
The double whammy of being poor – making less and getting charged more - ericglyman
https://blog.paribus.co/2015/09/20/the-double-whammy-of-being-poor-making-less-and-getting-charged-more/
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marcoperaza
A few problems with this article:

1\. The absurd proposition that it's unjust that you will find a better deal
if you spend more time looking for one. Of course you will.

2\. The claim that e-commerce is a regressive tax on the poor because
purchases are bigger percentage of the poor's income. You can say the same
thing about any purchase. A burger is a bigger percentage of a poor person's
income than a rich person's income.

Paribus is providing a great service, but this is a marketing/PR article
pretending to be serious economic commentary and analysis. It's just hopping
on the bandwagon of a narrative that's politically en vogue (that the world is
stacked against the poor).

~~~
ericglyman
Hey Marco,

Thanks for the kind words on the service. On your feedback, here's my take:

1\. Stepping back, isn't it more absurd that people are, by default, charged
more unless they spend significant time dealhunting? The claim is not that the
disparity itself is unjust, just that it's time for this to come to an end.

2\. For all of the biggest e-Commerce players (Amazon, Walmart, etc.), their
biggest business lines (and ones where they're investing the most) are in the
sales of basic necessities (food, household goods, etc.). So considering how
dynamic pricing will impact people (esp. re: basic necessities) is important.
I'm not sure why you're dismissing the key point so quickly -- if we care at
all about helping bridge the income divide, we should care about helping the
poorest get the most affordable prices.

In any case, I wrote the article because it really did shock us. Joe is a real
person and a friend and we hope it does some good to show a small slice of
what we're seeing.

~~~
rdancer
1\. To paraphrase what the fine folks in the US like to say, the world doesn't
owe you a deal.

The merchants do deals not for the customers, but for themselves: to maximize
profit, increase market share, and maybe achieve some other goals. If you guys
are communists, and think corps are evil, and the poor are exploited, that's
fine, but how can you hope to successfully operate in any industry without
comprehending the basic motivation of the principal actors?

~~~
ericglyman
We just have a different view.

In a highly-competitive marketplace, the stores that treat people right will
win volume. Those who win volume take the market. So don't rip customers off
(or be extremely quick to correct it when you're called out) and you'll gain
customer loyalty and all the subsequent transactions.

The world doesn't owe you a deal, but then again, the customer doesn't owe you
their next purchase. Life is long. As a store, your job is to keep earning
customer trust so they come back.

~~~
ninkendo
How do you reconcile your view of how you think things are with how they
actually are?

ie. if what you're saying were true, why are there still businesses that only
give deals to people who hunt for them?

~~~
ericglyman
There are all kinds of players along the spectrum. It's just that the ones
that grow to become the largest (Amazon, Walmart, Costco, Jet, etc.) tend to
operate this way (and offer Everyday Low Prices).

------
jacquesm
There are many examples of this and some even more direct: poor people have to
deal with debt collectors more frequently out of necessity and as a result end
up paying both their original debt+whatever the debt collectors tack on.

In many cases the added on part is larger than the original debt.

Then there's buying quality products that last longer by the wealthy and
crappy products that need to be replaced (far) more frequently by the poor and
many more examples like these.

~~~
briandear
Debt collectors are a result of using credit or spending being one's means.
There are plenty of poor people that don't buy a 60 inch TV from Best Buy and
then default on the payment. A huge portion of debt collectors are collecting
on things like department and electronic store credit cards. The ability to
manage money (even if you don't make much of it) is not unique to just the
rich. There's a big difference between being poor and being irresponsible.
Most debt collectors are the result of being irresponsible.

~~~
manicdee
My father ran a budget counselling service at the local church. The vast
majority of people the church was helping were low income families who were
struggling to make ends meet, and were considering things like payday loans in
order to simply put food on the table.

They were not irresponsible people: they had smart phones but no landline:
Smartphone for $60/month versus landline for $70/month, they were making some
smart decisions about where to spend their money.

The issues they did have were not being in contrl of their budgets. For the
majority of these families, just learning about the envelope budget system
helped them regain control. Also learning how to shop around more carefully
and pay attention to whh coupons were useful and which were merely advertising
helped.

The catch for low incme families can simply be not knowing how to be
ruthlessly disciplined with their budget.

There is a vast gulf between, "being irresponsible," and "not knowing better
ways to manage their money."

Poor people are often poor because they do not have access to the same
opportunities as you: inadequate education, poor training, naiveté about
wealth-building habits, and so on.

You can help make the world a better place by not perpetuating the myth that
poor people are popr because they are undisciplined, lazy, stupid, or
irresponsible.

Even better, find a local support group for low income families and see how
you can provide assistance.

~~~
jzd
"200-600 dollar smartphone with a 60/month plan"

If I was so poor as to barely afford food I would be living either without a
phone or with a $20 shit-phone on a bare bones prepaid plan. Costs hundreds
less and gets the same shit done (person-to-person communication)

~~~
vacri
Ah, the good ol' "if I was poor, I'd be awesome at it!" argument.

Whether or not you're right about how you'd actually behave, it's irrelevant.
We can see how poor people actually do behave, and we can look to solutions
that work empirically rather than philosophically.

~~~
jzd
Very good point

------
bane
I was reasonably poor once (even did a stint homeless living out of a motel).

The basic assertion: you make less and end up being charged more is in a sense
"correct".

For example: if you're poor, you'll probably shop at a discount retailer and
buy discount or knockoff clothes, which will fall apart and need replacing
faster than if you had just bought more expensive clothes. Over time, the
replacement costs will add up and you'll "pay more" for clothes.

Another example: if you buy in bulk, you can get some items cheaper, but poor
people tend to buy in small quantities (e.g. cigarette and alcohol "singles"
are a phenomenon that only exist in poor areas for example)

This all sounds kind of stupid, but there's a rationale for it that makes
sense from the inside, here's a scenario:

I just paid rent, I have $100 left in my bank account and payday isn't for 2
weeks. I work a physical labor job and my work boots need replacement. Do I?

a) Buy the $29.99 on sale boots at Walmart and hope they last for a couple
months?

b) Buy the $259.99 boots at the high-end boot store and they'll last for a
couple years?

c) Buy the $84.99 boots at the discount shoe store and they'll probably last
for 6 months to a year?

Of course the answer is a). This leaves me with $50 to eat on for two weeks. I
can't afford b) no matter what so it may as well not exist and c) leaves me
starving before payday.

You count pennies when you're poor, you know exactly how much small amounts of
things cost because you spend all your time buying small amounts of things and
balancing out the bottom few rungs of Maslow's Hierarchy of Needs against your
daily purchases.

Getting out of this cycle is _very_ hard. It's not like you can save up enough
to be worthwhile. Even with $5/mo left over at the end of every month, it
takes 52 months to save up to buy the b) boots.

This means also that you live in a constant state of emergency. Literally
_everything_ is an emergency -- and this short circuits your ability to
prioritize and make what seems like rational decisions. It also means that
whatever spare money/time you have you may as well spend on stupid bullshit
because you've convinced yourself it won't make any difference anyway.

It really is a vicious cycle.

~~~
yummyfajitas
If this theory is true, then there should be some category of goods where the
poor spend more than the non-poor. What category of goods is it?

[http://www.bls.gov/cex/2014/combined/income.pdf](http://www.bls.gov/cex/2014/combined/income.pdf)

~~~
DanBC
> then there should be some category of goods where the poor spend more than
> the non-poor. What category of goods is it?

There are many items where poor people pay more for smaller quantities, and
end up buying much less of that product over time.

"Sachet marketing" will sell individual servings of shampoo to poor people. A
poor person can't afford a cheaper-per-portion bottle, and can't afford to buy
a sachet every day, and so will wash their hair once a week (52 sachets a
year) instead of buying bottles and washing their hair - with 2 passes ("rinse
and repeat").

The total spend is obviously less, but it's not controversial to suggest that
poor people spend more for less than wealthy people, but if you compared
similar use the poor person would have to spend considerably more.

~~~
yummyfajitas
This is possible. Do you have evidence that this occurs to any significant
degree?

~~~
OrwellianChild
Would you accept the basic notion that items bought in bulk cost less in
per/unit or per/volume terms than individually packagaged items as evidence?

------
yummyfajitas
The article misrepresents the federal reserve study it uses to make it's case.
It claims that the federal reserve study implies rich "have more leisure time
so they get to know prices and deals well".

But this is nonsense. The federal reserve study doesn't study rich and poor at
all - it studies the unemployed vs employed. Specifically, the article shows
that _unemployed_ people spend less time shopping than _employed_ people. Is
the article really claiming that unemployed people have less leisure time?

In fact, the article actually claims that reduced working time causes a
(small) drop in shopping time.

~~~
ericglyman
You're straight up wrong. Read the piece. Quote below:

"For instance, total shopping time for households with an income between
$100,000 and $150,000 (category 5) is 5 to 7 minutes greater (per day) than
average shopping time by an individual in a household with income in the $0 to
$24,999 bracket (category 1). After controlling for various individual
characteristics (column I), this is robust to including both time and state
(columns II and III), as well as labor force status dummy variables (column
IV)."

~~~
yummyfajitas
From the article:

"The results indicate that a 1 minute decline in market hours is associated
with a 0.04 minute decline in shopping time."

The correlation between income and shopping time is simply not caused by
leisure time. This should hardly be surprising - leisure and income are
inversely correlated (i.e., the poor have lots of leisure, the rich very
little).

~~~
shkkmo
> leisure and income are inversely correlated (i.e., the poor have lots of
> leisure, the rich very little).

Do you have any data for that? I rather doubt that it is very solid if it
exists at all. There are a large number of poor people working more than two
jobs and more hours than the rest of the "middle-class". Additionally, many of
the jobs from the upper end of the middle-class tend to often require longer
working hours.

~~~
yummyfajitas
Most poor people don't work at all, and about half of those who do are only
part time.

[http://www.bls.gov/opub/reports/cps/a-profile-of-the-
working...](http://www.bls.gov/opub/reports/cps/a-profile-of-the-working-
poor-2013.pdf)

Doesn't cover multiple jobs, but it shows most poor folks don't work at all,
and a little under half of those who do are part time.

Do you have any data suggesting a significant number of poor people work
multiple jobs, or work more than 50 hours/week?

~~~
shkkmo
> Most poor people don't work at all, and about half of those who do are only
> part time.

If by "most" you mean ~10% (or were you including children and old people?)

>I can't find any solid statistics, but there is certainly evidence for a
'significant number': [http://poverty.ucdavis.edu/policy-brief/low-wage-work-
uncert...](http://poverty.ucdavis.edu/policy-brief/low-wage-work-uncertainty-
often-traps-low-wage-workers)

I wasn't specifically thinking about people below the poverty line, but was
rather intending to include the "working-class" as well.

------
vacri
Characterising this as "the 1%" is a disservice to the concept. You don't have
to be "1%" wealthy to do what's in the article.

Also, I question _" The wealthy build a better sense of when prices are low
and deals are good."_ \- the poor are very aware of how much their food costs,
for example. Wealthier people aren't, because they're not counting pennies. A
question illustrating this, taken from Yes Minister: "How much is a pound of
margarine?" The _really_ wealthy, the 1%, aren't going to have a good idea.
But the poor are aware of the costs of their staple foods.

The underlying point of the article isn't a bad one, but extrapolating "this
dude orders clothes sight-unseen from his smartphone every two weeks" into
"the poor have it so tough" is a strange path to take.

------
refurb
Did I miss something? The deal was only offered via the website and not via
mobile. What does that have to do with being poor?

~~~
Mz
Lots of poor people are online via smartphones, not desktop computers. That's
how.

~~~
refurb
If they had shown some data to back that up it would have been nice.

I've heard anecdotally that's true, but I've never seen data.

I've also heard about the price discrimination that goes on based on the
browser (Safari = user with $$$). Are we sure it wasn't just that?

~~~
Mz
Years ago, I took a college class called Homelessness and Public Policy. I am
also currently homeless and have been on the street for more than 3.5 years. I
think that is about as poor as you can get in the U.S.

I bought two tablets to go homeless. I currently own a tablet and a laptop.
But I assure you I am really weird for a homeless person. Tablets are not
normal on the street. Cell phones, including smart phones, are very normal on
the street.

I can't give you precise figures and this is not a formal survey. It is
firsthand personal observation. I spent six months in downtown San Diego
participating in various homeless services programs. This exposed me to dozens
or hundreds of other homeless individuals at a time. (The participation at one
of the meal sites was upwards of a hundred individuals per day and I
participated in that regularly for about six weeks.)

Does that work for you? (Sincere and respectful question.)

------
ams6110
Paribus: I've never heard of you. I don't know what you do. You have no link
to your website on your blog.

~~~
ericglyman
Hey -- didn't want to distract from the article. Just added in two hyperlinks
to our homepage.

We were part of the YC Summer 2015 Class. Link to our homepage here:
[https://paribus.co/](https://paribus.co/)

------
frogpelt
The example I've noticed is the poor person who doesn't have means for
transportation will usually go to the closest source for staple items, like a
convenience store. Milk and bread are 50-100% at these stores versus a
traditional grocery store and they rarely put things on sale.

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geoffwoo
Cool to see screenshots of price discrimination in practice

~~~
ericglyman
Thanks man!

Was pretty surprising when we first saw it, but have seen since that lots of
sites now serve different prices/coupons depending on the device you use to
access.

------
shkkmo
I agree with the point that this article makes and think we should be
discussing the questions article tries to raise.

However, the article is a poorly written piece of PR. It makes several
mathematical errors, mis-represents the study on shopping time, and fails to
provide any evidence to back up it's critical point of "e-commerce today acts
like a regressive tax".

Why is this crap on HN?

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thadd
Inflation- the secret tax

