The Causes of Poverty (22): Poverty Trap – Why Being Poor Makes You Poorer

The poorer you are, the more things cost. For example, if you’re poor, it’s possible or even likely that you don’t own a car. That means it’s a lot harder to shop around for the best deals. It also means that you’ll prefer to shop closer at home in order to avoid carrying your stuff over long distances. Being poor, you probably don’t have time to spend hours in a bus to do your shopping (for example, you don’t have time because you don’t own a washing machine and have to spend time at the laundromat). So you shop at the corner shop, where everything is more expensive. The stuff there may not be as fresh as elsewhere, which may affect your long term health. Hence, you’ll probably spend more on healthcare and you end up deeper in poverty. It’s also a fact that the diet of many poor people is relatively high-fat, and that obesity is a big problem. Hence even more money goes to healthcare. And then there are the health consequences of having to go to extremes such as organ donation, blood donation etc.

If you want a loan to buy a house or something, you’ll pay a higher interest rate because of the risk that you, with your low income, will someday default. Hence you’re forced to pay rent which may be higher than a mortgage. And you are forced to rent in a low-income neighborhood, which comes with its own costs such as a higher risk of being a crime victim.

If you want a job, an employer may think twice about someone who has a relatively high health risk, doesn’t have a car, doesn’t live close to a business area, and is generally depressed about being poor. Etc. etc. etc. etc. And like this you spiral down until you finally crash.

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