Money

Study Finds That Low-Income Households Pay More for Toilet Paper

March 27th 2016

By:
Ingrid Holmquist

Low-income families pay more for necessities such as toilet paper, according to a new study from the University of Michigan’s Ross School of Business, which studied the spending habits of 100,000 households for seven years.

It’s not a lack of financial wherewithal or an inability to sniff out deals that makes the poor pay more. Rather, the so-called “poverty penalty” results from an inability by low-income families to take advantage of bulk deals when they come up because they have to wait to make purchases until payday or until they receive their monthly food stamps (which can't even be used on products like toilet paper).

That means they may pay as much as 5.9 percent more for each sheet of toilet paper.

Bulk Toilet Paper

As an example, a bulk deal for 36 rolls of toilet paper will cost $15, where an individual roll costs $1, according to CNN Money. A family that can afford to pay $15 when the deal is offered has an advantage over those who can't, which could cost the disadvantaged family thousands of dollars over time.

Households that made less than $20,000 annually purchased toilet paper on sale 28.3 percent of the time, compared with families that made more than $100,000 a year, who purchased toilet paper on sale 40 percent of the time, the study found.

Buying in bulk is a way for families ultimately to save lots of money on nonperishable necessities, such as rice, paper towels, toilet paper, soap, etc. When the poor can’t enjoy these minor savings, they’re pushed that much further behind.

In addition, because the poorer families can’t afford to stock up on bulk purchases, they also can’t wait for the next sale when the TP runs out: There’s really no other practical substitute. Paper towels? They're harsh on plumbing systems. Kleenex? Equally costly. A handkerchief? Yuck. Leaves? Ouch.

via GIPHY

The study focused on toilet paper because it's not easily substituted yet is one nonperishable item that is hard to live without.

Here's what the University of Michigan's Yesim Orhun said about the study and its findings:

“Our findings suggest it’s not that poor households can’t do the math or are financially inept. They can be frugal. They take the better deal, when they can afford to.”

The study offers one more bit of evidence that it can be expensive being poor.