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The poor pay more for everyday items like toilet paper because they cannot take advantage of cost-saving strategies like buying in bulk or waiting for sales. Research showed the poor paid 5.9% more per sheet of toilet paper compared to wealthier households who could buy larger packages or wait for lower prices. Having limited funds prevents the poor from stocking up on non-perishables, so they must buy what they need immediately, often at higher per-unit costs. Poverty can effectively create spending traps where the inability to access one money-saving tactic prevents using others as well.

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Save Money

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Valeriu Costea

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Why the poor pay more for toilet paper

and just about everything else

There are several ways to save money on, say, a roll of toilet paper. You can reach for the cheaper
version: the store brand, or the singly-ply TP, or the stuff that feels like packing paper. Or you can buy in
bulk, saving on each roll per unit. Or you can stock up when the deal is good, like when the corner store
offers two packs for the price of one.

The poor, who need all of these strategies, are much less likely to use the last two. They can't afford to,
according to some revealing research by University of Michigan professor Yesim Orhun and Ph.D.
student Mike Palazzolo (hat tip to Michigan Radio).

Using panel data on more than 100,000 American households over seven years, they tracked purchases of
toilet paper, which has the great benefit of being non-perishable and steadily consumed (it's hard to go
without, but we also don't use more just because we happen to have more in the house). That's nearly 3
million toilet paper purchases.

When Orhun and Palazzolo compared households with similar consumption rates shopping at comparable
stores — and controlling for two-ply TP — they found that the poor were less likely than wealthier
households to buy bigger packages, or to time their purchases to take advantage of sales. By failing to do
so, they paid about 5.9 percent more per sheet of toilet paper — a little less than what they saved
by buying cheaper brands in the first place (8.8 percent).

Perhaps this sounds like a subtle discovery about minor household goods. But it supports a larger point
about poverty: It's expensive to be poor. Or, to state the same from another angle: Having more money
gives people the luxury of paying less for things.

In the case of toilet paper, or any number of other storable goods like canned tomatoes, rice or paper
towels, shoppers have to pay more up front to reap savings over time. And the poor often can't afford to
do that — to pay $24 for a 30-pack instead of $5 for a four-pack. Then, because they can't stock up, they
can't afford to wait until the next sale comes around. When the toilet paper runs out, they have to run to
the store for another small quantity of it — whatever it costs in that moment. Because they can't use one
money-saving strategy, they can't use the other, either.

"You can create a poverty trap even around the toilet paper that we study," Orhun says. Middle-
class consumers behave quite differently, she adds. "They buy when the price is right and wait when the
price isn’t. But poor people don’t have that luxury."

She and Palazzolo show that the problem isn't simply that the poor aren't savvy about sales or bulk
buying. They're more likely to use these tactics closer to the beginning of the month, when they have
more cash on hand from paychecks or benefits. Then, they behave more like consumers who have more
money.

Of course, the poor face a lot of other obstacles to reaping savings, too. They may not have access to
larger supermarkets that offer a wider variety of cheaper items. Or they may not have the car you'd need
to transport home 30 rolls of toilet paper, or the closet space you'd need to store them.
The world, in fact, is full of opportunities to save money — if you just have enough money to access
them. If you can afford a Costco membership, you can buy pounds and pounds of incredibly cheap
canned soup. If you can afford Amazon Prime (and have a stable mailing address and credit card), you
can really rack up savings on costly items like diapers. And buying diapers in bulk can mean spending
hundreds of dollars at a time (or borrowing hundreds of dollars from your future self).

Orhun says she started thinking about these spending patterns in developing countries, where cigarettes
are sold in singles and shampoo can come in tiny, pricey sachets. "When I say that, people say, 'Yeah,
yeah, that’s Bangladesh,'" she says. "Well, actually the U.S. isn't a whole lot different when you look at
households on $20,000 or below per year. That’s very little money."

These results, she says, should make us reconsider how poverty can prevent people from making smart
financial decisions. If we simply drop a new supermarket into a food desert, for instance, that doesn't
guarantee that poor people who live right next to it will be able to take advantage of all its savings. One
possible solution is that retailers could consider pushing their deals to the beginning of the month. But
they'd only be incentivized to do that — to help their customers pay less per unit — if they have to
compete for these shoppers.