Why the Poor Pay More for Toilet Paper—And Everything Else
Research in Action
It’s expensive to be poor, as more money gives people the luxury of paying less for even everyday basics like toilet paper.
Many households in the United States live paycheck-to-paycheck, struggle with income volatility, food insecurity and can have their world turned upside down by unexpected expenses.
Those households that need to save money the most are sometimes the least able to take advantage of money saving opportunities the rest of us take for granted.
Now this can have a host of unpleasant effects on the families that rely on assistance programs such as SNAP. For example, children for families that receive SNAP tend to have more disciplinary infractions and perform worse on exams, the longer it’s been since their family has received this assistance.
Because cash must be used carefully by these households, they try to take advantage of whatever money saving opportunities they can. So when they go to the supermarket for example, they are more likely to buy the cheapest brand.
Two common ways of saving money on everyday purchases are buying in bulk and taking advantage of sales. For example, buying toilet paper can be thirty to forty percent cheaper if you are buying a thirty-six roll pack instead of a four roll pack.
Households can potentially stock up on a product if they see it is available on sale even if they do not anticipate needing it for a while. Both of these opportunities allow households to save money, but also require these households to buy more in the short run than they otherwise would and use more of their limited cash as a consequence.
Unfortunately, our research shows that later in the month as lower income households are constrained for cash they find it harder to buy in bulk and to take advantage of sales.
This indicates that these households are capable of making really smart financial decisions. They are just inhibited from doing so by having a lack of cash on hand.