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Why the poor pay more for toilet paper and just about everything else

washingtonpost.com

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Re: Why the poor pay more for toilet paper and just about everything else

#41

Post by auggierose »

ars wrote: post #20
parenthephobia wrote: post #17

Earlier quoted context omitted.

No. She's saying that the poor can't save their money, because they don't have the luxury of not having to spend it to stay fed, clothed, and housed.

No, she did not say that. Otherwise why would the timing of the sale (start of month vs end) make any difference?

I didn't even read the article. But obviously, if there is an offer at the beginning of the month, you can buy cheaply and save. If it is at the end of the month, you already had to buy it at the beginning expensively, and you cannot save anything.

That's really simple. I am wondering where your karma points come from.

Re: Why the poor pay more for toilet paper and just about everything else

#43

Post by SilasX »

Eric_WVGG wrote: post #7

Some destitute-college-student friends were telling me that they lived on a $20/week of rice + beans + canned tomatoes; I suggested that I take them out to Costco and for $100 stuff their pantries with ~3 months of supplies. They patiently explained to idiot me that the reason they ate so poorly was because finding $100 was effectively impossible.

Why not loan them the money in return for paying back a portion of the savings? And then reinvest the savings in other modes of greater efficiency, which enables more, etc.

Re: Why the poor pay more for toilet paper and just about everything else

#44

Post by euyyn »

SilasX wrote: post #33
dangerlibrary wrote: post #2

Terry Pratchett said it very well: “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten d…

Sorry, the quote irritates me to no end (doubly so how people trip over each other to copypaste it). In practice, most opportunities are not a pure savings like this where you will end up ahead in every way if only you could borrow the money; usually, you'll end up with more painful feet but more money to spend, as the cheaper shoes aren't completely useless and in need of replacement. If the quote were as true as cl…

I'm buying a house, because downpayment + misc. costs are going to result in less monthly cost (mortgage + HOA + taxes) than the rent I pay now. The difference is bigger than what I'd obtain by just investing that money somewhere safe.

A year ago, with about the same salary but less savings, I wouldn't have been able to meet the 20% downpayment mark, so loan insurance would have make it not profitable. Before that, with even less savings to put as downpayment, just the monthly mortgage payment would have been higher than my rent.

I disagree with your premise that the poor can often get loans big enough to make an impact in their lives. And when they do, they tend to be predatory loans.

Re: Why the poor pay more for toilet paper and just about everything else

#45

Post by 542458 »

SilasX wrote: post #33
dangerlibrary wrote: post #2

Terry Pratchett said it very well: “The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten d…

Sorry, the quote irritates me to no end (doubly so how people trip over each other to copypaste it). In practice, most opportunities are not a pure savings like this where you will end up ahead in every way if only you could borrow the money; usually, you'll end up with more painful feet but more money to spend, as the cheaper shoes aren't completely useless and in need of replacement. If the quote were as true as cl…

I don't think that's quite fair. While the quote oversimplifies it, you too are oversimplifying it. If the boots situation existed your planned boots-loan would never work.

Because poor people are high-risk loans, you'd need to put a significant risk factor on that boots loan if you ever hoped to break even (there's a reason credit cards charge 20+% interest). So now the $100 boots are $130 or more.

Additionally, nobody not already in heaps of debt would ever take the loan, because people hawking predatory loans and money-for-nothing schemes are a dime a dozen in poor parts of cities (cash4gold! payday loans!) and those who don't lean quickly to ignore them all get screwed.

Finally, you're ignoring the psychological aversion to taking on debt, even if it's for the best. Even among fairly well-to-do university students the concept of business leverage seems to come as a bit of a shock, and takes a fair bit of explaining - "But why would you deliberately go into debt?". Imagine trying to explain to somebody below the poverty line that the boots are worth going into debt for!

Re: Why the poor pay more for toilet paper and just about everything else

#46

Post by stvswn »

This analysis ignores inventory costs. Those who can afford to buy in bulk accrue a cost to holding inventory in their dwelling.

This can manifest in two ways: 1) the storage space physically necessary to hold the TP and 2) the capital tied up in owning this before you need it.

To put it another way, maybe poorer people can afford to buy in bulk, but in their apartments they have no place to put a gigantic package of toilet paper. Or, maybe they choose not to tie up $25 in securing future TP when they need that liquidity to ensure they can make a car payment this month.

In either way, they get something of value by not holding inventory in their house. That's why it costs more. It's not completely clear that they'd be better off if they could lock in low TP prices, even if they did have the cash on hand.

Re: Why the poor pay more for toilet paper and just about everything else

#47

Post by stvswn »

cubano wrote: post #14

The poor get financially hosed in so many different ways in the US that singling out toilet paper , of all things, seems almost laughable. How about real killers, like payday loans, bank fees, and paying more for milk, eggs, and everything else at the corner store because you don't have transportation to get to Costco? And if you want next level hosedom, how about the opportunity cost of having limited or no transpor…

Why are payday loans a real killer? Is it because you think short-term, high-interest loans to people with poor credit is bad for the people with poor credit, or are you OK with it in principle but think they should be more upfront about some of the shady things like hidden fees, deceptive tactics, etc.?

Re: Why the poor pay more for toilet paper and just about everything else

#48

Post by SilasX »

euyyn wrote: post #44
SilasX wrote: post #33

Earlier quoted context omitted.

Sorry, the quote irritates me to no end (doubly so how people trip over each other to copypaste it). In practice, most opportunities are not a pure savings like this where you will end up ahead in every way if only you could borrow the money; usually, you'll end up with more painful feet but more money to spend, as the cheaper shoes aren't completely useless and in need of replacement. If the quote were as true as cl…

I'm buying a house, because downpayment + misc. costs are going to result in less monthly cost (mortgage + HOA + taxes) than the rent I pay now. The difference is bigger than what I'd obtain by just investing that money somewhere safe. A year ago, with about the same salary but less savings, I wouldn't have been able to meet the 20% downpayment mark, so loan insurance would have make it not profitable. Before that, w…

The story is trying to illustrate a specific dynamic: because of being unable to spend a little more in one month [1], you end up having to pay a lot more in later months.

You're supporting that by illustrating a situation where being able to come up with a lot of money over a year enables a savings later, which gives a different impression than "look how poor you become from not having $50 one time". I think your example supports my point: being poor has costs, but it doesn't look at all like the dynamic given.

>I disagree with your premise that the poor can often get loans big enough to make an impact in their lives. And when they do, they tend to be predatory loans.

But if the savings is so sharp, then even a predatory loan could reverse the cycle. In practice, it doesn't. So the theory is incomplete.

[1] though inflation since the writing makes the amount larger than it sounds now

Re: Why the poor pay more for toilet paper and just about everything else

#49

Post by ars »

auggierose wrote: post #41
ars wrote: post #20

Earlier quoted context omitted.

No, she did not say that. Otherwise why would the timing of the sale (start of month vs end) make any difference?

I didn't even read the article. But obviously, if there is an offer at the beginning of the month, you can buy cheaply and save. If it is at the end of the month, you already had to buy it at the beginning expensively, and you cannot save anything. That's really simple. I am wondering where your karma points come from.

Like you said, you didn't read the article. It's usually better not to comment if you have not.

But I'll help you out:

Implied was that they had enough money to buy in bulk for multiple months, but had wasted it on other things by the time the end of the month came.

There was another class of people who could not do even that, and could only buy for that one month, they could not buy in bulk at any time. (Which is what you were imagining I was talking about.)

Re: Why the poor pay more for toilet paper and just about everything else

#50

Post by stvswn »

JustSomeNobody wrote: post #15

Every so often I read one of these articles. Thing is, this isn't new information. I've been reading about it since at least the 80's (and I'm quite certain it's been happening since forever). Sadly, nothing every gets done about it. The price of a half gallon of milk will never be half the price of a whole gallon.

Do you think it should be?
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