Social, Institutional, and Behavioral Explanations of Consumption and Borrowing of Low-Income Households: Theory and Policy Remedies

Parker Wheatley, College of Saint Benedict/Saint John's University

Abstract

This paper discusses the important role of social, institutional, and psychological factors in the behavior of low-income households, and the paper makes direct arguments in favor of policy interventions to alleviate some the challenges of these households in that context. Qualitative focus group evidence and findings on the current behaviors of low-income families are provided to support and motivate this perspective on consumption, particularly in poor communities. While the data is drawn from a specific region, the observations and findings could be generalized to other communities after accounting for different cultural and social characteristics. The research provides an in-depth understanding of the challenges confronted by low-income individuals at achieving their economic objectives and desires for lives of basic dignity, explores both economic and non-economic motivations, and provides insights that might allow for useful modifications of models and policy deliberation.