Paying the cost up front
A study that looked into seven years of toilet-paper-buying behavior in more than 100,000 American households showed that wealthier households were more likely than poorer households to buy toilet paper in bulk and wait for sales. But why is this the case?
Buying in bulk and timing purchases with store sales help consumers reap the reward of savings in the long run, but to do this, they need to pay more money up front. What this means for poorer households is that they miss out on these savings, simply because they can’t afford the up-front cost. This means that because poorer households tend to have to buy smaller quantities of toilet paper, they in turn have to replenish their stocks more regularly, resulting in even more money spent.
Studies have shown that the average person uses 57 sheets of toilet paper per day, which works out to 20,805 sheets (or just under 42 standard rolls) per year. Not being able to buy in bulk and not being able to take advantage of sales means that poorer households end up paying about 5.9% more per sheet of toilet paper than wealthier households, which adds up, especially when you’re using 20,000 units!
Space and time
Other factors that potentially contribute to this phenomenon are transportation, time, and space. For example, if a poorer household does not have a car, and it would take hours to bus to Costco, it’s likely they will end up buying a smaller—and therefore more expensive—quantity of toilet paper. Space is also a factor, because you can realistically only transport so many goods on public transportation, and storing goods like toilet paper at home might be more difficult at poorer households if those households have less storage space, or more people living under one roof.
The economic poverty trap
Because toilet paper is something that most every household buys, it doesn’t expire, and people use pretty much the same amount over time—even if there’s a ton of it in the house—it was a data goldmine showing that it takes money to save money. However, it’s important to remember that the point it demonstrates extends much further than toilet paper, and has wide-reaching economic consequences that perpetuate poverty.
For instance, groceries in general are often more expensive for poorer households because they buy groceries in small quantities at nearby, high-priced corner stores. Because poorer households are often without a car and big, regular paychecks, you won’t see them buying a car-load of groceries at the farther-away, low-priced grocery stores like Safeway or Costco.
Oftentimes, these urban corner stores have higher prices for a few reasons. First, they don’t get the low wholesale prices from buying in bulk that large grocery stores do. Second, real estate is often more expensive for urban corner stores than for large grocery stores. Third, because volume of products is low at corner stores, the stores make fewer sales per worker than the large grocery stores. Because local corner stores cannot afford to be frugal, the high cost of groceries gets passed on to the poor households that don’t have the money, time, or transport to make it to the large grocery store. As you can tell, frugality really is a luxury that not everybody can afford.
The fact that it takes money to save money applies elsewhere, too. For instance, housing: Those who can afford to buy a house can make lower monthly payments than those paying to rent a similar place. This phenomenon that it takes money to save money is everywhere—you just might have to open your eyes to what your life would be like with more or less money to see it.
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