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What Is an “Essential” Purchase for a Low-Income Family?

Do lower-income families need and deserve access to fewer things than everyone else?

As a society, we seem to think so, revealing a “grim double standard,” finds a new study from Serena F. Hagerty, a PhD candidate at Harvard Business School and Kate Barasz, a Harvard Business School assistant professor.

In 11 experiments, Hagerty and Barasz find that—relative to higher-income earners—people with lower incomes were judged more harshly for what they chose to buy, even when the two groups made identical consumer choices.

It’s a concept Hagerty and Barasz call “permissible consumption,” or what is deemed socially acceptable (or not) for others to purchase. As they find, lower-income people are afforded a much narrower range of “permissibility.”

Such a notion is already pervasive in popular culture. For instance, Syrian refugees were shamed on social media after being photographed with smartphones, and federal agencies have reprimanded how lower-income individuals spend relief funds after natural disasters. Even groceries aren’t safe, Hagerty and Barasz note in the study. As one example, they point to an article in the satire publication The Onion headlined, “Woman A Leading Authority On What Shouldn’t Be In Poor People’s Grocery Carts.”

In a paper published this month, Inequality in Socially Permissible Consumption, Hagerty and Barasz seek to demonstrate this phenomenon empirically and explain its causes.

This study’s results could have implications for everything from social and economic policymaking to charitable donations and everyday interpersonal interactions.

What is permissible?

In one experiment, participants read about a man named Joe who had won a $200 gift card in a community raffle and decided to buy a $200 flat-screen television. Participants were divided into two groups: in one, Joe was described as lower-income, or in the bottom 25 percent of US households, while in the other, Joe was described as higher-income, in the top 25 percent of US households. In other words, the only thing that differed between the two scenarios was the consumer’s income. But that made a big difference in participants’ perceptions, since they judged lower-income Joe’s TV purchase significantly more negatively—less responsible, less thoughtful, more impulsive—than the exact same purchase made by higher-income Joe.

In another experiment, a nationally representative panel of over 1,100 participants read about a soon-to-be new parent named Alex, who was described as either a high- or low-income earner. Alex was considering a pair of child car seat options. Both seats had equivalent safety ratings, but one came with additional convenience features and an almost 20 percent higher price tag. Higher- and lower-income Alex both bought the more expensive car seat; however, lower-income Alex was judged more negatively. This was true even when controlling for participants’ income levels.

A third experiment asked participants to rate the “permissibility” of 20 household items in the US Department of Labor’s Consumer Price Index, purchased either by a lower- or higher-income consumer. The items included internet services, washing machines, mobile phones, and laundry services. Here, 19 of the 20 items were seen as significantly less permissible for the lower-income person, with only personal care products, like shampoo or toothpaste, being the exception.

What causes this behavior?

In addition to demonstrating differences in permissibility, Hagerty and Barasz sought to investigate why this occurs. They found that people form psychological permissibility judgments based on how necessary they think the item is for the buyer. The more necessary they viewed an item, the more permissible it is deemed.

However, even “necessity” is subject to a problematic double standard, according to the researchers. In another study, participants read about the Jacksons, a hypothetical family looking for a new home.

Participants rated how necessary they considered a variety of housing attributes to be for the Jacksons including a garage, a safe and secure neighborhood, interior walls in good condition, and natural light. Of the 20 attributes tested, 17 of them were rated significantly less necessary for the lower-income family.

“The gap emerged for things like a practical floor plan, outdoor space, and air conditioning,” Hagerty says. “It shows people do this across the board and even with very seemingly basic amenities. We seem to believe the poor have more basic basic needs.

Implications

The implications are unsettling.

“If people judge lower-income individuals more harshly for buying things they do not ‘need,’ but the definition of ‘need’ changes—narrowing and becoming more restrictive for precisely those individuals—a bleak predicament arises,” the researchers write. “Not only do lower-income individuals face harsher interpersonal judgment for deviating from ‘necessary’ purchases, but there are fewer items that fit within the permissible categorization of ‘necessary’ in the first place,” they write.

To illustrate, take the case of the gift card experiment. Participants were shown two gift cards that would be given away: a $100 credit to Trader Joe’s for groceries or a $200 gift certificate to Best Buy for electronics. For one group of participants, the recipient was described as a higher-income individual; for the other group, the recipient was described as lower-income. Participants then selected the gift card they believed was most permissible for the research team to give away.

While 53 percent chose the (objectively more valuable) Best Buy gift card for the higher-income recipient, only 25 percent of the participants did so for the lower-income person.

The implication? Study participants effectively allocated more money to the higher-income person—an average of $152—compared to only $125 for the lower-income person. It was a simple demonstration of the potentially far-reaching behavioral implications this implicit double standard may have.

The research was completed before the COVID-19 pandemic forced tens of millions out of work, and the US Congress approved a $2.2 trillion relief package to stave off what’s predicted to be the deepest recession since the Great Depression. Yet, the results reveal a troubling pattern as policymakers, charities, non-government organizations, and ordinary people grapple with the economic fallout.

For instance, genuine debates are already underway in the wake of COVID-19. One example that’s emerged in the pandemic is internet accessibility, a debate already well-publicized at Federal Communications Commission public meetings in recent years, as commissioners deliberate over what level of connectivity is necessary or not for Americans to have.

“There’s been a lot of press coverage about how broadband internet, or the lack thereof, has hurt a lot of rural and lower-income Americans because they can’t participate in an online school. They’re literally cut off from the world at this point,” Barasz says.

“Our research speaks to this debate. If you’re framing the policy question as ‘is the internet necessary?’ but implicitly, you’re asking ‘is the internet necessary for lower-income people?’ our work suggests you’re going to come to different answers,” she says. “And that is problematic.”

More broadly, Hagerty and Barasz see their work as contributing to the broader discourse on income inequality, which was already the subject of heated policy debate before the pandemic hit. Hagerty and Barasz say their research adds more nuance to the depths of its impact.

As they write, “We call attention to another dark side of pervasive economic inequality: Lower-income individuals are restricted not only by what they can financially afford to purchase, but also what they are socially permitted to purchase.”

Read the full research article: Inequality in Socially Permissible Consumption

Source: Harvard Business School 

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