Monday, June 28, 2010

why poor people don't save

Social status, like everything else, is subject to diminishing marginal utility—the less you have of it the more you are willing to pay to get some. Thus lower-status groups are willing to dedicate a greater percentage of their income to competitive consumption than are high-status groups. People in the upper class already have so much status that they're not willing to make any great sacrifices to obtain more of it. The lower classes, on the other hand, are.

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