News and Politics | August 23, 2008 | 14 comments

Low income? No car? Need groceries? Expect to pay "ghetto tax"

source: http://www.redorbit.com/news/health/1530974/lowincome_no_car_expect_to_pay_more_for_grocerie...

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TravG73
Households located in poor neighborhoods pay more for the same items than people living in wealthy ones, according to a new study in the Journal of Consumer Research.

Author Debabrata Talukdar (Columbia University) examines the impact of what has been dubbed the "ghetto tax" on low-income individuals. His study found that the critical factor in how much a household spends on groceries is whether it has access to a car. "Arguably, as the bigger, more cost-efficient stores move out, the poor increasingly are likely to find themselves choosing between traveling farther to purchase nutritious, competitively priced groceries or paying inflated prices for low-quality, processed foods at corner stores," Talukdar writes.

According to the findings, those without access to cars—which are exclusively poor households, but include only 40 percent of poor households— pay higher prices for groceries than households with access to a car (whether wealthy or poor).

Lacking mobility means consumers buy from the nearest neighborhood store rather than larger regional or national grocery chains, which have lower prices.

The author believes the poor aren't being intentionally slighted. "Stores' pricing and location decisions in most instances are guided by competitive factors rather than any bias against the poor or their neighborhoods," Talukdar writes.

Given the extreme inequality in access to affordable groceries, the author has suggestions for a more equitable solution. "One suggestion would be to explore the possibility of encouraging 'co-operative stores,' which spreads the ownership among a relatively large group of stake-holders within the poor community while at the same time increasing its operational economies of scale. Another possibility might be to consider joint ownership or management of franchises of selective stores in the poorest neighborhoods by the corporate owners of big grocery chains and poor residents."
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14 comments // Low income? No car? Need groceries? Expect to pay "ghetto tax"

  • stratuscloud9
    • 0
      stratuscloud9  

    • I think more affordable, safe, and available public transportation would be a remedy for this problem -- and we're already working toward it since the beginning of the energy crisis. More competition = more competitive pricing.

    • 3 years ago
  • reneelikeshugs
  • huntre
    • 0
      huntre  

    • How about a K-Mart that, because of it's location in an inner city, jacks up it's prices on baby products and such because it knows it has a captive, non-driving, customer base? I proved this by going to K-Marts located in the suburbs and comparing prices on the very same products. Once my letter appeared in the local paper, the sh*t hit the fan and prices, for the most part, were corrected.
      Moral: It pays to follow-up to make sure what you do actually makes a difference.

    • 3 years ago
  • outtheinside
  • AliciaJC
  • bss05g
    • 0
      bss05g  

    • I am happy that the article said that it didn't appear that the stores were purposefully targeting the poor because that is just not the case.

      It can all be described by using profit margins, walmart needs to make XXXX dollars a day, but they sell tons of stuff to many many people, their for the profit margin for each person and each item doesn't have to be that high because they can spread it to many people. at your local corner store they need to make XXX dollars a day but may only have ten or twenty customers if it is a bad day, they still have to make money so they have to increase the profit margin. Profit margin being the difference from what they the store pays for an item and the marked up price you pay.

    • 3 years ago
  • teddy14
  • stratuscloud9
  • outtheinside
  • SurfingMonkey
    • 0
      SurfingMonkey  
    • teddy14:

      Thats not totally true. I moved in a poor part of the inner city a year ago. I am very disappointed with my decision. I thought I would walk to the grocery store thats really close to my apartment. But the prices are ridiculous! I own a car, mainly to be able to go see people out of town and such, so I would only factor in the price of gas. Its worth it for me. I get better prices on my food by driving 5 min!

    • 3 years ago
  • extblues
    • 0
      extblues  

    • This is happening in mid sized cities like the one I live in. The "big box" stores are located at the very edges while, as you move toward the center, slightly more expensive independent grocers and so-called "convenience" stores are dominant.

    • 3 years ago
  • Bwittany
  • knightlynight200
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