Skip
Current Issue
This Month's Print Issue

Follow Fast Company

We’ll come to you.

3 minute read

Toilet Paper Explains How Expensive It Is To Be Poor

When you can't afford to buy in bulk or take advantage of sales, basic staples that we take for granted suddenly get a lot more expensive.

Toilet Paper Explains How Expensive It Is To Be Poor

Illustration: milagrosvita via Shutterstock

The poorer you are, the less likely you are to be able to get a good deal. A new study looks at toilet paper as a classic example: It's cheaper to buy in bulk, but if you don't have much cash on hand, you'll probably end up buying just a couple of rolls at a time.

"It's really interesting to think about some of the savings that a lot of middle-income people take for granted—going to Costco, going to Walmart, buying bulk items—it's a luxury, actually," says Yesim Orhun, a professor at the University of Michigan's Ross School of Business who led the study. "You've got to have the cash to be able to do it. That's basically what we documented."

Low-income households are also more likely to miss out on sales, either because they don't have enough money when the sale happens or because their meager stock of toilet paper runs out when nothing's on sale, and they can't wait to buy more.

"This sounds very counterintuitive, because it's like if there's a price discount, why buy anything else if you need to save money," she says. "In fact, if there's a price discount, they do go and use it. But oftentimes they're shopping out of necessity and cannot wait for a good deal."

It's something that's probably true for any easily storable, nonperishable product, such as laundry detergent, soup, or diapers. The researchers focused on toilet paper because it's something that people use at a steady rate, sales and bulk discounts are common, and it's hard to substitute something else if you run out.

The researchers found that the amount of cash someone has on hand matters. At the beginning of the month, after a paycheck, poor people are more likely to take advantage of sales and bulk deals. By the end of the month—if they're paid on a monthly basis—they're running out of money and buying smaller packages at a higher per-unit cost.

On average, low-income households save around 9% by buying the cheapest brands they can find. But because they can't take advantage of other deals, they lose out on another 6% in savings.

"When you put those numbers next to each other, it's kind of staggering," says Orhun. "You buy cheaper-quality brands, that maybe aren't as great, to save money, and here you could have been buying the same brand—just shifting your consumption in spending over time—and you could have made two-thirds of those savings just by buying in bulk."

Other factors likely also make a difference, such as whether someone has room to store 24 packs of toilet paper. "Whether you're living in a tiny apartment with eight people or a grand mansion also matters," she says. "Whether you have a car to haul these things around also matters. Also whether you live close enough to a supercenter or supermarket to buy things in bulk, or whether you live close to a 7-Eleven, also matters." But the study looked only at the difference liquidity makes.

It's a big difference—and it's something that retailers or brands could potentially help change, if they're motivated enough to keep customers coming back. "If there's a monopoly, if the only supermarket in town is facing these consumers, they're just like, 'Oh, great, they come shopping very often; they pay higher prices. Why would I ever want to fix this?'" she says. "Nobody would want to fix this except if they face competition for these consumers."

That, she says, is another big challenge for poor customers. Unlike richer households, who tend to have several supermarkets or big-box stores to choose from, a poorer family might be stuck with a single nearby store.

"Fixing access is going to be important," says Orhun.

loading