

res

of to

tal

disb

urse

men

t in

%

Expenditure items

Vulnerable

Lower-Middle

Middle

  67  

Figure 28: Shares of total disbursement for Debts

Source: Author’s own elaboration using POF 2002/2008

6.c Portraiting new consumption habits

Summarizing, in the previous chapter we have studied how item’s

expenditures defined as fraction of total disbursement evolve through time and we

did it by analysing its upturn and downfall in percentage terms of 2002 level. Our

opinion is that is a reasonable way to look at new exhibited spending preferences

that would otherwise not be captured by a macro analysis of differences in shares of

spending performed at an aggregate level.

What we first notice is that whenever we passed to examine households that

range from vulnerable to middle class, we see how changing in consumption

preferences seems attenuated not only from year to year, but also from class to

0  

1  

2  

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l di

sbur

sem

ent i

n %

 

Classes of households

2002 2008

0  

1  

2  

Extremely Poor

Poor Vulnerable Lower-Middle Middle

Shar

e of

tota

l di

sbur

sem

ent i

n %

Classes of households

2002 2008

  68  

class. There are, of course, little exceptions to this trend, but we wouldn’t make such

a mistake in considering the lower middle and the middle class as a unique

consumption entity. We will now summarize the changes registered in the precedent

analysis divided by classes of households.

6.c.1 Extremely poor

In 2008 extremely poor households diverted their spending on Food and Drink

towards less essential food items such as Soft Drinks reducing the amount of money

spent on essential food items (apparently except for Potatoes and Cow Milk). They

allowed themselves the “luxury” to spend more in eating Fresh Fisheries but not of

consuming any kind of food or drink outside their home. Conversely, inside their

homes, they slightly increased consumption of Spirits. It seems that in 2008

extremely poor people spent definitely more for beauty and body care services but at

the same time renouncing to the purchasing of accessories related to this category.

Extremely poor households in 2008 had a new expenditure item in their

balances that relates to the money necessary to “top-up” their mobile phones.

Perhaps consequently, we assisted to a downfall in expenditures over the classic

Telephone. We also observed together with a general increase for Home Appliances

(which reasonably help and facilitate e extremely poor households in their everyday

life42) a downfall in spending for Gas. From the analysis of the Transportation

category it came out that they boosted their spending in items related to the

possession of a car (Fuels, Maintenance, Purchasing) while just slightly incrementing

the amount of money dedicated to Public Transportation. Regarding Healthcare, we

saw how while Private Health Insurance remained apparently stables, we registered

the tendency for extremely poor households of 2008 to purchase private health

                                                                                                               42  We need to remind that the Home Appliances category is very broad and includes items such as Color/B&W Tv or Loud Speakers System which, even though on the one hand we could say that they indirectly better lives of extremely poor households, on the other hand they cannot be compared to the contribution of a washing machine or a fridge in case of absence of basic domestic appliances.  

  69  

services especially for Medical Examinations. Not surprisingly, extremely poor

households do not invest much in private education, neither in 2002 nor in 2008, but

in 2008 they started spending in Other Courses43 seemingly looking for professional

courses. Spending for Culture and Leisure Time in 2008 is focused on the

purchasing of mobile phones and accessories together with any kind of equipment

necessary to practice leisure activities. Parties and Ceremonies too registered in

2008 an increase in spending meanwhile purchasing of Toys reduced. Finally

extremely poor households in 2008 paid more for their debts and for the purchasing

of a house.

6.c.2 Poor

Poor households registered the same trend of the extremely poor in the Food

and Drink category with the only difference that in 2008 they spent more on

consumed at home Beers and they started eating out (but not drinking out which, in

turn, diminished). Consuming soft drinks at home too is apparently a favoured activity

for this class of households.

In 2008 we saw how items forming the Personal Care category acquired

importance in the balance sheet of poor households. Within an overall augmented

spending, they now spend more in the Accessories category being the only class that

registered such a high increment. Mobile Phones and home appliances in 2008

entered in poor households lives too, with the former registering an impressive

increasing. Here too, spending for Telephone diminished, together with spending for

Gas. Poor households in 2008 enhanced their spending more over Bio fuels than for

Diesel Fuel, while scoring positive variation for the remaining car related items such

as Car Maintenance and Car Purchasing. Regarding Health, at first sight poor

households in 2008 had not only spent more in purchasing Ambulatory services from

                                                                                                               43  We need to specify that the Other Course category is very wide and it ranges from Theatre Courses to Private Lessons to Plumber Courses. What we assume here is that extremely poor households would not spend money for formative courses that have no, or really few, chances to be spent on the job market therefore we consider this expenditure item as mostly absorbed by professional courses or private lessons.  

  70  

the private sector but also flimsy increased other items. Private health insurance

remains stable over time.

In Education, poor households are in line with extremely poor households

decisions of spending in formative courses other than formal schooling. Apart from

mobile phones and relative accessories, which account for the highest variations,

Magazine and Books jointly with Parties and Ceremonies are the two preferred items

in the Culture and Leisure Time category for poor households, meanwhile spending

in sports shrunk in 2008. Debts in 2008 were an issue to be taken into consideration,

while fraction of spending dedicated to house purchasing did not augment its share

through years.

6.c.3 Vulnerable

Vulnerable class households’ consumption habits seem to be more balanced

through time. Meanwhile they follow the general trend of diminishing fractions of

spending for essential food items, they registered narrower variations for less

essential food items with the only exception of Soft Drinks that follows the trend of

extremely poor and poor households. Personal Care too is following the trend of the

previously analysed classes but with variations from 2002 to 2008 of minor intensity,

and together with a decreasing for spending in Accessories. Regarding domestic

issues we did not record significant changes apart from higher spending for mobile

phone contracts and diminishing for telephone and gas.

Vulnerable class households spent more in fuels and car maintenance in 2008

meanwhile car purchasing stays constant. About Healthcare, when they recurred to

the private sector they spent more money for purchasing Medical Examinations and

for Drugs, at the same time diminishing spending for Dental Care services. In the

Education category it seems that in 2008 vulnerable class households started

considering as relatively more important investing more money in University Courses,

to be more likely considered of public nature due to practical budget constraints. We

do not assist to a significant increasing in shares of total spending for items included

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in Culture and Leisure Time, apart from the Mobile Phone and Accessories item.

Vulnerable class households too in 2008 had to face payments related to solving

their debts, meanwhile House Purchasing stayed stable.

6.c.4 Lower Middle and Middle

For these last two classes of households we did not observe so many

significant variations from 2002 to 2008 as we did for the first three analysed classes.

With the exception of expenditures related to the spread of mobile phone devices in

Brazil (that scored high positive variations in fraction of total spending among all the

considered classes) we observed more or less the same increasing encountered for

extremely poor, poor and vulnerable class households but with minor intensity. We

saw how, for example, in the Food and Drink category they are respecting the

previously highlighted trends with the sole exception of the Eating Out item that

increased for both of them and for Pork Meat which surged just among middle class.

In the Personal Care category they augment their spending in Perfumes, Manicure

and Pedicure and decreased the Accessories item as their extremely poorer

counterparts did. Lower middle and Middle class households reduced their

expenditure for Gas and Telephone and regarding Transportation we just notice how

middle class households decreased the Bio Fuel item. Some significant differences

came up in the Education category with just middle class households scoring higher

shares of total disbursement for University Courses meanwhile both of them in 2008

augmented their spending in the Other Courses category. In the Health category too

we see how in 2008 they recurred to private healthcare mostly for the purchasing of

Drugs and Medical Examinations. Middle class households spend in 2008 just a little

more than lower middle class in Parties and Ceremonies with left over categories

staying constant across years. Lastly, the debt load is higher in 2008, causing a

significant increase in the share of total expenditures dedicated to solve it. House

purchasing, instead, stayed constant.

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7. Discussion

We will first discuss the tendencies that are shared by the five classes of

households in Food and Drink, Personal Care, Housing, Health, Culture and Leisure

Time and Debts, then we will discuss the peculiar trait of each class (class specific

habits) and finally we will try gain a deeper insight on the inter class differences on a

sub set of relevant items by showing the results of our analysis on the inter-class

consumption patterns.

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7.a Common habits

7.a.1 Food and Drink

In this class of expenditures we observed a shift towards less essential food parallel

to diminishing monetary resources dedicated to more essential items. This was

already observed by Deaton when he studied the expenditure elasticity of food and

that of calories, he observed that the composition of purchased food change as

income rise: people substitute quality, variety, and taste for quantity and calories

(Deaton 1997). Excluding those that do not meet the minimum calories intake

necessary to work and perform everyday activities, the idea is that we can consider

extremely poor households expenditure on food as a minimum survival threshold

from which every household hypothetically starts its food acquisitions. If we name the

income level required for an individual not to be malnourished with x (controlling for a

series of variable such as type of work, size of family, health conditions, etc.), when a

household pass to x+1, x+2, …., x+n will spend its augmented income not to buy

more food (or, in other terms, more calories) but to substitute the basic food elements

with different, tastier and of higher quality items. Our data show how Brazilian

households are just partially respecting the trend suggested by Deaton as their

purchasing of savory and better quality items is not explicitly evident. We need to

acknowledge that Deaton is lacking of a framework, or a list, to define what is a

tastier food so that it creates room for different interpretations. If we consider, for

example, First Quality Cow Meat, Fresh Fisheries and Cheese as items

corresponding to tastier foods, aside from extremely poor households that enhance

their spending for Fresh Fisheries, we do not observe any significant variation along

the remaining classes. If, instead, we just observe the data and, in a certain sense,

we let Brazilians households choose their tastier foods, we see how the Soft Drinks

item registered the broader and higher increase. In line with our findings is the

research done by Bueno et al. that showed how the principle source of added sugar

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among adults in São Paulo is exactly the consumption of soft drinks (Bueno et al.

2012).

But this is not something new, it seems that soft drinks consumption is well

rooted in the Brazilian diet since long time. A study from Doyle and Feldman over

nutrition behaviours among adolescents in a northern region of Brazil shows how

they exhibit preferences for low-nutrient/high fat snacks, carbonated soft drinks and

fruit juices with high sugar content (Doyle and Feldman 1997). Doyle and Feldman

attributed among the most important causes generating this kind of preferences, the

kid’s parents education to nutrition against alternatives present in the market, which

was either null or directly responsible for the consumption of the wrong products via

emulation. From 1997, “Big Food”44 industries have gradually incremented their

presence on the Brazilian market, and can now be considered as well established.

These companies are globally looking at developing countries as new sources of

profits, since millions of people have been gradually lifted up from poverty and

possess now a sufficient fraction of disposable income to be spent.

Pursuant to Monteiro, the spread of these products in developing countries is

due to multiple factors: augmented purchasing power of low-income households,

saturation of developed countries markets, favourable legislation for enabling large-

scale entries of transnational companies, deregulation of markets which impedes

State intervention to introduce taxation in order to reduce consumption and, lastly,

aggressive marketing campaigns (Monteiro 2012; 2013). The risk that this

phenomenon carries within is the displacement of traditional dietary patterns with

ultra-processed food products45 since we know that transnational companies can

compete through, when is not massive multi-media advertisement campaigns, low

prices and better distribution. Our opinion is that consumption of soft drinks, despite

                                                                                                               44  The term ‘‘Big Food’’ refers to the transnational and other large corporations that increasingly control the production and distribution of ultra-processed products throughout the world. These products are created from substances extracted from whole foods such as the cheap parts or remnants of animals, inexpensive ingredients such as ‘‘refined’’ starches, sugars, fats and oils, preservatives, and other additives (Monteiro et al. 2010)  45  See Chapter 2 and 23 for other examples of ultra-processed food products  

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being rooted in Brazilians’ diet since a long time, has been boosted through the use

of sophisticated marketing campaigns directed towards the so-called bottom of the

pyramid. This could turn in a serious problem since it was demonstrated (WHO 2003;

Basu et al. 2013) how the spreading of ultra-processed product, in which soft drinks

are included due to their high percentage of added sugars46, are responsible for the

increasing in obesity, diabetes and other diet related chronic diseases, especially in

low-income and middle-income countries.

7.a.2 Personal Care

In 2008 was considered as a category worth to invest in by all the classes

considered, poorer households ahead. This is typically a market in which women play

a major role as consumers, therefore, we are not making such an error by saying

that, when financial resources are freed up, households’ women are those deciding

to invest in personal care services such as beauty salon, perfumes, hair products,

etc.

The fact of extremely poor households accounting for the highest gains in

budget shares dedicated to these products led us to conclude that personal care is

important at all level of the society regardless of income. The kind of hair products

purchased would be mostly those that “normalize”, “control” when doesn’t completely

alter the afro nature of the hair in order to look like white-skin-people hair47. This

could be an example of esthetical emulation that derives from the socio-economic

ascension: if the standards of living one person is aspiring to are mostly enjoyed by

white people, she/he more probably will try to look like them to have the sensation of

                                                                                                               46  Defined as refined sugar, brown sugar, corn and glucose syrups, fructose-based sweeteners, honey and molasses (Bueno et al. 2012).  47  According to Euromonitor International hair care products in Brazil has the biggest market share among cosmetics, with an estimated value of $9 billion in 2011 with this figure expected to rise by around 39% in a five year period. Reported among the principal causes, they highlighted hair styling products that are specifically designed to cater Afro and Latin hair. Source: http://www.cosmeticsdesign.com/Market-Trends/Brazil-market-for-cosmetics-continues-to-shine

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fully belonging to its new or desired class.

If we can say that a woman’s beauty is principally due by nature, is more

realistic to consider it as the sum of a series of services, accessories and products

(and time to consume them) that contribute, if not to its formation, at least to its

enhancement and conservation. Thus, women of households with high incomes have

the possibilities to dedicate more money and time to their beauty-care, while women

of low-income households will have to struggle to achieve the same results. In our

opinion, whenever possible, poor women will invest more in the purchasing of beauty

services and products for two reason: firstly because the beauty issue is transversal

to the Brazilian society and common to all women, the more one can do to improve

aesthetics the better it is; secondly because it has a symbolic meaning   indicating

economic well being and the belonging to a group of wealthy people who can afford

it. Regarding this issue we agree with Edmond who studied how in the Brazilian

society beauty, rather than be viewed only as a social construction, is an objective

form of value, especially when is not “possessed” by individuals (Edmond 2010, pp.

20). In his analysis he further suggests how class identifications can be redefined

and reshuffled in the culture of beauty. Beauty, in fact, ‘can also grant power to those

excluded from other system of privilege based in wealth, pedigree, or education’

(Edmond 2010, pp. 20).

7.a.3 Mobile Phones

The entrance of mobile phones in Brazilians households lives that is, specially

for low-income households, a new consumption phenomenon spreading in those

years. Thanks to PNAD we see how the percentage of households possessing a

mobile phone skyrocketed (see Table 11).

Table 11: Shares of Households possessing a mobile phone in 2002 and 2008

Households having a mobile phone Extremely poor Poor Vulnerable Lower-middle Middle

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2002 9% 10% 18% 29% 64%

2008 46% 49% 68% 70% 81%

Source: Author’s own elaboration using PNAD 2002/2008

7.a.4 Health

All the classes of households recurred to the private health sector even

though with different intensities and for different things. Private health insurance

stayed constant across years and across classes meanwhile the money spent on

various expenditure items belonging to this category increased. More in depth, in

2008 the most purchased item across classes was Medical Examination followed by

Drugs. We know that Brazilian public healthcare system (SUS) suffers from big

dysfunctions principally due to lacking (or decaying) infrastructures, low government

investments, high corruption (that turns investment even less effective) but especially

a skyrocketing demand that is congesting public hospitals. Parallel to this system

there are private healthcare institutions offering pay as you go services and the

possibility to contract a private insurance (plano de saúde). Private institutions are

not overcrowded as their public counterparts and they offer on average better and

faster services including medical examinations. Moreover, Nishijima et al. (2006)

found that users of private healthcare services benefit from two advantages: first,

waiting time for accessing private healthcare services is zero or almost zero; second,

whenever the patient needs a special therapy or a complex operation, is transferred

to public hospitals jumping the queue of normal users of the public healthcare system

(Nishijima et al. 2006). This is well known among Brazilians of all socio-economic

classes, and for this reason we were expecting a rise in the Health Insurance item

surging in 2008 among, at least, vulnerable and lower middle class.

In 2011, 551 different kinds of drugs were offered for free by the SUS. We

don’t have data for 2008 or 2009, but we know that, although probably in minor

quantities and for more generic pathologies, these lists already existed. In order to

able to have drugs for free, an individual needs to present a medical prescription that,

in turn, is normally obtained from a physician after being examined. Consequently, if

  78  

these procedures are respected, Drugs expenditures should be contained.

With this in mind we considered three possible causes for this rise in budget

shares for drugs: first, long waiting list for medical examinations could have forced

households to buy those drugs that alternatively would have been free with a medical

prescription; second, households with low income are not aware of the possibility of

getting free drugs via medical prescriptions; third, the list of free drugs in 2008 was

extremely poor.

We thus inspected the health insurance item calculating the fraction of

households that actually bought the Insurance, their related mean total disbursement

and total income and lastly which fraction of it is employed to purchase the item

(Table 12). We see how percentages of buyers remain constant over time, but

increasing with higher income. The fact that low income households are purchasing

medical examinations and drugs from the private sector without contracting a health

insurance is indicative that for them the pay as you go system is preferred to

contracting an insurance scheme even though in terms of weight over total

expenditures it would not be that burdensome. In Table 13 we compare the budget

shares dedicated to the purchasing of Car and Health Insurance in 2008 among

buyers, to give an idea about the financial effort.

Table 12: Shares of households purchasing Health Insurance in 2002 and 2008

Share of "buyers" Poor Vulnerable Lower-Middle Middle Upper-Middle 2008 1% 2% 3% 7% 12% 2002 1% 1% 4% 7% 13%

Source: Author’s own elaboration using POF 2002/2008

Table 13: Shares of total disbursement for Health Insurance and Car purchasing in 2008 among buyers

Shares of total disbursement Extremely poor Poor Vulnerable Lower-Middle Middle

Car 20% 11% 11% 12% 13% Health Insurance 9% 3% 5% 4% 4%

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Source: Author’s own elaboration using POF 2002/2008

7.a.5 Leisure activities   Items related to leisure activities had in 2009 a new market among low-

income households. This is probably linked to the fact that households are now

experiencing better economic condition and time was freed up accompanied by

higher salaries which allowed them to invest more of their budget in accessories for

leisure.

7.a.6 Debts

Since we registered higher increments of spending shares dedicated to solve

contracted debts, we could have observed the dawn of a from-low-to-middle-class

oriented credit market. In the matter of debts, it is of fundamental importance to our

analysis to underline the fact the Debts item present in the battery of expenditures,

does not include loans contracted for the purchasing of a house or a car since the

items relative to these two classes of expenditures have already included it (see

Annex IV).

If we reasonably attribute a minor weight to the “lending” money element

present in the item, the remaining ones are of solving nature. When is not for house,

or a car, and since contracting debts for financing education is uncommon, what are

these debts for? We can suppose that they essentially are consumers debts,

counting instalments on the purchasing of appliances, furniture, clothes, all-inclusive

holidays and more in general every consumer good (or service) for which is required

a large amount of money. Using instalments as a payment method has its roots in

the 70’ but its widespread followed the advance of credit cards in the early 2000’s

(Sciré 2009; BFA 2012; Dos Santos 2013; Financial Times 2013). At that time, in

fact, the credit market was extending its branches toward the bottom of the pyramid

rightly seeing in low-income consumers a huge potential market. Visa and

Mastercard “reward” these “special and important people” with invitation to get one of

their credit card via mail or phone, often followed by the opening of facilitated credit

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line after having performed iffy controls of actual sources of income (Sciré 2009).

With the spread of credit cards48 and the rooting of instalments as a form of payment,

our analysis seemingly captured the advent of this phenomenon that is now starting

to create problems both to households and to the Brazilian economy.

The economic growth experienced in the analysed years was accompanied,

and sustained, by increasing household consumption, which was considerably

fuelled by the spread of the credit market. Now household consumption is

depressed49, among other reasons, because of revolving debts accumulated along

years of booming credit. A 2013 IMF paper is highlighting this fact observing that:

‘Central bank data shows that the most recent expansion of credit growth is driven by further financial inclusion and accumulation of loans. With average debt service-to-income estimated above 20 percent, there are indications that some households are already under financial distress. Recent data on delinquency rates and bounced checks suggests that households may have reached or exceeded the limit of their debt-carrying capacity.’ (IMF 2013)

As the Financial Times points out through the words of Ricardo Rocha,

professor of finance at São Paulo’s Insper business school: ‘Brazilians are still very

anxious shoppers: they don’t have the discipline or the organization to just save and

pay up front’. He also estimates that 80% of all retail sales are now via instalments

(Financial Times 2013). Dos Santos (2013) and Sciré (2009) too agree on the fact

that low-income Brazilians find difficult to organize their savings and rather show

impulsive consumer behaviors50 (Dos Santos 2013; Sciré 2009). More in depth Sciré

(2011) explains how if before individual’s budget administration was based on the

scheme savings-credit-consumption, where savings were the architrave of the

relation, now Brazilians are changing the scheme for credit-consumption-debts, with

savings being substituted for immediate consumption (Sciré 2011).

                                                                                                               48  In order to have an idea of the magnitude of the phenomenon see Chapter 2    49  We passed from an annual growth of 6.1% in 2010 to 3.1% in 2012. Source: World Bank  50 See Chapter 2  

  81  

As we already saw in chapter two, discount and instalment value were

considered the most important variables when poor people decide to buy something.

In their paper Spers, Wright and Castro reported price tactics practiced by Brazilian

retailers in 2007 that are intended to mislead consumers in the calculation of the final

price. Among these practices there are: it’s unlikely to find a ten per instalments

solution due to the low degree of complexity that the calculation requires; instalments

are usually not fractioned in pair numbers for the previously stated reason;

instalments values are already charged with interests without displaying the full

interests-free price (Spers et al. 2007). Although in the end of the month installments

may sum up, it gives the transitory perception of the affordability to buy more

products simultaneously since the single monthly payment is low.

Moreover, we see how in 2008 the percentage of households belonging to the

5th income percentile and having some form of loan is around 40% and how, among

those, the 26% have a debt service to disposable income of more than 20% (IMF

2013). Adding to this we know that credit have mostly helped families to acquire

small to medium physical assets, such as TVs, appliances, cell phones and even

motorbikes, few appear to be building up significant financial assets for the future

(Dos Santos 2013; BFA 2012; FECOMERCIOSP 2012).

Whenever extremely poor households default on their credit cards they are

inserted in a five-years-lasting blacklist from which all the different financial

institutions51 draws information before conceding credit. Normally a household who

defaulted on its credit card has a debt to pay and the card frozen. This happening is

called ‘sujar o nome’, literally ‘dirtying the name’, and it is highly undesirable among

low-income individuals since it often starts a process of ‘continuous getting into debt’:

to solve the original one and to simultaneously keep on buying (Sciré 2009, pp. 107).

In order to continue buying, individuals with defaulted credit cards, leveraging on the

strong social ties of the low-income community in which they live in, usually ask a

                                                                                                               51 It must be said that retailers became the majors issuers of credit cards in Brazil reaching 127 millions of cardholders in 2004 against 91 millions bank-based. (Zouain, Barone 2007) thus, being blacklisted means having frozen credit lines with many different shops.  

  82  

relative or a friend to buy something for them, with the promise of repaying them

later. But among extremely poor people sources of income are scarce and irregular

(intuitively this is the reason why they have been withdrew from the credit sector)

putting this informal financial relationships under a big stress, often causing

disruption of social ties (Sciré 2009, p113; BFA 2012). As Sciré clearly explains:

‘Mutual help practices are consequently bonded to a much more institutionalized and

formal mean: the market’ (Sciré 2009, pp. 112).

7.b Class-specific habits

From the analysis we also observe that parallel to trends common to all the

classes there are consumption phenomena typical of just one or more classes.

7.b.1 Food and Drink   Starting from Food and Drink we observe how in 2008 eating out was an

activity in which poor, lower middle and middle class invested more money than in

2002. Even though the elements corresponding to the Eating Out class are various52,

and thus impeding us to directly link it to what we are going to say, it is worth to

spend some words on the symbolic meaning that eating out could have among low-

income households. The action of eating out consists in spending money to acquire

food and/or drinks provided by a private seller. When this action is performed in

public spaces, like little restaurants or pubs, a public of observers, divided in non-

consumers and consumers, is present. This way, the action of buying and consuming

food in public spaces acquires what Richins defined a public meaning: ‘(..) subjective

meanings assigned to an object by outside observers of the object, that is, by

members of society at large’ (Richins 2009). Mohammad Hasan Ansori in a 2009

paper studying the Indonesian middle-class, supports the thesis that culture and a

                                                                                                               52  On the other hand we observed how spending shares for consuming Spirits and Soft Drinks outside diminished among all the classes leading us to conclude that if the Eating Out class risen it is due to its food items.  

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lifestyle of consumerism must be seen as important cultural processes through which

an emerging middle class actually creates itself as a sociocultural entity (Ansori

2009). He stressed the importance of where the Indonesian middle-class is going to

eat and drink out as a peculiar characteristics contributing to its definition. These

places, called kafè tenda, assumed the double function of being on the one hand,

places where to spend some time consuming food and drinks, and on the other hand

places in which other members of the society belonging to the same class meet, talk,

and more importantly see and recognize each other as members of that class. The

public meanings of eating out could contribute to the formation of the “new” class

identity conquered by Brazilians household whenever they move out from poverty.

The creation of the label “family restaurants” for all the various fast-foods such as

McDonalds, Burger King, Giraffas, etc., where from middle to low-income families

often go dinnering out may be also because of the cheap price at which this

meaningful experience is offered to the entire family.

7.b.2 Housing

Purchasing of home appliances in 2008 seems to be mostly enhanced by

extremely poor and poor households.53 These two classes are those alimenting the

market for white goods since the majority of them still do not posses items that can

be commonly founded in houses of families with higher incomes. As we do not

possess sufficiently disaggregated data to find which are the most purchased items

among this class of expenditures, we will now briefly illustrate using the PNAD how

certain critical domestic appliances spread into households lives in the two study

periods.

In Figure 29 and 30 although observing modest variations for the two

typologies of fridge, washing machine and portable computers, we notice how the

                                                                                                               53We need to say that the spending for this item for the remaining households is stable, but just below the +20% threshold defined by us. This is indicating that, even though at a lesser pace, they are still considering this item as important keeping, and slightly augmenting, their dedicated budget shares.

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new item that these two classes of households had in their homes in 2008 is a

Colour-TV, that increased at around 20%. We can thus think that from 2002 and

2008 extremely poor and poor households elected Color TV as their preferred item

over other domestic appliances.

Figure 29: Shares of Extremely Poor households possessing domestic appliances in 2002 and 2008

Source: Author’s own elaboration using PNAD 2002/2008

Figure 30: Shares of Poor households possessing domestic appliances in 2002 and 2008

Source: Author’s own elaboration using PNAD 2002/2008

0  

20  

40  

60  

80  

100  

Two rings stove

Water filter

Radio Color tv Two doors fridge

Normal fridge

Freezer Washing machine

Portable computer

Shar

es o

f hou

seho

lds

Items

2002

2008

0  

20  

40  

60  

80  

100  

Two rings stove

Water filter

Radio Color tv Two doors fridge

Normal fridge

Freezer Washing machine

Portable computer

Shares  of  H

ouseho

lds  

Items

2002

2008

  85  

7.b.3 Transportation

In the Transportation category we infer, firstly from augmented fraction of spending

on fuels and, and secondly, in a more direct manner, from money dedicated to the

purchasing of a car, the spread of the latter from extremely poor, poor and vulnerable

classes of households. Meanwhile public transportation stayed constant over the five

classes54, extremely poor, poor and vulnerable class households in 2008 seemingly

had different mean of transportation. At first sight it sounds a bit odd and it is for this

reason that we decided to make a deeper analysis on this item adopting the same

methodology previously used for Health Insurance55. What came out is that the

shares of Car’s buyers over total population did not change significantly from year to

year and that while poor and vulnerable households dedicate around 10% of their

total spending to this acquisition, extremely poor households dedicated on average a

20% to it. This would indicate that households are spending more money to acquire

the same thing, seemingly opting for more expensive cars (for example new—carro

do ano, instead of a used one) or other means of transportation (see Annex IV). The

former is more likely than the latter since we know from Loretta Chao and John

Lyons of the Wall street Journal that ‘auto loans more than tripled between 2004 and

2010 to around $70 billion a year, as consumers progressively wanted to own a key

symbol of middle-class life. Banks were lending with no money down, a previously

unthinkable concept in the country’ (Wall Street Journal 2013). Conversely we did not

find information regarding a growth in the sales for the other items present in the Car

Purchasing item. This further analysis is also underlying how, despite the fact of

being extremely poor, this class of households decided in 2008 to dedicate 20% of

their spending (to have an idea of the magnitude of this value, among extremely poor

households in 2008 the average fraction of spending for food was 27%) to the

purchasing of this item.

                                                                                                               54  Extremely poor households are the only one slighlty inceasing their shares of budget dedicated to Public Transportation  55  See  chapter  7.a    

  86  

We can conclude that the car, although possessing an absolute value as an

asset and in minor part as an investment56, it also has a symbolic meaning being

linked with the middle-class social status. This is somehow reflecting what Luiz Inácio

Lula da Silva said when in the 70s’ he described what he felt driving a car depicting it

as a middle class privilege. Lula is, in fact, a controversial character somehow

representing that from-poor-to-middle-class migration of millions of people happened

between 2002 and 2008. He entered politics because during the ‘90s he was the

representative of the metal workers of the ABC industrial complex near São Paulo,

the Brazilian equivalent of Detroit. Is not a case that one of the biggest, if not the

biggest, pro-poor program of government transfers of the world (Bolsa Família) had

been implemented under his presidency.

7.b.4 Education

The Education picture is more puzzling: on the one hand extremely poor, poor,

lower middle and middle class households in 2008 opted to invest more of their

budget in purchasing Other Courses, on the other hand vulnerable and middle class

decided to do the same with University Courses (University Courses). Due to the

ambivalent nature of the Other Courses item is difficult to say whether vulnerable and

middle class value more education than extremely poor and poor class because, in

fact, meanwhile University Courses is formed by just one item, the money spent on

Other Courses, even reasonably excluding leisure courses such as theatre or

photography, cannot be said whether it goes for private lessons (or others formal

education related course) or to professional courses. We can, oppositely, suppose

that extremely poor households expenditure in Other Courses will be oriented to the

acquisition of skills to be spent on the job market. Since extremely poor households

depress their spending on purchasing both regular and university courses from the

private sector we can guess the existence of different perceptions over returns on

                                                                                                               56  Consider the fact that a households could use it to go to work, to bring their children to school, to open a little informal business of ready-made food selling, etc.  

  87  

education which could vary with different income levels. Nevertheless, thanks to the

Bolsa Família program57, more children from low-income families started to regularly

attend public schools, consequently, the number of children enrolled in primary

schools has sharply risen up. At the same time, secondary school attendance too

risen, as the sons of the new middle-class started considering education as a really

important objective to be achieved (SAE 2011). This has generated massive flows of

new students enrolled in public primary and secondary school, which, in turn, due to:

delays in investment for infrastructures, low teacher to student ratio together with the

corruption film that is surrounding every public contest and that is turning off the

investments engine, have led to an incredible lowered quality of publicly provided

education.  

  Table 12 shows how the shares of buyers over total population of Regular and

University courses increases with higher income. Starting from this fact we can

assume that, for a certain number of reasons, lower middle and middle class

household value and invest more in education than their poorer counterparts.

Table 12: Shares of “buyers” of private education in 2008

Education Extemely poor Poor Vulnerable Lower-middle Middle Regular Courses 1% 1% 2% 3% 4% Superiour Courses 0% 0,3% 0,5% 1% 2%

 

Source: Author’s own elaboration using PNAD 2002/2008

Public Universities in Brazil all have harsh admission tests (vestibular). Among

teenagers is really common to spend summer months preparing for these tests either

by themselves or more commonly via private summer schools. Statistics from the

Federal University of Campinas (State of São Paulo) show how in 2009 just one

student out of five that passed to the second phase of the admission test was coming

                                                                                                               57  Bolsa Família is a Conditional Cash Transfer program that asks parents of households with children to send them to school and to do a certain number of vaccination and medical examination.    

  88  

from public secondary school. The Federal University of Paraná has dedicated

special slots to those who have done from primary to secondary school in public

institutions. The presence of a national problem in guaranteeing quality education in

public schools is further proof by the fact that the government have ideated a

mechanism, known as Cotas58, that force all the Universities of the country to reserve

a certain number of slots to native indigenous and dark coloured skin people. The

reason is that they found a correlation between ethnic profiles and past schooling

track in public institutions.

The consequence of all that is that Universities, that through the admission

test mechanism should theoretically select pupils under a pure meritocratic basis, are

still a “rich affair”: for those who can afford it, they enrol their offspring in private

secondary schools since the chances to pass University’s admission tests are higher;

others that cannot afford it, enrol their kids in public schools and thus have harsher

entry barriers to tertiary education. Access to tertiary education is thus dependent on

the financial disposability of kids’ parents and/or relatives. The benefits coming from

a good formal education are widely recognized as the key for bettering anyone social

position. Up to know, government efforts have been concentrated, with success, on

improving participation and attendance in primary and secondary public schools, but

lesser attention have been posed on the trade-off equity-quality and how this would

affect the next logical step: access to Universities.

7.b.5 Culture and Leisure Time

Regarding Culture and Leisure Time we see how just extremely poor, poor

and middle class households augmented their spending over Parties and

Ceremonies in 2008 which is in line with what Duflo and Aberjee found regarding

poor individuals in thirteen countries to say with their words: ‘they spend surprisingly

larges amount on entertainment- be it televisions, weddings or festivals’ (Duflo and

Aberjee 2007).

                                                                                                               58 http://www.brasil.gov.br/educacao/2012/11/lei-de-cotas

  89  

With regard to house purchasing there are more extremely poor households

purchasing a house in 2008 than in 2002 and thus, rising their scores in shares of

disbursement over this item. Here we perform the same further analysis done for

Cars and for Health Insurance and we actually observe how the number of

households deciding to buy a house passed from being 0.4% in 2002 to more than

1% in 2008. Moreover, meanwhile in 2002 the share of total disbursement dedicated

to this item was around 21% for all the classes, in 2008 it reaches 45% for extremely

poor households with an average of 27% for the remaining classes59. We need to say

that in the House Purchasing item there are included all the different modalities

through which a household can acquire the item such as a loan, inheritance fees but

also municipality donation, not having for the latter further clarifications about how

this value is calculated It seems, though, that is referring just to the land on which the

house was (or will be) built. Starting from 200260 we observe several municipalities

starting a program of land donations to low-income families. The method through

which households value the land remains still unclear.

8. Inter-class gradients analysis and discussion           In our last analysis we aimed at exploring what changed in terms of

consumption desiderata between the two study periods. Consumption desires have

been defined in terms of differential in spending between one class of household and

its successive. We recall here the fifth chapter for a complete explanation of the

methodology used to create the tables from which the following charts derive. Since

new consumption trends appears to be more evident in the 2 lower economic classes

                                                                                                               59  Source: Author’s own elaboration using POF 2002/2008  60  http://www.novamamore.ro.gov.br/legislacoes/leis/item/404-lei-n-320-02-doacao-de-lotes-urbano http://www.saomateusdosul.pr.gov.br/wp-content/uploads/2012/10/lei-n.-1.509.03-institui-o-programa-de-doacao-de-lotes-urbanos-a-familias-de-baixa-renda  

  90  

we will focus on that classes. Regarding the items analysed will be first those of Food

and Drink and second an ad-hoc selection of tangible items.

8.a Food and Drink

The first chart (Figure 31) illustrates the gradients in expenditures for Food and Drink

between extremely poor household and poor household for both years. We consider

the size of each histogram as a proxy indicative of what an extremely poor household

would have bought if he/she moved to its upper class in the reference year (strength

of food wishes). To improve readability we plotted the differentials for year 2002 in

crescent order so as to capture the major differences occurred from year to year.

What we first notice is that the gradients pattern in 2002 is very different from

that of 2008. In 2008 consumed out Spirits, Processed Sugar and Eating Out were

items in which poor household spent largely more than their poorer counterparts

following an opposite trend with respect to 2002 when poor household spent less for

the same categories. The positive gradient for Cheese, Pork Meat and First Quality

Meat in 2008 too is in sharp contrast wit consumption patterns registered in 2002.

Finally the same trend, but of minor magnitude, is seen for Ready-made food, Wheat

Flour and Rice. It seems, though, that “food wishes” of extremely poor household in

2002 were more “traditional”, regarding essential food (in Figure 31 they are

concentrated in the upper part) more than for anything else.

Figure 31: Food and Drink expenditures gradients (%) from Extremely Poor to Poor households in the two study

periods

  91  

  Source: Author’s own elaboration using POF 2002/2008

In 2008 we observe approximately the same evolution for essential food items,

but with a major difference as very high gradients also stay in the lower part of the

chart that correspond to lesser essential food.

When we compare differentials from poor to vulnerable households, we obtain

completely different picture (see Figure 32). Plotting values in a crescent order for

2002, we do not observe a clear distinction between essential and less essential food

items as we did in Figure 31, nevertheless, they still are more represented in the

upper part of the graph. In general the 2008 gradients are qualitatively similar to the

one observed in 2002 but reduced in size particularly in the upper part of the graph.

Figure 32: Food and Drink expenditures gradients (%) from Poor to Vulnerable households in the two study

periods

-100.00 -50.00 0.00 50.00 100.00 150.00

Spirits Out

Beers

Wheat Flour

Alimentation Out

Pre-Made Food

Soft Drinks Out

Pasta

Processed Sugar

Soft Drinks

Cow Milk

Cheese

Rice

Pork Meat

Potato

Food & Drink

Spirits

Alimentation at Home

Chicken Meat

First Quality Cow Meat

Second Quality Cow Meat

Canned Goods

Processed Meat and Fish

Fruits

Eggs

Bread

Vegetables

Beans

Fresh fisheries

Manioc Flour

Varia0on  in  %  terms  

Food

 &  Drin

k  ite

ms  

2008  

2002  

  92  

Source: Author’s own elaboration using POF 2002/2008

This led us to conclude that in 2002 there was a gap (a healthy one from a

certain perspective) impeding to poor and extremely poor households to have access

to certain less essential food items such as soft drinks, processed sugar, ready made

food etc. This gap in 2008 was reduced by the growing market of these product and

what was distinguishing an extremely poor from a poor diet was mostly less essential

food.

Proceeding with the compilation of these graphs for the remaining classes61

what we observe is that whenever we plot classes that are one-step ahead extremely

poor, differences from year to year are attenuated and in the upper part (where

greater variations are) we always find less essential food items. Interclasses

                                                                                                               61 See Annex IV

-40.00 0.00 40.00 80.00 120.00

Manioc Flour

Beans

Pasta

Processed Meat and Fish

Rice

First Quality Cow Meat

Chicken Meat

Spirits Out

Pork Meat

Alimentation at Home

Fresh fisheries

Spirits

Food & Drink

Second Quality Cow Meat

Bread

Fruits

Vegetables

Beers

Eggs

Cheese

Canned Goods

Potato

Wheat Flour

Processed Sugar

Alimentation Out

Pre-Made Food

Soft Drinks Out

Soft Drinks

Cow Milk

Variation in % terms

Food

& D

rink

item

s

2008  

2002  

  93  

differences in both years are characterized by the acquisition of items related the last

mentioned category highlighting the fact that opting for tastier and better quality food

often was traduced in unhealthy food. Moreover, as already saw in Figure 32, up to

the last shift (lower-middle to middle are similar) 2002 differentials are usually higher

than those of 2008, especially for less essential food. This could indicate that 2008

inter-class differences in food consumption were being reduced probably due to the

benefits spilled-over from reduction of inequality, which is in turn a consequence of

the economic boom and of the application of pro-poor policies.

Summarizing, in 2008 we captured, from extremely poor to middle class, a

diffused desired for less essential food, attenuated at higher income levels. In 2002,

poor and extremely poor household were discriminated against this wanting that in

turn assumed an important meaning in differentiating poor from vulnerable

households. These findings are in line with those already cited of Monteiro and

Deaton, the former adding to the latter a new Brazilian dimension.

8.b Leisure Time, Personal Care plus others

The last performed analysis of consumption patterns is based on items

selected from different classes of expenditures. The reason why we did so, is that the

nature of the other items in the list is somewhat tricky to be linked to consumption

wishes. If we think for example to University Courses, the desirability of this item

depends on the perception of its benefits, which could be difficult firstly due to its

intangible nature (is not recognizable, at least immediately, a households whose son

is enrolled in a University) and secondly for the fact that it eventually constitutes a

source of added expenses because it implies buying books, uniforms, transportation

fares etc. Consequently we collected goods that are: mainly tangible (apart from

Health Insurance) that we can state of having “instant” returns and that are

“observable”, the latter meaning the possessed item having high degree of

communicability. These three characteristics are essential to start considering an

imitation process of consumption habits of the upper classes upon which the

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formation of desires and needs of poorer classes is based on. Car Purchasing and

House Purchasing on the other hand, had debts elements within and debts are,

indeed, not desirable. Due to the fact that they are strictly linked with the item for

which the debt was contracted for, we decided to include those two elements too.

Furthermore, is really unusual for middle class households of developed countries

too to buy a house or a car without contracting a loan. In the first chart (Figure 33)

we see how passing from extremely poor to poor gradients are larger in 2008 than in

2002, let alone House Purchasing.

Figure 33: Mixed expenditures gradients (%) from Extremely Poor to Poor households in the two study periods

Source: Author’s own elaboration using POF 2002/2008

Accessories for leisure times are earmarking this difference but also Books and

Magazines, Sport, Sport Games, Toys and Parties and Ceremonies. Regarding

House Purchasing, our data suggests that in 2002 the percentage of poor

households buyers was 1,12% against 0,4% of extremely poor and that the average

-100 0 100 200 300

Toys

Culture & Recreation

Sports

Jewelry

Sports Game

Health Insurance

Home Appliances

Smoke

Hygene

Parfume

Parties

Manicure

Car Purchasing

Hairdresser

Books and Magazines

Occasional Trips

Persnal Services

Hair Products

Accesorizing

Mobile Phone Accessorizing

House Purchasing

Variation in % terms

Mix

ed it

ems

2008

2002

  95  

per-household expenditure increased of 65%62. Aside the least two items, poor and

extremely poor households were more similar in 2002 than in 2008, as highlighted in

the above analysis for food and drink expenditures.

Continuing with the chart that shows consumption patterns traced down when

shifting from poor to a vulnerable household, we notice how differences in 2002 were

exacerbated if compared with gradients in 2008.

Figure 34: Mixed expenditures gradients (%) from Poor to Vulnerable households in the two study periods

Source: Author’s own elaboration using POF 2002/2008

The only exception accounts for Health Insurance that while being the major gradient

in both years, it is more the quirk of shifting from poor to vulnerable household in

2008 than in 2002. House Purchasing and Accessories for leisure time still figure

among the first four items in both charts. The curious thing is that three classes of

expenditure constituting a woman’s prerogative (Hair Products, Manicure and

                                                                                                               62  Source: author’s own calculation using POF 2002/2008  

-­‐100   0   100   200   300  

Hair Products

Smoke

Persnal Services

Hygene

Books and Magazines

Occasional Trips

Parfume

Home Appliances

Hairdresser

Manicure

Toys

Car Purchasing

Parties

Jewelry

Mobile Phone Accessorizing

Sports Game

Culture & Recreation

House Purchasing

Sports

Accesorizing

Health Insurance

Varia0ons  in  %  terms  

Mixed

 item

s  

2008  

2002  

  96  

Pedicure and Hairdresser) increased at the same pace from class to class and from

year to year.

Here too, proceeding with the creation of two graphs 63 describing the

remaining inter-class transitions, we observe how in general differentials are higher

for 2002 than for 2008 apart from lower-middle to middle transition.

Concluding, the analysis of these graphs led us to confirm what previously

found for poor and extremely poor household, that in 2002 they revealed a much

more homogenous consumption culture. Moreover, plotting the subsequent classes,

we first observed an overall gradients reduction in absolute terms, and secondly that

inter-class differences in spending were higher in 2002 than in 2008. The peculiar

thing, but here further study is needed, is that when we analyze the last shift (from

lower-middle to middle), the least mentioned trend is no longer valid and in 2008 we

observe larger gradients than in 2002. It would be interesting to extend the analysis

to richer classes of household in order to evaluate if, when proceeding towards

higher income levels, interclasses gradients in mean per-household expenditure are

still larger in 2008 than in 2002. Nevertheless, since differences are minor in absolute

terms, the trend seems to be that richer classes have similar consumption habits.

                                                                                                               63 See Annex IV

  97  

9. Conclusions

Our analysis describes in detail the new consumption patterns that emerged

between 2002 and 2008 among households ranging from extremely poor to middle

class. As the classes we have analysed belonged to the left side of the income

distribution, these changes mirrors the so called “20 millions phenomenon” which

saw millions of poor Brazilians improving their living conditions. We have analysed

consumption trends by looking at inter-years variations of shares of total

disbursement within the same class and at intra-year variations of mean per

household expenditures between consecutive classes. If the output of the former

analysis is easy to interpret, the latter could be more complex. We have thought that

differences in consumption between consecutive classes would be a sort of proxy of

consumption desiderata of the poorest among the two.

The analysis of inter-year variations within the same classes has shown that

new consumption trends are partly shared by all the classes analysed (even though

with different intensities) and partly belong only to certain classes. In both cases we

have observed for the extremely poor, poor and partially for vulnerable households a

general tendency of scoring the greatest variations from 2002 to 2008, while low-

middle and middle class households accounted for the lowest, seemingly keeping

their old consumption habits constant.

The evolution of food and drink consumption, similar in all the classes,

presents a decrease in spending for essential food items against an increasing for

less essential and tastier food, with Soft Drinks registering the highest variation for all

the classes but the middle class. On the other hand, class-specific habits are:

seeking food with highly dense nutrients or high calories contents like Cow Milk and

Potatoes for the poorest classes; affording to buy more meals out from home for the

higher classes; increased purchasing of Beers for the poor and finally buying more

Fresh Fisheries for the extremely poor.

We have also observed a large increment in spending for elements forming

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Personal Services and Culture and Leisure time in 2008. We have seen how

Personal Services items showed a diffused increase that was particularly evident in

the Manicure and Pedicure item for all the classes considered, suggesting how

important is for households, better, households’ women, to augment their shares of

total disbursement dedicated to beauty care. With regard to Culture and Leisure

Time, all classes boosted their spending for Mobile Phone Accessorizing, while

spending for Parties increased just among the poorest classes and, but with minor

intensity, the middle class. Items related to mobile phones scored the highest positive

variations along the entire analysis witnessing the entry of this new item in the low-

income market.

We then registered the spread of domestic appliances among the poorest

classes, especially for colour-TVs, and the gradual shift from the fixed telephone line

to the mobile phone. By recording augmented shares of total disbursement in some

of the items of the Transportation category we have inferred the importance of having

and using a car for poor households, in contrast with the upper classes. House

purchasing too registered a similar trend letting us hypothesize an incremental

process of appropriation of basic assets (domestic appliances, cars and houses)

from the poorest classes of households. On the contrary, upper classes of

households, already possessing these assets, did not register significant increase.

Healthcare and Education are publicly provided in Brazil and for this reason

the expenditures registered for these two categories have to be linked with the

purchasing of the same services from the private sector. Exploring Health items, we

have noticed how if on the one hand in 2008 it was not uncommon for all the classes

to buy more healthcare services from the private sector, on the other, spending for

contracting a health insurance (which would guarantee access to private healthcare

services) did not augment. Finally the education picture is the more puzzling, maybe

due to the heterogeneity of the elements forming the Other Courses item. While we

have observed increased spending in private university courses for vulnerable,

middle and in minor part for poor households, all the classes but vulnerable

households increased their shares of total disbursement dedicated to Other Courses.

  99  

We can suppose that households belonging to this part of the income distribution

were more likely to purchase standard formative courses instead of leisure courses

such as theatre or photography. In addition, given the framework of the Brazilian

education system, it is peculiar how in 2008 there wasn’t an increase in spending in

private secondary education, which seems to be the key to access to higher quality,

publicly provided, upper-secondary education.

When we passed to investigate how consumption aspirations64 changed from

2002 and 2008 with respect of Food and Drink in 2008, we have captured a diffused

desire for less essential food spread among all the classes, although the same was

somehow attenuated at higher income levels. Since soft drinks (consumed at home

and out from home), ready-made food and processed sugars were the products

accounting for the largest gradients, choosing tastier and better quality food at higher

income levels, often meant to move towards unhealthy food. In 2002, by registering

differences in consumption concentrated in essential food items, poor and extremely

poor households were probably somehow discriminated against this wanting that,

exactly for this reason, suggest a possible modification in the consumption

desiderata of extremely poor households of 2008. Moreover, in 2002 extremely poor

and poor households had a much more homogeneous consumption culture

registering little gradients when we switch from one class to the other. On the

contrary, gradients for the subsequent class comparisons were higher in 2002 than in

2008.

When we move to analyse gradients for the battery of selected items, we

notice that in 2002 differences in consumption between extremely poor and poor

households were characterized by House Purchasing, while in 2008 by accessories

for leisure time. It seems also that in 2008 poor households enjoyed more the

consumption of Books and Magazines, Sport (accessories), Sport Games, Toys and

Parties and Ceremonies against their poorer counterpart. Conversely, the last

mentioned items have showed little or negative variations in the 2002 comparison

                                                                                                               64  Defined as the gradient in mean per household spending from one class to its consecutive in the same year  

  100  

which instead saw items such as Mobile Phone Accessorizing, Hair products and

Personal Services scoring the highest gradients. This made us thinking about a

changing in consumption aspirations among the extremely poor of 2008. Proceeding

with the analysis we observe how differences in consumption for the least two

classes were larger in 2008 than in 2002, while for the remaining class comparisons

we have registered the opposite trend. What is peculiar is that both in 2002 and in

2008 Health insurance was the item in which vulnerable households spent definitely

more money than poor households.

Both analyses have lead us to conclude that the reduction in inequality

experienced by the Brazilian society was mirrored by a reduction in consumption

differences, even though this trend may not be true for higher income levels.

If up to now it has been relatively easy to examine new consumption trends,

finding the determinants of these trends has been rather puzzling. The main reason

is that by evaluating multiple aspects of consumption, we complicated the cause-

effect scenarios expanding it to a vast number of possibilities. Each of the macro

consumption areas (Food and Drink, Housing, Health, etc.) has its determinants’

phenomenology and by treating them individually we would risk to reach inconsistent,

if not conflicting, conclusions; for these reasons, we have rather considered the

phenomenon as the result of a combination of macro drivers. If on the one hand we

have been able to individuate the major components, on the other it has been difficult

to weight them precisely and to establish a hierarchy based on their contribution.

Nonetheless, the purpose of this last chapter is to try to provide possible

explanations to the newly emerged trends but, most of all, their implications as

peculiarities of the Brazilian development model.

What then has influenced the singular characteristics of these trends? We

thought at a combination of two major factors: tailored marketing strategies and the

emulation of consumption habits of the upper classes. Regarding the former, it is

very common among low-income individuals to possess five or more credit cards

each one issued by a different subject to which they had provided detailed

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information about themselves. In Brazil, large retail companies like Wal Mart, Casas

Bahia, Carrefour, Pão de Açucar are also credit card issuers and, thanks to personal

information required in order to obtain a credit card, they posses precious data about

their customers. Moreover, credit card contracts are often not fully understood by

low-income individuals both for the way they are formulated and for their lacking of

cultural capital necessary to fully understand terms and conditions, which could

include, among other things, the complete tracking of their purchasing. The quantity

of data would be, thus, big enough to create incredibly effective marketing campaigns

directed towards low-income customers. With this, we do not want to say that every

marketing campaign is structured in a way to induce people to buy things they don’t

need or that before they didn’t want, we just want to ascertain the fact that with this

quantity of information there is the possibility for this to happen.

With respect to the emulation of consumption habits, in our opinion there is a

continuous process of class identity formation through the purchasing of objects and

services in which the elites play the role of trends setters. It recalls the water flow

spilling from the higher vessel towards the lower ones. The source is close to the

highest vessel, where we find the elites with their possibility/capability, both cultural

and monetary, to create and shape what is wrong and what is right, what is cool and

what is not. They shape their microcosm of symbols which, through the media, are

(un)intentionally advertised to people of the lower classes. The pressure for acquiring

the elite-defining (and defined) products, as perfectly described by Dittmar rely upon

the idea that ‘(..) material possession may constitute particularly powerful symbols

precisely because they circumvent explicit messages about status, wealth and power

differences, while depicting and thus reinforcing these differences in a visible and

compelling way’ (Dittmar 1992, pp. 186). By possessing certain key items, an

individual may communicates his/her desired wealth status, even though it might not

correspond to the real wealth status65. Explaining the reasons why people eventually

                                                                                                               65  In order to show the desired wealth status, low and medium income people are facilitated by, for example, the use of instalments to purchase highly priced items, lowered cost of high-technologic products and lastly imitations  

  102  

decide to show a false wealth status is beyond the main aim of this study. The

concept to underscore is that the process is continuous because when the middle

class 66 appropriates a key symbol belonging to the upper class, the item will

automatically lose its value and a new item will substitute the missing one creating

another gap that soon will be filled finally creating a spiral of needs. This is, of

course, also valid for services and cultural products. For example “eating out” or

“going to the theatre” or other services like holidays and concerts are all usually

enjoyed by high-income individuals, and, also for this reason, have a strong appeal to

the new middle class. The middle class thus, will represent a new market segment

for cultural products and, therefore, products will be tailored to this new public

eventually by lowering not only the degree of complexity, but also the contents’

quality. The reasons for this, is the apparent simplicity of the needs and wanting of

the new middle class that had recently acquired its status without a simultaneous

cultural empowerment and therefore without the tools and capacity necessary to

evaluate the quality of a cultural product. As showed by Featherstone, a certain

cultural level is reached certainly not only just through formal education but also with

a constant dedication of time and money, that is the conditio sine qua non one is

enabled to judge and thus appreciate a cultural product (Featherstone 1995).

Featherstone, recalling the work of Douglas and Isherwood (1980), further expand

this concept:

‘(..) there are three classes of consumption defined in relation to three baskets of goods: the first basket is composed of primary sector goods (for example food); the second is characterized by technological products that corresponds to the secondary sector; the third are services products typically education, arts, leisure time activities, etc. In the lower strata of the income distribution, poor individuals are limited to the first basket of goods and have a lot of spare time; in order to access the third basket of goods are not only required higher income levels, but also the proficiency to evaluate tertiary sector goods, which is necessary to create the feedback that is the essence of the consumption of intangible goods. In order to have this proficiency a person should, during all his life, invest time and capital in cultural and symbolical activities’. Douglas and Isherwood remember us that the ethnographic evidence suggests that the competition for the purchasing of goods belonging to the information sector, create high entry barriers and consequently efficient exclusion techniques.’

(adapted from Featherstone 1995, pp. 37).                                                                                                                66  Whenever we refer to the middle class it is of crucial importance to keep in mind how we defined it in chapter five: the inevitable status through which low-income households have either to pass, and continue their social ascension, or to stay. This is, in fact, of fundamental importance to understand the conditions (both monetary and cultural) with which low-income individuals enter their new socio-economic status.  

  103  

A possible scenario would be that of a society characterized by a fairer

distribution of wealth and an unequal distribution of high quality cultural products. The

new dimension on which class subdivision will be set is therefore cultural, where the

elites, thanks to money and privileged access to information separate themselves

from the expanding middle class that will progressively appropriates their old

symbols.

Education is the necessary but not sufficient condition to gain access to

cultural products, which finally constitute the real distinctive element of the social

ascension to the middle class status. In his book O’Dougherty explores the identity of

the Brazilian middle class during the long inflationary period lasting from the second

half of the 80’s until the second half of the 90’. After having conducted a series of

interviews with different focus groups about what truly identify middle class he

concludes that ‘(..) middle-class speakers constructed a morally superior position on

the (quasi-sacred) support of home ownership, educational investments and cultured

consumption (plus ownership of an old car) in contradistinction to those having a new

car and engaged in vulgar, superfluous, materialistic consumption but do not have a

decent home, education or culture’ (O’Dougherty 2002, pp. 49). Moreover,

McDonough (1981) and Plank (1996) referring to the Brazilian society, found that in a

formerly slavocratic society, where the educational levels are lower than one might

expect from a country with such large economy, having or not having culture function

as a clear threshold in social hierarchy. Objectified desires, conversely, can be easily

created67, fuelled up and rapidly satisfied, contributing to the sustainment of the

production side and of the economy of a country. The assimilation and enjoyment of

cultural products is subtler, slower, is less scalable or replicable (therefore less

profitable) and, as stated above, requires a certain cultural level plus time. Low-

income individuals would eventually consume goods as a compensatory measure for                                                                                                                67 ‘Needs-creation selling’ is the practice of helping to create a need in the mind of the prospect for their products or services even if no needs were apparent, obvious or existed to the prospect before speaking to the sales person. The method is for a company to question the prospect in order to identify, discover (and suggest) organizational problems or potential problems that would then create a need for the product or service. Source: www.salesopedia.com    

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their cultural inadequacy. The process is sustained by the consumerist society that, if

not slowed down by a shift in the scale of values (shift that may, but also may not,

occur through education) towards more post-materialistic needs and desires, will

continue to correlate class identities (and lastly self identity) to the capability of

purchasing certain services and items that are either continuously changing or

cannot be fully enjoyed thereby creating a deep dissatisfaction. O’Dougherty in his

work explains how middle-class Brazilians already in the nineties ‘linked consumption

and money matters to their sense of social status, national integrity, even to what

makes sense and gives life value’ (O’Dougherty 2002, pp.75). Our results showed

the advent of the credit market for low-income individuals that would have facilitated

the expansion (and realization) of their material desires, though, posing at the same

time serious threats to the capacities of managing their accounts without ending to be

insolvent.

Duflo and Banerjee shows how in nine countries out of thirteen, individuals

living on less than 2$ a day dedicate considerable fractions of their income to

festivals and ceremonies (Duflo and Banerjee 2007). Our results too are in line with

Duflo and Banerjee since we showed how Brazilians poor and extremely poor

household, given conditions of augmented income and prospected economic growth,

had increased their fraction of spending dedicated to parties and ceremonies68. It

could be thus, that poor individuals, since they do not start with large fractions of

disposable income, had elaborated a scale of values that prioritizes, among other

things, also a different battery of less objectified, more intangible items (mainly due to

income constraints), being somewhat close to post-materialism69. Clearly this would

be a signal of a sort of forced post-materialism that is not desirable, since the

freedom of choice is far more important. Interestingly, these partially ‘exogenously’                                                                                                                68  See also chapter 7.b    69 Even though we recognize that parties and ceremonies require a typology of consumption related to the purchasing of material goods necessary to organize and/or to participate to them, the consumption of such events is highly desirable for the intangible elements (traditions, sense of belonging to a community, friends and relatives’ meeting, more simply feelings of joy for staying together, dancing, singing, eating, drinking etc.) that characterize them.

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created values, would modify once individuals start moving out from poverty

gradually shifting to a consumerist society (for several reasons, one for all could be

the ending of material deprivation), to the point that the individual identity, or better,

new identity will be founded on the act of consuming. We acknowledge that in this

work there is no evidence that consumerism is a harmful practice either for poor or

for rich individuals and, in this merit, we provide some hypothesis of its implications

without testing them with the data. Consuming itself is not an objectively bad action,

but it might generate disruptive consequences such as high debt levels, bending

personal happiness to disposable income, the assimilation of commercial-induced

needs and object dependency. It also might indirectly provide support (searching for

lower prices) to environmentally harmful companies, or companies that do not

respect basic human rights of their employees in order to contain costs.

By considering quality education an important factor contributing to the

endorsement of post-materialistic values for an individual, we must say that in Brazil,

universal access to quality education is still unfair and it strongly depends on the

financial possibilities of a person 70 . Among Westerners access to high quality

secondary and upper secondary education is easier and less income-dependent,

thus, the appreciation of the importance of post-materialistic values is more likely,

due to the fact that it is not exogenously, but endogenously generated as a

completely free choice. On the contrary, post-materialism culture linked with poverty

would hardly resist the high consumerist pressure typical of countries that are rapidly

gaining higher standards of living. Individuals with poor origins that had just bettered

their wealth status, would rightly claim to participate the well advertised consumerist

fest to which they had been excluded for so long, since it is the peculiar trait

characterizing the new acquired status. A possible solution to interrupt the sequence,

even though with large margins of error, is by expanding the access to quality

education that, if will not help building (or keeping) a different values scale, it could at

least educate to responsible consumption. But as we previously saw, up to now this

                                                                                                               70  See chapter 7.b    

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channel seems to be blocked for most of Brazilians’ poor and indeed it necessitates

large government investments and a substantial reform of the educational system at

a primary and secondary level.

On the other hand, education to responsible consumption could be a policy

objective itself. In this sense, Chile in 2009 started pioneering a project coordinated

by Consumers International and the International Partnership for Education and

Research about Responsible living. The project is an outcome of the Marrakech

Process71, and Chile is one of the three countries selected to pilot an ESC project

(Education for Sustainable Consumption). It consists in: first, organizing formative

courses about the environmental impact of consumers’ choices, and second, in

partnership with the private sector, to develop non-formal sustainability education

projects. The Guardian, where we found this information, is highlighting the

importance of such practices considering the pace at which the expanding middle

class in Latin American countries is accompanied by the reproduction of consumption

habits found in the developed world. It would therefore be important, not to repeat the

same errors done in first world countries, but to recognize since the very beginning,

the importance of sustainable consumption.

Regarding the risks that derive from unhealthy dietary patterns, a policy

suggestion comes from the UK, where the NHS (National Health System) developed

a system of coloured coding to warn consumers about their energy intake. For every

pre-packed food product there is a nutritional label indicating the relative energy

intake divided by Fat, Saturates, Sugars and Salt. Then, adopting traffic light colours

and considering a threshold of 2000 kcal72, is showed the percent of energy intake

coming from each of the different elements: red means high, amber means medium

and green means low. The more the green(s) on the label, the healthier the choice.

This way, not only consumers are easily warned against the risks of buying (and                                                                                                                71 The Marrakech Process is a global process to support the elaboration of a 10-Year Framework of Programs (10YFP) on sustainable consumption and production, as called for by the World Summit on Sustainable Development in the Johannesburg Plan of Action. <http://esa.un.org/marrakechprocess/>  72  This split: 70g of fat; 20g of saturates; 90g of sugars; 6g of salt.  

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eating) for example, an all red product, but it could also be a stimulus for companies

to orientate their market strategies towards the production of healthier pre-packed

food. Such initiative could seem easily applicable in every country, but it is not. In

Europe, for example, traffic light labelling for pre-packed food does not exist, and

pursuant to Moodie ‘(…) (industries) avoid disclosure of relevant health information to

consumers. From the denial of tobacco addiction as late as 1994, to the obstruction

of traffic light labelling of unhealthy food’ (Moodie et al. 2013). In Brazil too, such

coding system for food products does not exist, even though it would be useful to

prevent the spread of non-communicable disease (NCD) resulting from unhealthy

alimentation. Low price of pre-packed food products, the augmented financial

disposability of Brazilians’ poor household and effective marketing campaigns73

expose them to the possibility of making unhealthy choices and, in the long run,

eventually contracting NCD.

The last initiative worth to be mentioned comes from Mexico, more specifically

from Mexico City. The municipality set special markets where people swap rubbish

for healthy food. They then sell the rubbish, conveniently separated, to glass-makers,

paper firms and other industries. These markets are subsidized from the government

for the reason that by just selling rubbish they are not able to cover the costs of food

purchasing. This idea, aside having had a great success among citizens, it has the

advantage of addressing two critical issues at the same time: recycling and having a

healthy diet.

The good thing is that worldwide, people of developing countries like Brazil are

gradually emerging from poverty enjoying higher incomes and better living standards.

From a marketing perspective these two facts have an important consequence: they

now have the power to choose how to spend their discretionary income. Individuals

are acquiring, together with a new class identity, the status of consumer entities, in

fact, development is strictly associated to increasing consumption. On the other

                                                                                                               73  Nestlè a Bordo (Nestlè on board) is a Nestlè initiative started in 2008 that consisted in an ambulant boat, going up to the Amazon rivers and stopping by village after village. The boat was announcing its arrival with an inviting music and on board there was a fully-refurnished Nestlè supermarket. Good-looking salesmen, colours, lights and music were part of an intense shopping experience for most of the native-indios populating those villages.    

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hand, consumption frenzy, and its disruptive implications, has always been, and still

is, a characteristic of first world societies that just now, facing the past economic

crisis and given the actual conditions of the energetic resources of the planet, are

rethinking the act of consuming. But as Hubacek, Guan and Barua highlighted in their

work ‘(…) given the links or dependencies created through global trade, foreign direct

investments and marketing in these emerging economies the possibilities for

developing countries to successfully contribute to global efforts for sustainable

production and consumption might be difficult’ (Hubacek Guan Barua 2007).

Will the Brazilian society have to pass first from compulsive consumption,

which is sadly symbolizing wealth, before realizing the critical importance of

responsible consumer behaviour? Is there a way not to follow the path of first world

countries and directly embracing an alternative model without renouncing to

economic growth? Or are we just assisting to the spread of materialism culture in

countries whose most of the people was before characterized by material

deprivation? The awareness of being a consumer requires a re-thinking of our

actions and the last presented ideas are all intended to help making responsible

decisions over consumption choices, trying not to fall in the consumerist trap.

 

     

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(2011) Health care in Brazil: An injection of reality The Economist http://www.economist.com/node/21524879 Accessed: December 17, 2013 (2013) Recycling Mexico: Junk Food. The Economist. http://www.economist.com/news/americas/21565258-novel-market-swaps- rubbish-vegetables-junk-food Accessed: January 23, 2014 (2014) Kids just want to have fun The Economist. http://www.economist.com/blogs/americasview/2014/01/brazils-rolezinhos Accessed February 2, 2014 Websites http://www.cosmeticsdesign.com/Market-Trends/Brazil-market-for-cosmetics- continues-to-shine Accessed: December 12, 2013 http://www.nhs.uk/Livewell/Goodfood/Pages/food-labelling.aspx Accessed: January 3, 2014 https://www.google.it/publicdata/explore?ds=d5bncppjof8f9_&met_y=sp_pop_totl&hl =en&dl=en&idim=country:BRA:MEX Accessed: November 26, 2013 http://www.ufcg.edu.br/prt_ufcg/assessoria_imprensa/mostra_noticia.php?codigo=36 58 Accessed: December 12, 2013 http://www.brasil.gov.br/educacao/2012/11/lei-de-cotas Accessed: February 5, 2014 http://www.novamamore.ro.gov.br/legislacoes/leis/item/404-lei-n-320-02-doacao-de- lotes-urbano Accessed: December 28, 2013 http://esa.un.org/marrakechprocess Accessed: December 29, 2013 http://www.saomateusdosul.pr.gov.br/wp-content/uploads/2012/10/lei-n.-1.509.03- institui-o-programa-de-doacao-de-lotes-urbanos-a-familias-de-baixa-renda Accessed: December 28, 2013

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ANNEXES  

ANNEX I: 2008 mean per-household expenditures complete table  

 Table 13: Complete 2008 selected mean per-household expenditures

 

2008 Mean per-household expenditure Extremely Poor Poor Vulnerable Lower-Middle Middle

Mean Total Income 133.56 381.45 668.42 1025.12 1379.04 Mean Total Disbursement 463.65 593.89 798.80 1099.61 1425.84 Food & Drink 129.46 182.36 221.59 277.15 331.47 Alimentation at Home 114.65 152.19 184.38 219.93 254.87 Rice 8.82 12.65 13.27 13.79 14.88 Beans 6.02 7.49 7.95 8.31 8.98 Pasta 2.17 2.80 3.03 3.44 3.53 Wheat Flour 0.65 0.98 1.04 1.33 1.56 Manioc Flour 2.22 3.30 3.07 2.76 2.70 Bread 0.53 0.69 0.98 1.33 1.58 Potato 3.84 4.43 4.91 5.67 7.11 Vegetables 2.91 4.17 5.67 7.45 8.12 Fruits 2.75 4.50 6.19 8.28 10.43 Canned Goods 3.36 5.02 7.18 10.54 12.79 First Quality Cow Meat 4.99 8.64 10.61 11.85 13.08 Second Quality Cow Meat 0.98 0.94 1.40 2.14 2.51 Pork Meat 4.46 6.80 8.74 10.02 11.94 Processed Meat and Fish 2.82 4.85 4.67 5.00 4.89 Fresh fisheries 9.02 11.68 13.51 14.90 16.02 Chicken Meat 2.04 2.61 3.07 3.26 3.57 Eggs 4.27 5.93 8.33 11.10 13.03 Cow Milk 0.99 1.15 1.91 2.95 4.04 Cheese 4.33 7.64 9.92 12.69 14.16 Processed Sugar 1.49 3.24 4.35 5.96 7.82 Soft Drinks 1.07 1.05 1.57 2.74 3.48 Beers 0.71 0.61 0.60 1.01 0.97 Spirits 0.77 0.81 1.03 1.31 1.97 Pre-Made Food 1.19 1.60 2.81 3.32 4.76 Alimentation Out 14.82 30.17 37.20 57.22 76.61 Soft Drinks Out 1.71 2.09 2.55 3.74 4.80 Spirits Out 1.76 4.23 4.45 5.53 7.72 Jewelry 0.72 0.95 1.41 1.75 2.70 Hygiene 13.40 16.95 22.70 29.70 37.22 Perfume 5.35 7.33 9.74 12.40 15.68 Hair Products 1.16 1.87 2.09 2.79 3.24 Personal Services 3.27 4.37 6.01 8.90 13.27 Hairdresser 2.57 3.51 4.76 6.84 9.97 Manicure 0.43 0.49 0.75 1.33 2.23 Accessorizing 0.04 0.17 0.10 0.13 0.20 Others 0.22 0.21 0.41 0.59 0.88 Home 189.71 221.45 300.26 401.91 500.44 Rent 52.23 82.58 121.29 163.80 214.12 Electric Energy 17.64 21.46 28.70 37.99 47.83 Telephone 1.97 2.21 6.15 13.40 21.14

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Mobile Phone 2.34 4.60 6.35 10.12 13.41 Gas 10.08 13.75 17.29 19.33 20.69 Home Maintenance 33.33 16.92 24.69 32.90 35.94 Furniture 12.36 15.67 19.88 24.58 29.93 Home Appliances 18.93 21.64 25.66 32.33 39.68 Clothes 23.23 33.99 43.82 58.26 75.76 Man's Clothes 6.02 8.76 10.69 13.72 19.33 Women's Clothes 6.68 9.39 12.36 17.25 21.05 Kids' Colthes 4.12 5.90 7.22 8.85 10.77 Transportation 50.90 52.59 71.34 114.99 169.49 Public Transportation 20.66 22.35 30.64 46.19 54.38 Diesel Fuel 6.08 7.93 10.79 17.15 31.44 Bio Fuel 0.79 0.66 0.90 1.56 3.20 Car Maintenance 2.79 4.38 6.19 11.41 18.85 Car Purchasing 16.27 11.45 14.87 27.28 44.56 Occasional Trips 3.29 4.66 6.12 8.66 12.41 Health 18.34 28.22 46.11 66.14 86.25 Drugs 14.50 23.07 35.98 48.56 61.10 Health Insurance 0.82 0.54 1.96 4.44 7.98 Dentist 0.61 0.48 0.75 1.22 2.54 Medical Advisoring 0.87 1.03 1.96 3.31 4.50 Ambulatory 0.00 0.05 0.10 0.25 0.27 Surgery 0.02 0.41 0.21 1.17 1.08 Hospitalization 0.00 0.02 0.13 0.39 0.34 Medical Examination 0.87 1.34 2.63 3.54 4.09 Therapy's Goods 0.57 0.99 2.01 2.45 3.39 Education 3.05 4.79 7.28 11.40 18.68 Regular Course 0.17 0.33 1.07 2.05 3.26 Superior Course 0.02 0.23 0.73 1.23 3.48 Other Course 0.60 0.85 0.97 2.72 5.37 Books 0.25 0.43 0.69 0.91 1.00 School Material 1.87 2.65 3.19 3.64 4.27 Culture & Recreation 4.15 6.51 9.35 14.25 21.12 Toys 0.90 1.24 1.87 2.74 3.64 Mobile Phone Accessorizing 1.44 2.07 3.10 4.54 6.29 Books and Magazines 0.40 0.83 0.83 1.34 2.20 Sports 0.53 1.06 1.46 2.61 4.35 Others 0.87 1.30 2.08 3.02 4.64 Smoke 5.00 6.60 7.09 8.87 11.20 Sports Game 0.92 1.35 2.09 2.95 4.74 Parties 1.38 2.13 2.55 3.79 7.33 Current Expenditures 4.78 12.10 24.77 48.53 78.05 Taxes 2.50 5.00 8.13 15.23 24.44 Bank Services 0.12 0.48 0.91 2.00 3.70 Private Pension Scheme 0.24 0.00 0.05 0.04 0.07 House Purchasing 7.57 2.55 4.63 8.74 12.12 House Renovation 1.82 8.06 12.41 16.69 21.68 Debts Repayment 2.03 3.62 7.03 12.89 15.19

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ANNEX II: PNAD analysis    Table 14: Classes definition according to per-capita income in PNAD  

Income Brackets 2002 Income Brackets 2008 Class x<43 x<65 E 43<x<86 65<x<130 D1 86<x<154 130<x<233 D2 154<x<234 233<x<353 C1 234<x<340 353<x<513 C2 340<x<540 513<x<815 B1 540<x<1314 815<x<1984 B2 1314<x<1624 1984<x<2137 A1 x>1624 x>2137 A2

Source: Author’s own calculation using data from SAE 2012

Table 15: Subsection of a table using DOM dataset from PNAD 2002 illustrating households sharing the same roof characteristics divided by classes    Roof's material Extremeley poor Poor Vulnerable Lower-Middle Middle Tiles 1662062 8174469 7375590 6330964 10004236 Treated woods 188121 895634 1287283 1632429 5440776 Concrete rocks 3991 29979 23312 25883 45998 Zinc 19844 96293 99321 71857 91317 Recycled woods 4557 14216 6426 3478 4398 Straw 62826 177333 65631 26451 9170 Other 6549 16767 15160 8455 6234

Source: Author’s own elaboration using PNAD 2002

           Table 16: Subsection of a table using PES dataset from PNAD 2008 illustrating ethnic profiles of individuals divided by classes  

 Ethnic profiles Extremeley poor Poor Vulnerable Lower-Middle Middle Indigenous 78871 163231 162761 97277 36160 White 2918469 17447209 28729949 32672064 10120358 Black 800939 4044823 4769587 2653706 603094 Yellow 38117 151168 241380 457659 213174 Mulatto 6220242 30926365 27580063 14928658 3402350

 Source: Author’s own elaboration using PNAD 2008

 

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ANNEX III: Expenditures categories expanded (in Portuguese)    2008-2009 House purchasing elements: AQUISICAO DO IMOVEL A VISTA (VALOR PAGO, IMPOSTO DE TRANSMISSAO, ETC.) IMPOSTO DE TRANSMISSAO DO IMOVEL (AQUISICAO A VISTA) AQUISICAO DO IMOVEL A VISTA (VALOR PAGO) AQUISICAO DO IMOVEL A PRAZO (ENTRADA, PARCELAS, TAXAS, IMPOSTOS, ETC.) TAXAS PARA AQUISICAO DO IMOVEL A PRAZO IMPOSTOS PARA AQUISICAO DO IMOVEL A PRAZO PARCELAS PARA AQUISICAO DO IMOVEL A PRAZO ENTRADA PARA AQUISICAO DO IMOVEL A PRAZO AQUISICAO DE OUTROS IMOVEIS A VISTA OU A PRAZO (PARCELAS, TAXAS, ETC.) IMPOSTO DE TRANSMISSAO DE OUTROS IMOVEIS (AQUISICAO A VISTA OU A PRAZO) ESCRITURA DE OUTROS TERRENOS OU IMOVEIS CONSORCIO DE OUTROS IMOVEIS (PRESTACAO) LOTE DOADO PELA PREFEITURA MUNICIPAL (OUTROS IMOVEIS)

AQUISICAO DE OUTROS TERRENOS OU LOTES A VISTA OU A PRAZO (PARCELAS, TAXAS, ETC.) 2008-2009 Debts elements: JUROS E SEGURO DE EMPRESTIMO ENCARGOS FINANCEIROS DE FINANCIAMENTO PAGAMENTO DE EMPRESTIMO EMPRESTIMO (PAGAMENTO)

PAGAMENTO DE TITULO PROTESTADO PROTESTO DE TITULO TITULO PROTESTADO CARNET DE MERCADORIAS EMPRESTIMO A TERCEIROS 2008-2009 Car purchasing elements: LEASING DE AUTOMOVEL BARCO A VELA BARCO BARCO A MOTOR BICICLETA MOTOCICLETA WINDSURF ASA DELTA TRAILLER ULTRALEVE CAIQUE AUTOMOVEL UTILITARIO NACIONAL KOMBI CAMINHAO LANCHA

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JET SKI MOBILETE AUTOMOVEL UTILITARIO IMPORTADO AUTOMOVEL DE PASSEIO IMPORTADO VEICULO DE TRACAO ANIMAL E ANIMAL DE TRACAO ANIMAL DE TRACAO WALK MACHINE KART JIPE (KART) MINI-BUG BARCO A REMO CANOA A REMO PIROGA CONSORCIO DE AUTOMOVEL CONSORCIO DE MOTOCICLETA

AGREGADO

               

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ANNEX IV: Inter-class gradients

Figure 36: Food & Drink expenditures gradients (%) from Vulnerable to Lower-Middle households in the two study periods

-40.00 0.00 40.00 80.00 120.00 160.00

Manioc Flour Beans Pasta

Processed Meat and Fish Rice

First Quality Cow Meat Chicken Meat

Spirits Out Pork Meat

Alimentation at Home Fresh fisheries

Spirits Food & Drink

Second Quality Cow Meat Bread Fruits

Vegetables Beers Eggs

queijos Canned Goods

Potato Wheat Flour

Processed Sugar Alimentation Out Pre-Made Food Soft Drinks Out

Soft Drinks Cow Milk

Variation in % terms

Food

and

Drin

k ite

ms

2008  

2002  

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Figure 37: Food & Drink expenditures gradients (%) from Lower-Middle to Middle households in the two study periods

-­‐50.00   0.00   50.00   100.00   150.00  

Manioc Flour

Beans

Rice

Processed Meat and Fish

Pasta

First Quality Cow Meat

Pork Meat

Wheat Flour

Chicken Meat

Alimentation at Home

Vegetables

Food & Drink

Fresh fisheries

Bread

Beers

Potato

Soft Drinks Out

queijos

Eggs

Fruits

Cow Milk

Spirits

Second Quality Cow Meat

Alimentation Out

Spirits Out

Processed Sugar

Canned Goods

Pre-Made Food

Soft Drinks

Variations in % terms

Food

 and

 Drin

k    it

ems

2008  

2002  

Figure 38: Mixed expenditures gradients (%) from Vulnerable to Lower-Middle households in the two study periods

0.00   50.00   100.00   150.00  

Home Appliances

Parfume

Occasional Trips

Smoke

Sports Game

Jewelry

Hygene

Hair Products

Hairdresser

Parties

Sports

Toys

Persnal Services

House Purchasing

Culture & Recreation

Health Insurance

Mobile Phone Accessorizing

Accesorizing

Car Purchasing

Manicure

Books and Magazines

Variations in % terms

Mix

ed e

xpen

ditu

re It

ems

2008  

2002  

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Figure 39: Mixed expenditures gradients (%) from Lower-Middle to Middle households in the two study periods

0.00   50.00   100.00   150.00   200.00  

Smoke

Accesorizing

Home Appliances

Hygene

Jewelry

Books and Magazines

Hair Products

Hairdresser

Parfume

Persnal Services

Occasional Trips

Sports Game

Culture & Recreation

Mobile Phone Accessorizing

Manicure

Toys

Sports

Parties

Car Purchasing

House Purchasing

Health Insurance

Variazioni  in  %  terms  

Mixed

 expen

diture  item

s  

2008  

2002