Living Economics

In the fictional place called Erewhon, the justice system is set up to punish people who are down on their luck and reward those who are already well-off. It is supposed to be a satire of the real world. But it turns out that the real world is closer to Erewhon than we would like to think.

One example of this upside-down world is the pathological link between poverty and nutrition. Poor people living in the inner city are forced for convenience sake to shop in nearby small groceries and independent supermarkets. These small stores don't have enough sales volume to keep prices down through economies of scale. Lacking the sales volume and bulk purchasing power of the big chains, they have to charge between 10 - 20% more to stay profitable and carry only high-turnover items as liquor, cigarettes, sugar and snack cakes. More nutritious items such as whole-wheat bread, skim milk, low-sodium, low-sugar, and cholesterol-free items that move slowly are often missing from the shelves (WSJ 12/20/1990). Even when they are carried, their slow turnover means that they are often stale (WSJ 4/15/1991).

So here is an innocent vicious cycle: The poor eating habits of inner-city residents force the neighborhood stores to carry fast-moving but non-nutritious items. And the absence of more nutritious items in turn limits the choice of even those few residents who want to maintain a balanced diet. And the end result is Erewhon justice: Mal-nourished people end up eating non-nutritious food and poor people end up paying more for similar items than residents in the suburbs.

Poverty then is not just low absolute income, but low relative income. Low relative income amplifies the random mal-distribution of opportunities and disproportionally affects the already unfortunate poor who do not have the financial buffer to weather even minor adversities. Low relative income due to extreme income inequality not only leads to poor nutrition but also status-related stress that is the major cause of many poor health conditions (Wilkinson).