Higher economic inequality intensifies the financial hardship of people living in poverty by fraying the community buffer

Jon M. Jachimowicz, Barnabas Szaszi, Marcel Lukas, David Smerdon, Jaideep Prabhu, Elke U. Weber

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

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 (sample size N = 1,029,900) from the United States, Australia and rural Uganda, through correlational and experimental data, as well as an instrumental variable analysis. On average across our studies, a 1 s.d. increase in economic inequality is associated with an increase of financial hardship among low-income individuals of 0.10 s.d. We discuss the implications of these results for policies aimed to help people living in poverty buffer against the adverse effects higher economic inequality imposes on them.

Original languageEnglish (US)
Pages (from-to)702-712
Number of pages11
JournalNature Human Behaviour
Volume4
Issue number7
DOIs
StatePublished - Jul 1 2020

All Science Journal Classification (ASJC) codes

  • Social Psychology
  • Experimental and Cognitive Psychology
  • Behavioral Neuroscience

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