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.
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.
The impact of the poverty penalty phenomenon has been observed across a range of products and services, including energy and insurance.
See also
The factors causing poverty and suffering
External links
- Brown, DeNeen L (18 May 2009). "The High Cost of Poverty: Why the Poor Pay More". Washington Post.