Poverty penalty

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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]


  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.

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