Payday Loans and Pawnshops: The Consequences of Fringe Economy Use for Political Engagement

• In Event: 1122 - Section on Inequality, Poverty, and Mobility Refereed Roundtable Session
  In Refereed Roundtable 60min: Table 05. Knowledge, Market and Economy

Abstract

Political participation of marginalized groups is necessary to ensure the representation of their interests. The under participation of those in lower income brackets is well documented. Little attention, however, has been paid to how financial services such as pawnshops, check-cashings, auto title loans, and payday loans (collectively known as the fringe economy) exacerbate this relationship. Using a policy feedback framework, I argue that an individual’s interaction with the financial institutions within the fringe economy decreases a person’s likelihood to participate in politics. I compiled an original dataset of fringe economy locations. Using this data, I outline the characteristics of the fringe economy and illustrate it is predominately concentrated in neighborhoods that are disproportionately nonwhite and disproportionately low-income. Analyses using the 2016 Collaborative Multiracial Post-Election Survey show that individuals in states with strong regulations are less likely to use the fringe economy, though minorities and low-income individuals still use fringe economy services more. Connectedly, I show the effect of using fringe economy services on political participation varies with storefront concentration – higher concentration of fringe economy services decreases political participation; the fringe economy increases the discussion of politics, but decreases contributing money, and the participation in collaborative work, community meetings, or protests.

Author

• Patricia Posey, University of Pennsylvania