Consumption, Credit, and Institutions: Using Field Research and Theory to Consider Poverty Alleviation

Abstract

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

Keywords:

• poverty
• consumer behavior
• household finance

Acknowledgements

The author acknowledges the support of William R. Waters Research Grant that supported field research contributing to this paper. The author also wishes to thank Professor Dan Finn for helpful comments at an earlier stage of this project. Finally, the author thanks the editors and the two anonymous reviewers for their helpful comments and suggestions.