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

treatment of the poverty penalty and the configuration of an approach to it since his work. As for Prahalad (2005), the centrality of the market system, or the market-based analysis for the poverty penalty concept, is present in Caplovitz (1963). In the same way, it is from the specificity of the market for the poor that Caplovitz (1963) discusses the penalties for the poor, treating, therefore, pioneering these issues and in this sequence. The existence of private markets for the poor can be seen in the following quote: “In sum, a fairly intricate system of sales-and-credit has evolved in response to the distinctive situation of the low- income consumer and the local merchant. It is a system heavily slanted in the direction of a traditional economy in which informal, personalties play a major part in the transaction. At the same time it is connected to impersonal bureaucratic agencies through the instrument of the installment contract. Should the informal system break down, credit companies, courts of law, and agencies of law enforcement come to play a part”. (Caplovitz, 1963, p. 29-30) The poverty penalty as a penalization of the poor by the market, highlighted by Dalsace et al (2012), in turn, can be seen in the following passage: “The problem of low-income consumers stems from the same set of forces that have created that special system of sales-and-credit [...] catering to their wants. Any program of action must therefore take into account the conditions that have brought this system into being. [...] this marketing system is in many respects a deviant one, in which unethical and illegal practices abound. Nevertheless, it can persist because it fulfills social function that are presently not fulfilled by more legitimate institutions”. (Dalsace et al, p. 179-180) Like Prahalad (2005), Caplovitz (1963) deals with the penalization of the poor by the market by analyzing each market separately, like the durable goods market, which is his object of analysis. “This book examines such consumer practices among low- income families in New York City. It describes the major durables they own, how they went about getting them, and the difficulties they encountered along this way. It also tells how these families are buffeted by high-powered advertising, exploitative salesmen, and debt entanglement.” (Caplovitz, 1963, p. 2) The similarities described above serve to indicate that, although the term penalization of poverty was not named by Caplovitz (1963), there are enough elements in his work to consider him not only a pioneer in terms of that definition, but, mainly, the one that inaugurates a market-based, single-market and personalized approach to poverty for the poor, which also penalizes them. The differences between the treatment given to the concept by Caplovitz (1963) in relation to Prahalad (2005), in turn, help to identify the potential for development of the concept, as well as the limitations that are imposed on its use. In terms of measurement, while in Prahalad (2005) the proportion between the prices paid by the poor and the rich indicates the poverty penalty, Caplovitz lists all the prices paid by the various ways he considers the poverty penalty in his interviews. Although not directly measuring the poverty penalty, by relating insolvency to the necessary expenditures on health, food and clothing, as part of his task in describing the consumption of the poor, Caplovitz (1963) ends up pointing to what will later become a line of research and will contribute to the poverty penalty concept, called catastrophic expenditures. Measurements in this sense are found in Table 9.15 of that book and an example that summarizes it, in the words of the aforementioned author, is the following: “the proportion of families who have had to put off medical care is generally quite small, but still is more than twice as large in the insolvent group.” (Caplovitz, 1963, p. 130) The concept of penalization of poverty also receives in Caplovitz (1963) a broad foundation in terms of its justification, and clear delimitation, as to what is proposed, or potentiality of the results of its application. The solution to poverty given in Prahalad (2005) by transforming the market characteristics, or the characteristics of the economic ecosystem, is justified in Caplovitz (1963), based on the sociological determinants from which the economic ecosystem originates. In your words, “[C]onsumption in our society, as in many others, is more than a matter of getting and having material conveniences. Equally important, Americans in all walks of life are trained to consume in order to win the respect of others and to maintain their self-respect. These social pressures to consume are perhaps inevitable in a society characterized by a rising standard of living. Compounding the force of a rising standard of living is the fact that most low-income families (many of which belong to minority racial and ethnic groups) have little opportunity to base their self- respect and the respect granted them by others on occupational, educational, or other accomplishments. And this poverty of opportunity may only reinforce the significance of consumption in that pattern which we have called ‘compensatory consumption’”. (Caplovitz, 1963, p. 180-181) This compensatory consumption, however, would not be a way to solve the problem of poverty. In this sense, just like Prahalad (2005), who sees combating the penalization of poverty in the form of social transformation of the economic ecosystem as sufficient to solve the sociological problems that determine poverty, Caplovitz (1963) considers any solution to the consumer problem, even as a compensation, as something limited, if poverty is not eradicated, or in his words: © 2022 Global Journals Volume XXII Issue II Version I 23 ( ) Global Journal of Human Social Science - Year 2022 E Poverty Penalty: A Market-Based Review