Date of Award
Spring 2022
Degree Name
Bachelor of Science (BS)
Advisor(s)
Hoori Rafieian
Abstract
This study investigates the impact of financial power on consumer behavior, specifically examining how low-income individuals' expenditure on higher-order psychological needs influences perceptions of their financial rationality and affects support for governmental aid. Drawing from Maslow's hierarchy of needs, which posits that human needs escalate from basic physiological to higher psychological levels such as belonging and self-esteem, this research explores societal judgments towards low-income individuals who allocate financial resources towards non-essential goods. Despite the intuitive understanding that fulfilling higher-order needs enhances well-being, there exists a prevalent belief that low-income individuals should prioritize basic needs. This study reveals that such expenditures by low-income persons are often viewed as irrational by those with higher incomes, subsequently influencing their support for policies aimed at assisting these individuals.Through experimental design involving 325 participants, this research assesses the rationality of purchases made by a fictional low-income individual on different levels of needs—basic, belonging, and self-esteem. Results indicate a significant bias; spending on basic needs is deemed rational, while expenditure on higher psychological needs is viewed less favorably. This perception affects the willingness of non-low-income individuals to support governmental aid for low-income groups, particularly when funds are potentially used for non-essential needs.
This research contributes to the understanding of social biases in economic behavior and has implications for policymakers, suggesting that public support for welfare could be contingent on the perceived legitimacy of the financial behavior of aid recipients. The findings encourage a broader discussion on how economic judgments and societal values influence support for social welfare policies.
Recommended Citation
Qi Di, Zheng, ""How People Form Judgments of Low-Income Individuals’ Spending on Basic Versus Higher-Order Needs "" (2022). Gabelli School of Business Honors Thesis Collection. 31.
https://research.library.fordham.edu/gabelli_thesis/31
