There are legions of negative preconceived ideas about the poor. We often hear that they make poor financial choices (pun unintended) when managing what little money they have. I studied the data available from Statistics Canada’s Survey of Household Spending to assess if they hold up to the facts. For ease of reading, I will not indicate dates for each data point: they extend from 2009 to 2011 according to data availability.
The poor drink more
The (in)famous 24 pack of beer which, allegedly, sits on poor people’s porches: truth or myth? In fact, the bottom 20% of the population in terms of income spend on average $289 in alcohol bought in stores. With 24 packs costing $30, that means 10 per year. Furthermore, only 57% of the poorest quintile actually bought alcohol during the year, so more than a third didn’t purchase a single drop.
Now, let’s look at the population’s richest 20%. The numbers are quite different: $1,653 in store-bought alcohol (i.e. 55 24-packs) and 93.9% having spent money on alcohol.
The poor spend more on lottery tickets
Are the poor always over at the convenience store to buy lottery tickets? That seems unlikely: they purchase $81 worth of lottery tickets annually. That’s less than one $2-ticket per week. Only 44% of the poorest quintile spend money on the lottery, so the majority of them don’t buy a single ticket throughout the year.
The richest 20% spend twice as much on lottery tickets than the poorest, with average annual expenses of $162. Two thirds of the richest (67%) buy at least one lottery ticket per year, a much higher proportion than the poor.
The poor smoke more
Do poor people spend their days rolling cigarettes? Nope, they don’t. They only spend $210 on average per year on tobacco, i.e. 3 cartons of cigarettes. Those with a mid-level income actually spend the most on average on tobacco, with $469 per year, more than double the amount in the poorest quintile. This middle category also includes the highest proportion of smokers, but in this regard, all segments of the population are fairly equal (around 30% of each quintile smoke).
All in all, the poor aren’t consuming the way we may imagine given current stereotypes. Even if anecdotal cases do exist, they aren’t representative of the majority. And you know why the poor consume less of these products? It isn’t because they’re holier than any other group. It’s just because they’re poor, and when you’re poor, you have less money available for frivolous goods like alcohol, lottery tickets, and tobacco; they’re spending the bulk of your money on basic spending like housing, food, and clothing. That’s all, really.
Simon Tremblay-Pepin is a researcher with IRIS.