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I agree that there are cases where a payday loan is a good option, and that if people behaved rationally it would be objectively better to have that option than

I agree that there are cases where a payday loan is a good option, and that if people behaved rationally it would be objectively better to have that option than to not have it. The problem is that people don't behave rationally. And behaving irrationally isn't isolated to poor people (lots of people get 96 month loans on expensive cars they can't afford), but it hurts them the most. Reminds me of an anecdote from poor African countries. Farmers would buy fertilizer months before they needed it, even though it is logically better for them to save that money and only buy the fertilizer when they needed it (assuming the price of the fertilizer was constant). But they knew if they had the money the would be tempted to spend it in the meantime, so they bought it early to avoid the temptation. Payday loans can encourage people to take out a loan and spend money even in cases where it would be better for them to find an alternative.

tombert 6y ago
Sure, but it almost seems like you are justifying predatory behavior. When people are really desperate they'll do anything to survive, and providing a 14000% loan to people feels like you're just exploiting people's survivalist instincts. Also, a lot of these payday loans are just flat-out illegal. If you look up usury laws in the US, they typically cap interest at somewhere around ~25% per year[1], and the highest I could find was on the order of 400% per year [2]. I didn't check every state so it's possible there are some that don't have any caps, but my point is that very often these payday loans are literally breaking the law by charging absurd interest rates. [1] https://paydayloaninfo.org/state-information/40 https://paydayloaninfo.org/state-information/40 [2] https://paydayloaninfo.org/state-information/17 https://paydayloaninfo.org/state-information/17
wutbrodo 6y ago
100% agreed, and to some extent people _do_ need to be protected from themselves where irrational decisions are likely. But the comment I responded to referred to payday loans in general as a scam, and anyone who's bothered to study this, qualitatively or quantitatively, firmly disagrees. Note that this doesn't preclude regulated rate caps, which are motivated by the idea that, at a given rate, the innumerate/irrational being harmed outweigh the harm done by removing an emergency liferaft from those for whom it makes sense. You don't even have to be that smart or read high-quality sources to find this perspective! "Payday loans never provide value" is too dumb for even Vox[1]! The reason I'm so passionate about this topic is not just garden-variety frustration at how stupid people are. "Helping" people by controlling what they can spend their food stamps on, whom they can have sex with, or how they survive and support themselves should come with a heavy, heavy burden of rigor. History is full of elites destroying the lives of others through their malicious "compassion" and refusal to actually consider that other people live different lives with different problems. The problem with things like payday loans is that the kind of IFLScience midwits that places like HN are thick with won't bother to do the most basic of research beyond clickbaity headlines, eye-popping context-free stats, amd comedy shows that pretend to be informative. It's repulsive. [1] https://www.vox.com/xpress/2014/8/11/5991137/john-oliver-payday-loan-postal-banking https://www.vox.com/xpress/2014/8/11/5991137/john-oliver-pay...

tombert 6y ago

Sure, but it almost seems like you are justifying predatory behavior. When people are really desperate they'll do anything to survive, and providing a 14000% loan to people feels like you're just exploiting people's survivalist instincts. Also, a lot of these payday loans are just flat-out illegal. If you look up usury laws in the US, they typically cap interest at somewhere around ~25% per year[1], and the highest I could find was on the order of 400% per year [2]. I didn't check every state so it's possible there are some that don't have any caps, but my point is that very often these payday loans are literally breaking the law by charging absurd interest rates. [1] https://paydayloaninfo.org/state-information/40 https://paydayloaninfo.org/state-information/40 [2] https://paydayloaninfo.org/state-information/17 https://paydayloaninfo.org/state-information/17

wutbrodo 6y ago

100% agreed, and to some extent people _do_ need to be protected from themselves where irrational decisions are likely. But the comment I responded to referred to payday loans in general as a scam, and anyone who's bothered to study this, qualitatively or quantitatively, firmly disagrees. Note that this doesn't preclude regulated rate caps, which are motivated by the idea that, at a given rate, the innumerate/irrational being harmed outweigh the harm done by removing an emergency liferaft from those for whom it makes sense. You don't even have to be that smart or read high-quality sources to find this perspective! "Payday loans never provide value" is too dumb for even Vox[1]! The reason I'm so passionate about this topic is not just garden-variety frustration at how stupid people are. "Helping" people by controlling what they can spend their food stamps on, whom they can have sex with, or how they survive and support themselves should come with a heavy, heavy burden of rigor. History is full of elites destroying the lives of others through their malicious "compassion" and refusal to actually consider that other people live different lives with different problems. The problem with things like payday loans is that the kind of IFLScience midwits that places like HN are thick with won't bother to do the most basic of research beyond clickbaity headlines, eye-popping context-free stats, amd comedy shows that pretend to be informative. It's repulsive. [1] https://www.vox.com/xpress/2014/8/11/5991137/john-oliver-payday-loan-postal-banking https://www.vox.com/xpress/2014/8/11/5991137/john-oliver-pay...