Scarcity leads to bad borrowing

Low-income individuals often focus on immediate expenses, making future expenses more difficult to meet.

A Princeton University study found that scarcity led people to make choices that they would otherwise avoid. One such problem was excessive borrowing at high interest rates in order to satisfy today’s needs.

Researchers said interventions to discourage this behaviour should focus on allowing the poor to save for critical items in advance.

Read more at Princeton University