Global Journal of Human Social Science, E: Economics, Volume 22 Issue 2

Poverty Penalty: A Market-Based Review Wagner Nóbrega [1] Summary- The poverty penalty is the price that the poor pay more than the rich to obtain the same or similar goo ds. To be consistent with the way th is concept is presented in the author who originally deals with it (Caplovitz) and in the author who originally calls it (Prahalad), the understanding of means “similar” concerns a quality standard imposed on the consumer as a condition of its functioning in society. The sociological relationships that determine this pattern, shape, through the institutions participating in the market, the economic ecosystem (so called by Prahalad). In view of this, the fight against that penalty is of questionable success in the absence of interventions to treat the sociological bases from which it is generated, which, in turn, implies that the measurements that lend themselves to identifying the penalty of poverty, need to include the effects of those sociological determinants, in the absence of which, they are useful as an exploratory data analysis, which only suggests the existence of the poverty penalty but does not actually verify it. In order to be consistent with the pioneering authors in the treatment of the penalization of poverty, the concept needs to be understood in the context of markets, or market-based. In this sense, related concepts are presented in the literature, such as “catastrophic expenses”, “out-of-pocket” expenses, “uncompensated expenses”, “consumer detriment” and “double jeopardy”. Taken together as market-based, these concepts point to two different ways of interpreting the penalization of poverty. One, when this last concept is obtained from the analysis of a single market and another, when it relates different markets. This article revisits the poverty penalty concept making it coherent with the approach with which it is originally presented in terms of a single market, leaving the treatment of the concept in terms of the relationship between two or more markets for another article. Emphasis is given to the work of Attanasio and Frayne (2006), as a promising example to measure and test the existence of the poverty penalty latu sensu , as discussed in this article. I. I ntroduction he definition of the penalization of poverty as a greater expense of the poor than of the rich with the same or similar goods is presented with words similar to those originally by Prahalad (2005) [2] , but it can also be inferred with the same meaning from reading Caplovitz (1963), Goodman (1968), or Kunreuther (1973), among the first authors to address the same theme, from similar perspectives. Mendoza (2011), in turn, deals with it in relation to the market, highlighting the role that it occupies as a place where the penalization of poverty takes place [3] , based on what he reinterprets as “forms of exclusion and marginalization faced by the poor within the context of the market system” [4] . Dalsace et al (2012, p. 22), finally, attributes the penalization of poverty to the market, or in their words, “[q]uite naturally, without any particular ill will on the part of the actors in the commercial sector, the market sometimes penalizes the poor.” This article is based on the view that the penalization of poverty stems from the market context. From this, depending on whether markets are considered in a related way or not, the poverty penalty concept is treated from two different perspectives. To this end, it is argued that some concepts can be gathered under the name of poverty penalty, like Mendoza (2011), who considers so-called “catastrophic expenses” as such. In the latter, we include the concepts of “out-of-pocket” and “uncompensated” expenses. We also defend that the concepts of “consumer detriment” and “double jeopardy” be understood as poverty penalty. The concepts of “out-of-pocket” and “uncompensated expenses”, which are, under the name of catastrophic expenditures, require an analysis of the relationship between different markets to define them. The two previous ones, in turn, are treated in the literature on each independent market. The part of the literature that derives the poverty penalty concept from isolated markets, aims to explain how the poor are penalized in each one and, perhaps from the understanding of the market mechanisms of this punishment, point out ways of reducing or solving the penalty dealt with. This is not to say that works along these lines dispense with the application of the poverty penalty concept in a more comprehensive manner. For example, Caplovitz (1963) considers that the fight against the penalization of poverty would be part of a greater fight against poverty [5] , while Prahalad (2005), defends the dissemination of combating the penalization of poverty, in the markets where it is detected, as an economic development project. The part of the literature identified with catastrophic expenditures deals with the penalization of poverty not based on each market in isolation, but on the relationship between some of them. Thus, this literature expands the relativity characterizing the concept, making the comparison between poor and rich involve more than one market. Among these different markets, one is always considered to be of more necessary goods than the other(s), so this line of analysis anchors the poverty penalty in a market in T © 2022 Global Journals Volume XXII Issue II Version I 19 ( ) Global Journal of Human Social Science - Year 2022 E Author: Professor at the Department of Economics at the Federal University of Sergipe, Brazil. e-mails: profwn@hotmail.com, wnecon@academico.ufs.br