Seeing Inequality?

Relative Affluence and Elite Perceptions in Mexico

Alice Krozer
El Colegio de México

Occasional Paper 8
Overcoming Inequalities in a Fractured World:
Between Elite Power and Social Mobilization
May 2020
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a revised and peer reviewed version of a paper originally prepared for the UNRISD
International Conference, Overcoming Inequalities in a Fractured World: Between Elite Power
and Social Mobilization (November 2018). The conference was carried out with the support of
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Table of Contents
Acronyms ...................................................................................................................................... ii
Abstract ......................................................................................................................................... ii
Keywords ...................................................................................................................................... ii
Bio ................................................................................................................................................. ii
Acknowledgements ....................................................................................................................... ii
Introduction ................................................................................................................................... 1
Inequality in Mexico ..................................................................................................................... 3
Data and Research Methods .......................................................................................................... 5
Elite Perceptions of Inequality ...................................................................................................... 6
The Mexican Elite’s (Small) World .............................................................................................. 8
Spatial patterns of separation and discriminations.................................................................... 8
Formal and informal education ............................................................................................... 11
Relative Affluence: Re-centring the Distribution ....................................................................... 12
Conclusion................................................................................................................................... 14
References ................................................................................................................................... 15

List of Figures
Figure 1: Income distribution for selected countries ..................................................................... 4
Figure 2: Decile self-placement among the Mexican elite, by monthly income ........................... 6

i
Acronyms
OECD Organisation for Economic Co-operation and Development
MBA Master of Business Administration
PhD Philosophiæ doctor
ECLAC United Nations Economic Commission for Latin America and the
Caribbean
CONEVAL Consejo Nacional de Evaluacion de la Politica de Desarrollo Social
INEGI Instituto Nacional de Estadística y Geografía
CEEY Centro de Estudios Espinosa Yglesias
GDP Gross Domestic Product
USD United States Dollars
MXN Mexican Pesos
PPP Purchasing Power Parity

Abstract
Among the many approaches attempting to explain the persistence of inequalities, the role of
perceptions and relative measures remains under-explored. Based on over 40 in-depth interviews
with members of the Mexican elite, this paper examines how the dissonance between elite
perceptions and measured economic status matters for the social construction and perpetuation of
inequality. This unique empirical data reveals that the “wealth bubbles” within which elites exist
lead to an experience of relative affluence: although elites acknowledge being privileged
compared to a majority of the population, they simultaneously feel poorer compared to the
exceptionally wealthy peers in their social space. Consequently, despite showing concern about
inequality and its negative effects, elites underestimate their own position in the overall income
distribution, re-centring the distribution around their own incomes. Understanding elites as
embedded in their particular sociality helps explain how the accumulation of advantages assures
persistently high inequality in the country. For instance, where elites feel they “earned” their own
social position through personal merit, they might insist on education as the key to overcoming
inequality, even though due to the stratified opportunity structures in the country, such a “remedy”
will actually perpetuate inequality, as it centralizes privileges rather than equalizing opportunities.
Meanwhile, elites’ distorted perceptions of the majority’s wellbeing affects social cohesion by
further alienating them from the rest and obstructs the implementation of effective policy to
sustainably decrease inequality. Hence, elites’ policy recommendations, based on their
perceptions, perpetuate inequality, meaning that ultimately perceptions end up influencing
inequality levels.

Keywords
Inequality; elites; income distribution; perceptions; Mexico

Bio
Alice Krozer is currently a post-doctoral researcher at El Colegio de México’s Social Inequalities
Seminar, with a PhD in Development Studies from the University of Cambridge. She has been a
visiting researcher at Stanford University, and has worked as a consultant for ECLAC and Oxfam,
among others.

Acknowledgements
I thank Nurjk Agloni and Graham Denyer Willis for their invaluable suggestions and
improvements; José Gabriel Palma, Juan Carlos Moreno-Brid, Diego E. Osorno, Christopher
Hope, Albert Sanghoon Park, Katja Hujo, Maggie Carter and two anonymous reviewers for their
helpful comments; and the Heinrich-Böll-Stiftung for financial support. Special thanks to the
participants of the study for taking part in this research.

ii
Introduction
Inequality has become the topic of the hour. Within most contemporary academic and public
discourses, it is an acknowledged fact that vast inequalities exist, and that they have profound
impacts on the societies experiencing them. However, research has not given substantive
consideration to the fact that, as inequalities are perceived differently depending on one’s position
along the income distribution, perceptions and relative measures play an important role in the
social construction of inequality. Focusing on Mexican elites, this paper considers how the
dissonance between perceptions and measured economic status matters.

One of the most puzzling aspects of inequality is its persistence over time. Although Mexico has
long been recognized as an unequal country, efforts to change this have been largely unsuccessful.
An explanation for this conundrum can be found in the way that inequality is perceived rather
than measured, especially among those members of society having the most impact on the
formulation and implementation of public policies: the elites.

Although elites have long held an important place in multidisciplinary inequality research, most
studies either blame them for maintaining an unfair distribution by conspiring against the rest
(Dorling 2014; Mount 2012) or hail them for pushing up top incomes thanks to supposedly
extraordinary individual characteristics (Rosen 1981; Kampfner 2014). Insufficient light has been
shed on the role that their perceptions play in the persistence of inequality. As perceptions inform
political behavior and policy preferences (Kuziemko et al. 2015; Cruces et al. 2013), 1 studying
elites’ perceptions is not only interesting out of scientific curiosity, as little is known, neither
empirically nor theoretically, about how elites understand distributional dynamics. Rather,
addressing this knowledge gap is a crucial step in any attempt to sustainably decrease inequalities
in Mexico (and elsewhere). Identifying elites’ views can thus give new insights to illuminate the
old debate about the persistence of inequalities.

Research has repeatedly shown that, on average, people have a poor understanding of inequality. 2
Inconsistencies between measured inequality and people’s perceptions appear regardless of
methodological setups (Dawtry et al. 2015). Given how difficult it is to correctly estimate the
distribution of income and wealth for skilled professionals, it is reasonable to expect that most
“time-constrained, statistically unsophisticated citizens” have little exact knowledge about
inequality levels (Gimpelson and Treisman 2015:5). However, rather than being randomly
misinformed, respondents often systematically underestimate inequality levels and misidentify
trends across countries (Norton and Ariely 2011; Chambers et al. 2014). Likewise, subjective
social position, that is a person’s self-placement in a social hierarchy, often varies greatly from
the position that person would be allocated according to his or her income. For instance, in a study
conducted in Spain, only 14 percent of participants correctly identified the decile of the national
income distribution they fell into (Fernández-Albertos and Kuo 2015). In general, despite
significant country-specific variation as to the degree of deviation (Bublitz 2017; Lindemann
2004), poor people tended to overestimate their ranks in the income distribution, while rich
individuals underestimate theirs (Gimpelson and Treisman 2015).

1
For instance, individuals’ redistribution preferences relate to inequality perceptions rather than actual inequality levels.
As such, in the United States, misestimations of inequality lead individuals to see less need for redistribution (Dawtry
et al. 2015). See also Alesina et al. (2018), Bublitz (2017), Gimpelson and Treisman (2015), and Karadja et al. (2017).
2
Karadja et al. 2017; Norton and Ariely 2011; Chambers et al. 2014.

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Occasional Paper 8

One explanation for why individuals’ estimates diverge from measured income rankings is that
people make sense of the world based on their experience, mediated by beliefs of fairness,
expectations about social mobility or other societal norms (Mijs 2019; Gimpelson and Treisman
2015). 3 Accordingly, individuals make their inferences about inequality, poverty and affluence in
society based on cues their environment affords. This process of “social sampling” (Dawtry et al.
2015) means that elites, like everybody else, have to be understood in “the social worlds within
which they are embedded” (Khan 2015:83).

Taking the influence of context into consideration, inequality can thus look very differently for
somebody at the bottom and the top of the income distribution. An interdisciplinary niche within
the burgeoning literature on perceptions of inequality is starting to concern itself with the role
elites play in these processes, and the way their particular experience conditions how they
understand inequality. For instance, Hecht (2017) and Sherman (2017) explore the role of elite
perceptions as drivers of wealth accumulation in the United Kingdom and the United States,
respectively (see also Payne 2017), while Khan (2015) discusses the attitudinal differences
between elites and the rest arising from “elite culture.”

Not much is known about these issues in the global South, where social, political and institutional
circumstances differ from those found in the global North. Even less related research is available
for Mexico. 4 However, if context determines perceptions, and our perceptions—whether correct
or not—have an impact on our policy preferences and political behavior (Campos Vazquez et al.
2020), this makes perceptions a powerful driver of inequality, and (national) context a key factor
to study its persistence, or reproduction. More to the point, it is elite perceptions that play a large
role in enacted policies and preferences (Reis and Moore 2005); thanks to their disproportionate
influence over policy making (Gilens 2012; Bartels 2008), it matters greatly how they view
inequality, and consequently which responses to address the issue they support (and oppose).

Thus, in attempting to fathom the nature of inequality, it is important to understand perceptional

particularities, their origins, and the standpoints of elites more generally. As I will show below,
elites’ perceptions diverge from those of other groups because the social worlds of elites and non-
elites differ markedly. To sustain my argument, I will first present Mexican elites’ particular
perceptions of inequality. I will then illustrate how, in a reiterative fashion, exclusionary dynamics
like spatial, social and institutional segregation first operate as causal factors in the construction
of these elite perceptions to subsequently condition elites’ preferred responses to deal with
inequality. I will argue that their perceptions of, for instance, education as an equalizing policy
also inform a self-image of deserving recipients of earned assets in a supposedly meritocratic
context, which grants perceptions a key role both in the conception of self and in the process of
inequality justification and legitimation. Understanding this bidirectional role that perceptions of
the rich play in the social construction of inequality can thus help identify the kind of responses
needed to effectively tackle it.

Before immersing ourselves in the analysis, the next section will provide a brief contextualization
of inequality in Mexico. The third section outlines the methodology applied. The fourth presents

3
Alternatively, one might try to explain the discrepancy between the two measures with participants’ dishonesty or
disinterest, although the non-random patterns of self-placement observed contradicts the expected results for such
explanations.
4
The main exceptions to this almost complete absence of information include Cerón-Anaya’s (2019) account of elites’
class and racial relations and Iturriaga’s (2016) study of the Meridian elite.

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 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

the empirical results that the fifth section aims to explain. The sixth section discusses their
implications and the last concludes.

Inequality in Mexico
Mexico is among the countries with the highest inequality and lowest social mobility in the world.
With a Gini coefficient of around 0.5 (CONEVAL 2019), less than 3 percent of those born in the
lowest quintile will move up to the top quintile and only 2 percent from the top quintile will end
up at the bottom (CEEY 2019). At the same time, the income ratio between the lowest and highest
decile is 18.3 (INEGI 2019). While half of the population lives underneath the poverty line, the
four richest men hold wealth equivalent to 9 percent of GDP (Esquivel 2015).

Mexico City is a suitable location to examine these issues: as the country’s capital, it hosts most
of the federal political elite and is a regional hub for international institutions, as well as
businesses. It is the place with both the highest income threshold for the top 1 percent (Castañeda
2016) and the highest millionaire density in the country (Arriagada Cuadriello 2015). But
inequalities in other dimensions are also particularly large within Mexico City. For both the
quality and quantity of public goods provided, including water, electricity, sewage and transport,
demarcations run along the same divisions as resident income clusters. The absolute (and
growing) difference between income levels leads to richer boroughs being able to afford more
and better public provision of basic services, alongside private supply by and for its rich residents.
This exacerbates differences in experiences in every aspect of life between residents of different
sections of the city. Intersectionality of inequality dimensions means that, depending on the
neighbourhood inhabited, citizens might experience water shortage, lack of public security
provision, inadequate housing, etc.—or none of those.

Moreover, these diverging experiences are again embedded in a national context with one of the
largest ranges of income inequality in terms of the differences in income held by the poorest and
richest groups in the population, respectively, as displayed in figure 1. Expectedly, the country’s
income distribution is worse than that of rich countries like Norway (or the often highlighted
example of the increasingly unequal United States). However, the figure shows that inequality in
Mexico also compares unfavorably to that of otherwise more similar countries in the (infamously
unequal) Latin American region, like Argentina, Brazil or Chile. It visualizes the fact that poor
people in Mexico not only have a lower share of total income than their counterparts in Brazil or
Argentina, but that they earn similar incomes as the poor in India. Meanwhile, the income of
Mexico’s rich is (almost) comparable to that of rich people in wealthy OECD countries like
Germany.

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Occasional Paper 8

Figure 1: Income distribution for selected countries

Source: Income-inequality.info (2019) based on Lakner and Milanovic (2013).

Note: Country percentile vs. world income distribution; Income per person per year in 2011 PPP
(Purchasing Power Parity) dollars

Once we disaggregate the top 5 percent presented by Lakner and Milanovic, these differences
only become more notorious. According to the National Statistics Institute INEGI, the top 1
percent in Mexico earned a total monthly average household income of MXN 133,221 (~USD
7,087) 5 in 2014 (del Castillo 2015). 6 This compares to MXN 46,902 (USD 2,495) for the richest
10 percent of the Mexican population, a mean income of MXN 13,240 (USD 704) and MXN
2,572 (USD 137) for the poorest 10 percent. However, inequality within the top 1 percent is very
high: average income for the top 0.01 percent is over 30 times that of the lowest top group (99.00-
99.90 percent) (Campos Vázquez et al. 2016), compared to a ratio of 27 between the Mexican top
and bottom deciles (Krozer et al. 2015). In absolute terms, Campos Vázquez et al. (2014)
recalculate average income for the lowest 90 percent of the top 1 percent to lie between a slightly
more modest MXN 112,000-127,000 (USD 5,958-6,756), the lowest 90 percent of the 0.1 percent
as “only” MXN 437,000-651,000 (USD 23,249-34,634), and the top 0.01 percent, depending on
the methodological assumptions used, as MXN 2.5-6 million (USD 133,000-320,000). Since
these denote average incomes, the threshold for top 1 percent household incomes would lie just
above MXN 100,000 (USD 5,320).

Receiving an income of these proportions in itself grants options to influence public debates and
policies, be that through concerted strategies or as “by-products” of unrelated business
investments or personal activities. They may include law-abiding campaign and election
financing, bidding into and sponsoring of public infrastructure projects, exerting influence over
regulatory agencies or politicians via donation of funds, or setting up lobbying foundations (not
to mention illegal activities, corruption and bribery). 7 Moreover, individual’s high incomes often

5
Dollar equivalents correspond to an exchange rate of MXN 18.8=USD 1 (11 January 2020).
6
This number is the official quotation and refers to the income reported in household surveys. However, as it is known
that household surveys underestimate top incomes, new research by Campos Vázquez et al. (2014; 2016), del Castillo
(2015), and Bustos and Leyva (2016) uses different methodologies to improve on household survey estimates’
underreporting top incomes. Their results differ significantly, but all of them apply large upward corrections to official
accounts. In this paper, the thresholds I use follow Campos Vázquez et al. (2016).
7
As a political system that requires vast resources for aspiring politicians to be elected into office, the Mexican
government is susceptible to elite pressures. Few candidates can cover the immense costs of running an independent
campaign, and those who can tend to be members of the business elite (Krozer 2016).

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 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

stem from other sources of influence, predominantly their high-ranking professional positions in
private and public sectors, intellectual clout and persuasion, or culture/sports-related fame. Where
they own wealth, too, they may access and control media and strategic economic assets such as
banks, natural resources, real estate or the energy sector (Krozer 2016). The frequent combination
of these economic, social and political capitals provides elites with bargaining power, voice and
assets to influence policy outcomes, should they wish to do so. 8 To varying degrees, all of these
strategies are pursued in Mexico, if not always intentionally; many appear, either overtly
discussed or hinted at, among the testimonies collected for this study.

Data and Research Methods

I conducted 43 in-depth interviews with members of the Mexico City elite between October 2015
and October 2016. Combining definitions of Reis and Moore (2005) and Khan (2015), I
understand “elites” as members of a loose group that comprises individuals within the top 1
percent of the country’s income distribution in positions of potential influence, that is those in
possession of disproportionate amounts of both economic resources and at least one other source
of capital (political, social, cultural, symbolic). I thus selected participants from within the highest
social and occupational classes: 10 officials in public sector decision-making positions, including
ministers and deputies; 25 private sector managers or directors; and 8 opinion-shaping academics,
intellectual leaders or media professionals. Compared to the population as a whole, participants
are extraordinarily well-educated. All of them have a first university degree; 21 hold a master's
or MBA degree; an additional 13 have, or are in the process of acquiring, a doctoral degree. At
the national level, less than 1 percent of Mexican students hold a PhD (OECD 2015). Participants
have attended the most prestigious—overwhelmingly private (except Universidad Nacional
Autónoma de México, UNAM)—national (Instituto Tecnológico Autónomo de México,
Tecnológico de Monterrey) and international universities (“Oxbridge” and United States Ivy
league institutions).

I identified potential interviewees via a snowballing sampling, since peers are best able to access
hidden populations like the elite (to avoid “community bias,” I started out with several
independent chains). Moreover, thanks to the personal referrals, I was perceived as a trustworthy
peer in most situations. This increases reliability of participants’ declarations and provides
internal validation. According to the income thresholds for the top 1 percent discussed above, just
over half of the interviewees fall within the 99-99.9 percent, whereas the remainder belong to the
top 0.1 percent and above (up to MXN 2 million [USD 106,400] monthly). 9 At least half of the
participants additionally have high levels of wealth, placing them in the top percentiles of the
country’s wealth distribution.

Although deliberate efforts were made to diversify the sample, women and ethnic minorities
remain underrepresented. This is however also a defining feature of the top, of which 87 percent
is male at the global level (WealthX 2016), a similar percentage as in my sample. Only two
participants explicitly refer to themselves as “brown,” compared to over 80 percent at the country

8
For instance, they might pursue revolving door strategies or exert financial pressure through withholding corporate
taxes, or threatening to boycott policies or stall the economy. Acemoglu and Robinson (2012) provide examples of
extractive elites blocking technologies or increasing spending on education, if and when such policies do not promise
them private gains.
9
These amounts are current incomes only, not taking into account material or financial wealth held by the individual or
his or her family, spouses’ income, government transfers or other incomes not related to the individual's primary
activities. I have insufficient information on 5 participants’ incomes to place them accurately within the top 1-3 percent.

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Occasional Paper 8

level (Peralta 2017). Age within the sample ranges from 28 to 77 years; its average age of 45.6
years is well above the national average of 28. I did not aim to collect a representative sample of
what constitutes “the elite.” Instead, my sample represents a variety of personal characteristics,
including different political ideologies, religious beliefs, sexual orientations, ethnicities and
migration histories, family statuses, and socio-economic backgrounds. 10 Interviews were
conducted in Spanish, recorded and transcribed verbatim. 11

Elite Perceptions of Inequality

To better understand how Mexican elites perceive inequality, I asked participants where they
would locate themselves on the country’s income distribution. Figure 2 plots the participant’s
perceived income rank against his or her actual income level. In line with the above-cited studies,
most of my participants placed themselves on lower ranks than where they actually fall. Although
all participants fall within the top percentile of the country (marked by the black vertical line at
MXN 120,000 in figure 2), only just over one third located themselves in the highest decile,
including the group of intellectual leaders (many of whom work with inequality-related topics),
and three other participants. Although public sector officials and academics tend to gauge their
positions more accurately, outliers exist even among these groups. The remainder placed
themselves anywhere between the upper-middle ranks and as low as the median, fifth decile.
Despite a tendency for those with higher incomes to situate themselves in a higher decile among
private sector participants (whose incomes tend to be higher in absolute terms), no linear
correlation exists between actual income level and perception. Instead, a marked mismatch
between the two occurred at all income levels included in the sample, particularly in the private
sector.

Figure 2: Decile self-placement among the Mexican elite, by monthly income

Source: Author elaboration

10
Elites might differ by location, therefore I restricted participation to Mexican nationals born, or residing for most of their
life, in Mexico City.
11
Three interviews were not recorded.

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 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

How can this phenomenon be meaningfully explained? In the following, I will give an account of
inequality in Mexico according to its elites, to then proceed placing these perceptions within their
particular social world, and bring forward a theoretical explanation for the observed mismatch.

Against stereotypes of elite indifference (Sherman 2017), participants are aware of, and concerned
about, inequality and its negative consequences, which they blame for the country’s violence
epidemic and its endemic corruption. 12 They refer to inequality as a “ticking bomb [and] we don't
know when it will explode” (#4). Despite a unanimous agreement that current inequality levels
are too high, understanding of what exactly inequality is, and what it looks like in Mexico, differs
among participants.

Asked to define the problem, two distinct groups emerged in the sample. On the one hand,
academics and some public officials asserted that maldistributed resources are the core feature of
multidimensional inequality in Mexico. On the other hand, participants, particularly in the private
sector, mainly worry about access to education (and, to a lesser extent, cultural goods, political
rights or legal guarantees) and see individual responsibility as the main determinant of outcomes.
Accordingly, the first group emphasized the policy decisions underlying inequality’s extreme
level, whereas the second overwhelmingly sees inequality as something “natural” and persistent,
but not negative per se, even “to a certain degree just” (#17), as long as “the poor” don’t “starve
to death” (#7).

This cut-off point beyond which inequality will allegedly be too extreme—when people at the
low end of the distribution die of hunger—glosses over the existence of much inequality. The
naturalization of inequality also blurs the distinction between inequality and difference, common
among (private sector) participants. The resulting “normalization” of inequality predominantly
worries the first group above, as this section director in a multilateral institution states:

These apartments right in front, they cost about USD 4000 per square meter. But
when we go out for lunch, you will find all the workers eating on the bare ground.
If that isn’t inequality—caramba!—tell me what is inequality! They are building
luxury things in very precarious working conditions, but it’s seen as something
natural. (#22)

Although all sectors agree that Mexico is currently facing excessive inequality, a repeated
insistence that Mexico has “always” been highly unequal seems sufficient justification for
inequality’s existence (where “always” may start with the Conquista 500 years ago, refer to
Prehispanic caste societies, or the participant’s own lifetime). Accordingly, although participants
are aware of inequality, it seems they don’t know just how big the gap between the poor and the
rich really is. A CEO claims workers think that “this guy [the boss] is earning 10 times what we
are making” (#6), compared to actual ratios that are much higher (over 500:1 in the company
where #33 is employed as a section manager).

Participants tend to underestimate actual inequality both in terms of total range and earning
expectations along the distribution:

At [private university X], I think we were people from the seventh to the tenth

12
Mexico ranked 123rd on the Corruption Perception Index 2016 (Transparency International 2017).

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decile. You end up being closest with those that are like you, eighth-ninth decile
more or less [because] aspirations and expectations about lifestyle [differ]. In
Mexico, somebody from the sixth, fifth decile expects to earn around 20,000
pesos. Somebody from, say, my level couldn’t even pay my children’s school fees
with 20,000! So my aspirations are much higher than theirs.” (#4)

While aspirations might differ, the thresholds suggested overestimate real income levels
significantly. According to INEGI (2016), a—typically 3.9 member—household in the sixth
decile can expect an average monthly income of MXN 11,622 (USD 618); MXN 9,492 (USD
505) for the fifth. Even if the reference to the “fifth-sixth decile” were meant as an estimate of
average incomes instead, the estimates are too low. Some participants claimed to “have no idea”
(#9) about median or mean income levels; those who ventured into numerical guesses invariably
overestimated actual levels. An interviewee placing himself between the eighth and ninth decile
(which would imply a monthly income of MXN 18,046-24,417 [USD 960-1,300]) proposes a
mean income of “20,000 pesos in a household of two” (#1). This compares to an actual average
monthly household income—again, for the typical family of four—of just over MXN 15,000
(including imputed rent; USD 798).

Although poverty is routinely mentioned as a consequence of inequality (and often conflated with
inequality), the social reality that participants are exposed to differs from that of the majority in
the country and perceptions of poverty often lack empirical accuracy and romanticize rural
poverty: “I just grab a mango and eat. What should I worry about?” (#6). Salaries for low-income
public employees that participants consider poor, like police officers, are overestimated by a
factor of 3 (#2). 13 In the majority’s Mexico, 15 percent of the population is chronically
malnourished (Tourliere 2017). The country spearheads world homicide-rankings (only surpassed
by war-torn Syria in 2016), experiencing its highest homicide levels ever recorded in 2017
(Paullier 2017).

More than participants’ awareness of (relative) poverty, their frequent reference to an exceptional
wealth they perceive as far removed from their own position when explaining inequality is
particularly revealing:

The thing is that the gap is really big—I mean the rich people are very rich! They
live in ridiculous opulence, unimaginable. (#10)

To better understand this statement, we need to take a closer look at the world inhabited by these
participants. In the following, I will illustrate the efficacy of mechanisms of “elite preservation”
grounded in the physical, social and cultural spaces experienced by participants. I will first
consider spatial and social discrimination, and thereafter turn to educational institutions.

The Mexican Elite’s (Small) World

Spatial patterns of separation and discriminations

Increasing levels of income inequality and segregation over recent decades have meant that people
grow up in less economically diverse environments. Participants report moving within a very

13
Participants working in the construction and manpower sectors, who pay their workers at (multiples of) the minimum
wage, and those working in media and politics, are however aware of the devastatingly low minimum wage levels.

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 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

small radius of largely overlapping areas within the city where all work, play, and study are
concentrated.

A case in point is the creation of the new urban development north of Polanco colloquially known
as “Slim City” (or the Carso Blocks), referred to above by the international official (#22). It meant
a colonization of formerly popular barrios and wasteland for their conversion into new upper-
class neighborhoods. This kind of urban restructuring also affects the social and cultural planes
by conditioning the provision of social infrastructure (members-only clubs replace public parks
and sports facilities), driving up prices of groceries and education (luxury stores and private
schools crowd out markets and public schools), altering symbolic references (personal drivers
compete with public transport), and flaunting new residents’ conspicuous consumption (vacation
destinations abroad, ostentatious penthouses with rooftop pools). 14

The resultant commodification of public goods and restriction of social spaces to predominantly
private spheres mean that even where elites may be geographically close to non-elites, in effect
there is little overlap in the social worlds they occupy. This prevents those on either side of the
divide from grasping the full extent of inequalities (Mijs 2017). Indeed, all participants report low
levels of interaction with people outside their own socioeconomic groups; towards the low end of
the distribution, most participants only interact with their domestic employees and workers in
their companies, who remain far from the bottom. While low income sectors, both of these groups
tend to earn at least minimum wage, which amounts to about double the income of the absolutely
poor in the lowest decile. 15 Their limited exposure to other contexts of poverty results in
participants’ underestimation of poverty, which can lead them to consider income levels actually
lying around the ninth decile as “poor” (as in the example of the supposed salary of a police officer
above).

A participant mentions the “effort” it takes to escape one’s “own comfort” or “bubble,” while
acutely aware of powerful “filters and paradigms you have as an adult” and “the way we have
constructed society in Mexico” (#19); in other words, social structures in place in his environment
work against the formation of relationships across socioeconomic strata. Such is the rigidity of
this societal feature that the different segments within the elite share important personal features
beyond the fact that they have more economic and/or political power. A young CEO summarizes
these features when explaining why a poor person is considered “somebody from a completely
different world [that] wouldn't be compatible socially or family-wise,” inhibiting interaction:

In Mexico, it’s not just a question of money. It’s a cultural, racial and social
issue. I mean, I am not like that, but the majority of people in the high social
strata don’t like to interact with people they consider indigenous or Indio. (#1)

This statement encapsulates the predominant mechanisms through which socioeconomic in-
groups are created and upheld. On the one side, discrimination is used as a tool to identify whom,
where and how to exclude, enacted for example through structural racism. On the other side,

14
More than simply “normal” processes of gentrification, this example refers to the sudden appearance of a completely
new neighbourhood partially adjacent to and partially on top of an old neighbourhood. Another example of this practice
of spatial appropriation is the high-end neighbourhood of Santa Fe. See Turati (2014) for social consequences of
Nuevo Polanco, and Osorno (2015) on its founder’s perspective.
15
It is not uncommon for participants to pride themselves on paying their domestic employees above minimum wage.
Although the particularities of domestic service mean that they nevertheless often work under precarious conditions,
they do tend to have a regular income, as opposed to large factions of informal workers.

9
Overcoming Inequalities in a Fractured World
Occasional Paper 8

segregation restricts with whom, where and how to interact, using vehicles of classism and
cultural norms. The intimate entanglement of these mechanisms often makes it difficult to
distinguish them. However, prominent examples of such inequality-reproducing micro channels
of privilege transmission include a person’s social heritage/family background, which again is
connected to geographic environments of upbringing and educational institutions. The combined
information about these characteristics help classify peers, as this participant explains:

With the chilangos [inhabitants of Mexico City], I understood how I had to

classify them: what does the father do? In which school did he study? In which
neighbourhood did he grow up?” (#11)

The ensuing categorization system ensures an accumulation of opportunities which selectively

grant access to the exclusive and exclusionary spaces they protect. Overrunning declared
differences in political inclination or occupational sectors within the elite, a group of individuals
emerges that differs markedly from the majority of the Mexican population in terms of both
physical and cultural attributes, while sharing important markers among themselves. As such,
appearance and speech are recurrent themes. Often they are sufficient indicators to establish
individuals’ positions in the social hierarchy, participants assure, making social background in
“classist” Mexico “obvious” to spot by simple “checkpoints,” like accents, educational institution
(#20) or skin color. These markers, moreover, reinforce each other. They increase distance
between those that speak, dress and look “appropriately,” and those that don’t. Besides
discrimination towards the poor, racial stereotyping is pervasive in the country. As the correlation
between income and skin color is an empirical fact in Mexico (Solís et al. 2019), it is difficult to
gauge to what degree these statements are based on observation or prejudice. Irrespectively, for
many participants, this fact seems so obvious and natural that it is scarcely acknowledged as worth
elaborating upon:

You would always think that somebody with caucasian features is from
economically medium-high or high universes. That’s normality in Mexico. (#4)

Participants feel the “special” treatment goes both ways. A public sector official explains that he
cannot use public transport “because of my face […] I am obviously a blondie [güerito]”, which
would increase risk of exposure to violence (#9). On the other hand, one of the few participants
that did not comply with the expected “obvious” features (“I am very brown”) points out that, in
his experience, social standing seems to trump even ethnic prejudice:

I mean, it’s not the same to snub a brownie [morenito] like me when he comes
walking along, or when he arrives at a high-end restaurant in a fancy car
accompanied by four bodyguards, right? As a teenager, if we went to a club, all
my friends that look like you [blond] just went in, and to me they said: “no, this
one doesn’t pass.” And today wherever I go it’s the opposite, they even say “you,
come!”, right? (#20)

These experiences permit a peek into the shaping of “homogenous” social contexts. Since having
friends and contacts from more diverse backgrounds reduces biases in misperceptions of
inequality (Bublitz 2017; Cruces et al. 2013), decreasing opportunities for encounters with the
respective “other” also decrease the capacity to relate to each other.

10
 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

The manifestation of these exclusionary patterns and consequences of ingroup preferential

treatments, independent of political or self-serving motivation, inform individuals’ judgments and
preferences (Dawtry et al. 2015). As such, the interaction with cultural references “typical of our
stratum” (that is, “those higher-class backgrounds”), like “being used to reading Shakespeare”
(#15), constitutes easily identifiable barriers to elite membership. The resultant cultural reference
patterns are deeply engrained and predictive of “class” belonging. Participants’ extraordinary
emphasis on education, scrutinized in the following, corroborates this.

Formal and informal education

Relatively high social mobility spurred by urbanization and industrialization during the 1960s and
1970s sparked a firm belief in education as the means of socioeconomic ascent in Mexico (Solís
2012). For most of society, these patterns have long ceased to exist. Today, overall
intergenerational mobility is low: although there exists some movement in the middle of the
distribution, chances to move from the lowest quintile to the highest are less than 3 percent, while
around half of those born in either the highest or lowest quintile remain there (CEEY 2019).
Notwithstanding, many participants’ blind faith in “education” as a necessity and, combined with
personal effort, sufficient requisite for success persists, as this CEO relates:
Effort, work and education, that’s my line… I am privileged, because I can give
my children education. And my children’s children will be even more privileged
than my children. That’s what I expect, what I aspire to. (#3)

This seemingly neutral statement encapsulates the consequences of accumulation of privileges:

rather than being a social equalizer, education works as a mechanism of stratification, as it
effectively contributes to increasing inequality when the children of the privileged will become
yet more privileged (Friedman and Laurison 2019). Despite a monolithic belief in meritocracy, 16
equality of educational opportunities does not exist in contemporary Mexico (INEGI 2017), where
a degree from a private university can cost more than half a million pesos just in fees. 17 An
increasing bifurcation of formerly public goods into a public-private dichotomy of services shifted
perceptions towards the superiority of its (expensive) private component. According to one CEO,
“in Mexico everybody from the 4th to the 10th [decile] will send their children to private school”
(#4). Although a real phenomenon that holds for public and private sector participants alike, the
actual number among the Mexican population is closer to 20 percent of high school students in
private education (OECD 2015). Besides, a creeping “elitization” of private services cements not
only the hierarchical nature of this dualistic social system, but creates one within the private sector
itself. Participants are acutely aware of this phenomenon:

There is a segmentation within private education and health: it is not the same
to go to the Hospital ABC or just any low-level private hospital. It is not the same
to go to the ITAM, where I studied, or any unrecognized private university. (#4)

This means that private education institutions catering to the elites specifically function as places
of non-interaction with different strata. They offer practical applications of “othering” that
combine meritocratic ideals with classic “classist” structures leading to “a sort of groupism”
(#15). A participant’s casual statement—perceived as obvious—concisely exposes this

16
According to the latest World Value Surveys, the Mexican conviction that hard work leads to success is only
surpassed by Haiti, Trinidad and Tobago, and Yemen, and is on par with India (WVS 2019).
17
For instance, at Universidad La Salle, the inscription costs and fees amount to MXN7 1,303 (USD 3,793) per
semester, or a total of MXN 570,424 (USD 30,350) for a bachelor degree.

11
Overcoming Inequalities in a Fractured World
Occasional Paper 8

amalgamate of structural discriminations:

Somebody descending from the Sierra Tarahumara [i.e. indigenous] wouldn’t be

able to become president of Televisa [the largest broadcasting company]. (#4)

The respective opportunities of the poor indigenous person in the northern mountains and the
Televisa CEO, one of the richest individuals in the country, differ from the very outset. They live
in different “Mexicos” where “different socioeconomic groups have different realities” (#16).
These are also governed by different laws, because “if you have money you can buy justice”
(#13A).

After describing some of the mechanisms creating these dissimilar parallel universes, we can now
turn to the implications of this phenomenon to explain why elites perceive inequality as they do.

Relative Affluence: Re-centring the Distribution

Spatial and social separation thus mean that elites live in their “own” particular world. Their
exclusive “bubbles” condition how they make sense of inequality. Rather than misperceiving
reality, elites seem to understand their own experiences quite well. Where many fail though is in
the assumption that the reality of others is similar to their own (Khan 2015). However, why do
elites seem to worry about inequality in their wealthier-than-average environments?

Despite elites experiencing a truncated inequality structure with regards to the lower end of the
distribution, they do in fact experience large inequalities. Theirs just looks different from others’
because it is encompassed within a fraction of the distribution the rest rarely peeks into.
Effectively, neither elites nor the rest see the whole picture. While elites cut off the lower end, the
rest usually has little insight into how the top looks “on the inside.” The particularity of top income
earners’ perceptional framework is that those they are in social contact with, although not
representative of the entirety of the income distribution, represent a relatively broad income range
compared to other socioeconomic factions—simply because differences between top incomes are
so large. This leads to a perceived lack of upwards relations “all the way up in the tenth decile”
(#2, #4), “or [even] the ninth” (#10).

As differences within the top are almost comparable to those for society as a whole due to the
massive absolute distance between incomes of MXN 120,000 and several million (as in my
sample), members at the lower end of the elite universe feel relatively “poor” compared to those
higher up. The more unequal the overall system gets, the stronger these effects become as a
consequence of the physical and social compartmentalization defining their daily lives.
Participants do appreciate the quality of life they enjoy, considering themselves well-off
compared to those that work poorly-paid jobs out of necessity rather than having the privilege to
choose their activities freely. However, the amount of “exceptional” peers in their surrounding
shifts the baseline of what constitutes “average,” normalizes the extraordinary and reorients the
self with respect to this new “normal.” From their own perspective, their (disproportionately
affluent) universe extends so far upwards that most cannot realistically place themselves at the
very top. This leads to a re-centring of the distributional universe around one’s own position where
the low end is cut by limited exposure to the poor, and the self is re-situated into the middle due
to disproportionate exposure to other wealthy people, which elongates the high end.

12
 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

The ambivalence of being torn between the appreciation of one’s own privilege compared to those
worse off, and awareness of the existence of others infinitely richer, is a constant feature in
participants’ accounts of their lots, including one characterizing himself as “the poor one of the
group”:

There is a level of very rich people that live in another world. I might earn well
[monthly 0.5 million], but I never made real money. I mean, I can’t complain
about anything, I’ve got my assets… Still, life is expensive; I don't have a plane,
I don't have a yacht, and I don't go to stay at the Ritz in Paris. Like these guys
that can decide tomorrow: “let’s go to Paris”, they get their stuff, and they go!
Right? (#31)

Although they would clearly be perceived as rich by the rest of society, within their own world
and frame of reference, they are doing well, but not excessively so. Participants recognize their
relatively affluent position compared to the “poor.” A consequence of the seemingly limitless top
and associated lifestyles is that the “real” rich’s lifestyle is described with awe and sometimes
incredulity, even within the top 1 percent:

They have their own planes. So they take their stuff and say: “let’s go to our
house in [Mexican beach resort] where they have eight rooms.” I consider myself
very well off, very fortunate, but nothing to do with these guys. And I am not
talking about the [Carlos] Slim sort of fortunes, noooo, I’m talking about people
that have 200, 300 million dollars of wealth. Me, I have like, ten, ok. (#31)

In their own universe, many therefore do not count themselves as part of the very top echelons,
and seem to experience similar status anxiety looking up to their “rich” friends, as might be
expected from relatively poor groups. The lack of clear correlation between participants’
perceptions with income levels further confirms that their experience of relative affluence does
not relate to the objective position within the income distribution (or even within the top 1 percent)
they might hold, but to who they are comparing themselves to.

Thus, while segregated from a large part of society in virtually all aspects of daily life, members
of the elite still live in a very heterogenous environment of high inequality at the top. Their self-
placements, rather than a misperception, reflect a reality within this reference frame. Participants
clearly use a different, re-centred reference scale for their estimates, where whom they consider
poor earns incomes around the national average, while those perceived as rich are far removed
from their own—comfortable, but not extraordinary—level.

Affluence thus becomes a multidimensional, dynamic and socially constructed—that is,

relative—phenomenon (analogous to the acceptedly multidimensional, dynamic and socially
constructed concept of poverty). The complex puzzle of differentiated perceptions of inequality
can thus be resolved by resorting to a rather mundane explanation: we have to speak of inequality
as perceived by, rather than something existing independently of reference. An elite’s perception
of inequality differs from that of the rest, because elites inhabit a different world—but one full of
inequality nonetheless. In short, theirs is a relative affluence.

13
Overcoming Inequalities in a Fractured World
Occasional Paper 8

Conclusion
I have shown in this paper that perceptional particularities of the elites can be explained without
resorting to arguments based on alleged manipulations, or difference in individual character often
ascribed to the rich. Instead, the dynamics of the material worlds that elites inhabit tend to be
different from those of the rest, particularly in high inequality contexts with spatial clustering of
wealth. The problem is that distinct elite environments lead them to mistake their (wealthier)
world with the world, thus hiding the reality of the many.

These findings have theoretical and practical implications. Firstly, wealth, as poverty, is a
relational concept, and depends on references that we identify as meaningful. As these differ
significantly, inequality perceptions differ. Elites might exclude the low end of the distribution
from their mental maps. However, whereas for the rest of society “the 1 percent” represents a
black box, elites actually exist inside this most unequal part of the distribution. Members of the
elite, like everybody else, tend to compare their income and social standing to their surroundings
rather than the country mean or general population. And since they experience a different,
wealthier world, they are constrained in their ability to make overall references to society at large.

Therefore, differences within the top need to be better understood. Generalized conceptualizations
of “the rich” as the top quintile, top 10 percent, or even top 1 percent, are not necessarily
illuminating due to the fractal nature of top incomes. Moreover, wealth bubbles (analogous to
poverty pockets) and their multidimensionality need to be acknowledged as a social problem that
leads to side effects like diminished empathy on the individual level and suboptimal distributional
policy for society, rather than part of the natural order of things.

Since perceptions are embedded in the particular social context, and perceptions of inequality—
accurate or not—correlate with redistributional preferences, direct redistribution might seem less
urgent where inequality is perceived as lower, and indirect solutions like the proposed education
and poverty relief can be viewed as sufficient, making the processes observed here antagonistic
to political efforts to reduce inequality. A first necessary intervention to tackle inequality, thus, is
the creation and dissemination of better data on inequality.

Then, space in its physical, social and cultural spheres has to be desegregated to improve
interaction. This could include tailoring public space to purposes of integration, rethinking urban
planning to dissolve particularistic enclaves and encourage usage of public services including
transport. Education and health care systems have to become more inclusive, which will require
investments in infrastructure, itself subject to availability of funds and political will. Achieving
this will take time and other scarce resources in a context of deeply engrained structural obstacles
and cultural beliefs. It will require concerted efforts by public, private and civil sectors of society.
Although costly, such interventions will nonetheless be a lesser price to pay for society than letting
the status quo unleash its full centripetal forces, likely leading towards further social
disintegration. Future research will have to determine the optimal policy responses to the results
presented here, which will have to combine both informational and fiscal interventions.

14
 Seeing Inequality? Relative Affluence and Elite Perceptions in Mexico
Alice Krozer

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