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  • July 2020
  • Article
  • Nature Human Behaviour

Higher Economic Inequality Intensifies the Financial Hardship of People Living in Poverty by Fraying the Community Buffer

By: Jon M. Jachimowicz, Barnabas Szaszi, Marcel Lukas, David Smerdon, Jaideep Prabhu and Elke U. Weber
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Abstract

The current research investigates whether higher economic inequality disproportionately intensifies the financial hardship of low-income individuals. We propose that higher economic inequality increases financial hardship for low-income individuals by reducing their ability to rely on their community as a buffer against financial difficulties. This may occur, in part, because a frayed community buffer reduces low-income individuals’ propensity to seek informal financial support from others. We provide empirical support across eight studies (sample size N = 1,029,900) from the United States, Australia, and rural Uganda through correlational and experimental data as well as an instrumental variable analysis. On average across our studies, a 1 s.d. increase in economic inequality is associated with an increase of financial hardship among low-income individuals of 0.10 s.d. We discuss the implications of these results for policies aimed to help people living in poverty buffer against the adverse effects higher economic inequality imposes on them.

Keywords

Economic Inequalty; Economy; Income; Equality and Inequality; Poverty; Civil Society or Community

Citation

Jachimowicz, Jon M., Barnabas Szaszi, Marcel Lukas, David Smerdon, Jaideep Prabhu, and Elke U. Weber. "Higher Economic Inequality Intensifies the Financial Hardship of People Living in Poverty by Fraying the Community Buffer." Special Issue on Racism in Action. Nature Human Behaviour 4, no. 7 (July 2020): 702–712.
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About The Author

Jon M. Jachimowicz

Organizational Behavior
→More Publications

More from the Authors

    • April 27, 2022
    • Journal of Economic Surveys

    Inequality in Researchers' Minds: Four Guiding Questions for Studying Subjective Perceptions of Economic Inequality

    By: Jon M. Jachimowicz, Shai Davidai, Daniela Goya-Tocchetto, Barnabas Szaszi, Martin Day, Stephanie Tepper, L. Taylor Phillips, M. Usman Mirza, Nailya Ordabayeva and Oliver P. Hauser
    • Nature Reviews Psychology

    Embracing Field Studies as a Tool for Learning

    By: Jon M. Jachimowicz
    • March 30, 2022
    • Harvard Business Review (website)

    To Retain Employees, Support Their Passions Outside Work

    By: Lauren C Howe, Jon M. Jachimowicz and Jochen I. Menges
More from the Authors
  • Inequality in Researchers' Minds: Four Guiding Questions for Studying Subjective Perceptions of Economic Inequality By: Jon M. Jachimowicz, Shai Davidai, Daniela Goya-Tocchetto, Barnabas Szaszi, Martin Day, Stephanie Tepper, L. Taylor Phillips, M. Usman Mirza, Nailya Ordabayeva and Oliver P. Hauser
  • Embracing Field Studies as a Tool for Learning By: Jon M. Jachimowicz
  • To Retain Employees, Support Their Passions Outside Work By: Lauren C Howe, Jon M. Jachimowicz and Jochen I. Menges
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