How Scarcity Affects The Working Poor - The Decision Lab

FinanceSocietyHow Scarcity Affects the Working PoorArash Sharma

0 min read

Oct 27, 2016

All too often, the working poor are unfairly put down as miscreants, reprobates, and degenerates that impede our otherwise thriving Western society. The poor are first marginalized as defective, inadequate and flawed consumers, and then stigmatized for not participating in socially relevant consumer practices. Recent global economic downturns serve as a key source to a greater diversity in the poverty experience. Research suggests that these plights have precipitated the advent of the nouveaux pauvres (middle-class consumers whose social and cultural capital has decreased) and the working poor (consumers that work yet fail to pull above the poverty line or make ends meet) (Hamilton, Piacentini, Banister, et al., 2014).

This article aims to dissuade readers from typecasting the working poor as apathetic and incapable. Specifically, insights from behavioral economics are used to explain why the poor are not poor simply by virtue of their bad decisions. Instead, it is suggested that people make bad decisions because they are poor. Together, capitalistic structures at the macro-level and impaired decision-making at the micro-level render the working poor’s consumer behavior all the more faulty and unstable.

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References

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Bertrand, M., Mullainathan, S., & Shafir, E. (2006). Behavioral economics and marketing in aid of decision making among the poor. Journal of Public Policy & Marketing, 25(1), 8-23.

Hamilton, K., Piacentini, M. G., Banister, E., Barrios, A., Blocker, C. P., Coleman, C. A., & Saatcioglu, B. (2014). Poverty in consumer culture: Towards a transformative social representation. Journal of Marketing Management, 30(17-18), 1833-1857.

Shipler, D. K. (2004). The working poor: Invisible in America. New York: Knopf.

Mullainathan, S., & Shafir, E. (2013). Scarcity: Why having too little means so much. New York: NY.

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Arash Sharma

Government of Canada · Behavioral Economics

Arash is a Behavioural Scientist at the Government of Canada.

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