The poverty penalty describes the phenomenon that poor people tend to pay more to eat, buy, and borrow than the rich. The term became widely known through a 2005 book by C. K. Prahalad, The Fortune at the Bottom of the Pyramid.[1]

An earlier exploration of this was a 1960s sociology study published as The Poor Pay More which examined the ways in which retail patterns and a lack of consumer options allowed marginal retailers such as door-to-door salesmen, "easy credit" storefronts and the sale of installment credit agreements to extract profits from low-income buyers, with fewer options and less sophisticated consumer habits.[2]

The impact of the poverty penalty phenomenon has been observed across a range of products and services, including energy[3] and insurance.[4]

See also

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  The factors causing poverty and suffering

References

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  1. ^ Prahalad, C. K. (2004). The fortune at the bottom of the pyramid (2. print. ed.). Upper Saddle River, NJ: Wharton School Publ. ISBN 0-13-146750-6.
  2. ^ Caplovitz, David (1967). The poor pay more : consumer practices of low-income families (1st Free Press pbk. ed.). New York: Free Press. ISBN 0-02-905250-5.
  3. ^ "Energy and the poverty premium". Fair By Design. 19 Jan 2017.
  4. ^ "New Zealand's insurance poverty premium - Banked NZ". Banked.co.nz. 26 April 2023.
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