Higher economic inequality intensifies the poor’s financial hardship by fraying the community buffer
Nature Human Behaviour
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Jachimowicz, J., Szaszi, B., Lukas, M., Smerdon, D., Prabhu, J., & Weber, E. (2020). Higher economic inequality intensifies the poor’s financial hardship by fraying the community buffer. Nature Human Behaviour, 4 (7), 702-712. https://doi.org/10.1038/s41562-020-0849-2
The current research investigates whether higher economic inequality disproportionately intensifies the financial hardship of low-income individuals. We propose that higher economic inequality increases financial hardship for low-income individuals by reducing their ability to rely on their community as a buffer against financial difficulties. This may occur—in part—because a frayed community buffer reduces low-income individuals’ propensity to seek informal financial support from others. We provide empirical support across eight studies (N = 1,029,900) from the U.S., Australia, and rural Uganda, through correlational and experimental data, and an instrumental variable analysis. On average across our studies, a one SD increase in economic inequality is associated with an increase of financial hardship amongst low-income individuals of .10 SDs. We discuss the implications of these results for policy aimed to help the poor buffer against the adverse effects higher economic inequality imposes on them.
External DOI: https://doi.org/10.1038/s41562-020-0849-2
This record's URL: https://www.repository.cam.ac.uk/handle/1810/302105
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