Description: A recent Journal of Marketing Research article by Jorge Jacob, Yan Vietes, Rafael Goldszmidt, and Eduardo B. Andrade explored how anticipation of socioeconomic-status (SES)-based discrimination affects the price sensitivity of poor, but not rich, consumers. Although low-SES consumers tend to be more price-sensitive—and for good reason—results from five studies reveal that low-SES (vs. high-SES) consumers are willing to pay more and even accept low-value rewards to avoid more affluent commercial settings such as upscale retail stores. The authors document that this self-defeating behavior occurs because these consumers anticipate greater discrimination in upscale commercial settings. The authors refer to this as a “psychological ghetto tax,” a version of the well-documented “ghetto tax” phenomenon in which lower-income individuals end up paying more due to mobility costs, lack of information, location, and other factors.
Source: AMA.org
Date: Apr 04, 2023
Link: https://www.ama.org/2023/04/04/psychological-ghetto-tax-the-poor-pay-more-to-avoid-discrimination/
Questions for discussion:
- What is meant by the term “ghetto tax”?
- Summarize the research findings presented in the report.
- How should marketers deal with this research?
