To see how often consumers at different income levels take advantage of discounts, Orhun and Palazzolo analyzed seven years’ worth of data on toilet-paper purchases made by over 100,000 American households. They picked toilet paper because it’s “tailor-made” for what they’re interested in studying: It’s often sold in bulk, it’s frequently on sale, and it’s non-perishable and easily storable.
They found that high-income households (those making $100,000 or more a year) bought their toilet paper on sale 39 percent of the time, whereas low-income households (those making $20,000 or less a year) only did so 28 percent of the time. High-income households were also more likely to buy more rolls of toilet paper at a time, which meant not only that they were saving money on each roll, but that they didn’t have to make as many trips to the store. “Low income households,” Orhun and Palazzolo write, “are less likely to utilize these strategies even though they have greater incentives to do so.”
These differences produce a striking pattern: Orhun and Palazzolo calculate that because low-income shoppers don’t take full advantage of sales and buying in bulk, they end up paying about 6 percent more per sheet of toilet paper than high-income households. At the same time, lower-income households seem to be compensating for this premium by buying cheaper brands—a trend working in the other direction, saving them about 9 percent per sheet, compared to high-income households. “Therefore,” Orhun and Palazzolo write, “about two-thirds of the savings low income households accrue through brand choice is forfeited by their relative inability to utilize intertemporal money-saving strategies.” (Whether products with fancier brand names are truly better, and whether it’s a loss to miss out on them, is another matter.)