SB IPB University Lecturer: The Phenomenon of the “Fake Rich Middle Class” Sounds the Alarm on the Financial Resilience of the Middle Class
Recently, the term “fake rich middle class” has been widely discussed on social media. This phenomenon describes a group of people who appear to be well off in terms of lifestyle, but actually have a fragile financial foundation.
IPB University Business School lecturer Dr Tanti Novianti explains that this phenomenon is related to the dynamics of middle class growth in developing countries, including Indonesia. Over the past two decades, economic growth has led to the emergence of an increasingly large middle class.
“The World Bank defines the middle class as a group with purchasing power that can meet basic needs while also accessing non-essential consumption such as recreation, education, and technology. However, behind this increase in purchasing power, there is a phenomenon known as the fake rich middle class,” she said.
According to her, this term refers to a group of people who appear to be well off, owning the latest gadgets, frequently going on vacation, or actively visiting cafes and shopping centers. However, the reality is that they have weak financial resilience due to minimal savings, investments, and financial protection.
Dr Tanti explained that this phenomenon is influenced by a combination of economic, social, and psychological factors. One of these is an economic growth pattern that encourages consumption rather than asset formation.
“When income increases, many households experience lifestyle inflation, which is an increase in living standards that follows the increase in income. On the other hand, access to consumer credit such as credit cards, vehicle installments, and pay-later services is becoming easier,” she explained.
In addition to economic factors, she said that social pressure also plays a major role. In competitive urban societies, consumption often becomes a symbol of social status. “This is in line with the theory of conspicuous consumption introduced by Thorstein Veblen, which is when consumption is no longer just about fulfilling needs, but also a way of showing social status, wealth, or prestige,” explained Dr Tanti.
In the digital age, social media further reinforces this pressure. Lifestyle standards displayed through vacations, expensive restaurants, and branded goods are often used as benchmarks for success. According to Dr Tanti, this situation gives rise to the demonstration effect, which is the tendency for individuals to imitate the lifestyles of other groups they perceive as more successful or higher in status in their environment in order to gain social recognition.
“The desire to appear successful often makes people display prosperity, even though their financial condition is not yet stable,” she added.
She also highlighted low financial literacy as a factor that reinforces this phenomenon. Many people do not have an adequate understanding of the importance of emergency funds, debt management, or medium- and long-term investments.
According to Dr Tanti, without savings, investments, or productive assets, an increase in income does not automatically result in sustainable prosperity.
“Strengthening the middle class requires a more solid foundation. A strong middle class is not only characterized by consumption capacity, but also by the ability to build assets, manage risks, and maintain long-term financial stability,” she concluded. (AS) (IAAS/EPK)
