The existence and popularity of buy-now-pay-later services, coupled with the continued poverty of their best customers demonstrate that the "boots theory" is at

The existence and popularity of buy-now-pay-later services, coupled with the continued poverty of their best customers demonstrate that the "boots theory" is at best incomplete, if not completely false . (And that's not even accounting for "shoe culture"). A pair of cheap shoes that will fall apart quickly costs about $25. For $100 or less, you can buy good durable shoes that, if not excessively mistreated, will last between 10x and 20x as long. Almost every major shoe brand sells good quality products in the sub-$100 price range, and last-year's models of the $100-200 shoes are generally available in sub-$100 prices as well. (Shoes that sat a year in a warehouse are not materially less durable than new ones). BNPL services generally allow for purchases to be spread across four level payments for zero interest and zero fees with no credit check (other than that if you fail to repay a BNPL, you can't borrow from it again until you repay). Thus, the recent advent of BNPL services should have decimated the sales of low-quality budget shoes, as everyone who used to be able to afford them could now afford the $100 high-quality models and the 10-20x reduction of shoe-purchase frequency should make repayment of the BNPL trivial. Under the Boots Theory, the only people who should be buying cheap, low-quality shoes today are people who couldn't afford shoes at all previously, and are now using a BNPL to occasionally be able to have shoes. The size of the market for low-quality shoes readily demonstrates that this is not the case. I have written about shoes here because they're a really obvious example of the effect, involve goods at a low price-point, and happen to be the specific commodity discussed in the fictional origin of the theory. This same analysis works in a wide variety of markets. Increased access to credit, absent other interventions, does not result in the reduction of widespread poverty, except in the most extreme cases. (Micro-finance has alleviated extreme poverty in some areas where the actual societal unavailability of capital was preventing poverty escape)