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Dear Professor, here is a reality check. The first step to becoming poor is losing the ability to have a credit card. There are many steps subsequent to this fi

by dazc 4y ago

Dear Professor, here is a reality check. The first step to becoming poor is losing the ability to have a credit card. There are many steps subsequent to this first step. More than I can list here. I would go so far as to say that the vast majority of people who lose access to a credit card will still not ever experience poverty. Furthermore, people who do not pay off their balance each month are not poor, likely will never be poor and are, often, regular people, with jobs and middle class lifestyles.. In short, if you have access to a credit card you are not poor and are a very long way from becoming so. I have an amex reward card but I have also been poor. These are my qualifications that allow me to question your hypothesis.

jaclaz 4y ago
The thesis seems to me very different, it is about who pays in the end the part of the high processing fees generated by the rewards, but unlike similar thesis, the accent is about differentiating "financially sophisticated" people against "naıve" people regardless of income. The article is about a Federal Reserve paper referenced in the article: https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf https://www.federalreserve.gov/econres/feds/files/2023007pap... >Notably, our results are not driven by income, as they hold within the sub-samples of low-, middle- and high-income individuals. In particular, high-FICO high-income consumers benefit the most from reward credit cards, but they do so at the expense of low-FICO high-income consumers. >While credit card rewards are often framed as a “reverse RobinHood” mechanism in which the poor subsidize the rich, our results show that this explanation is at best incomplete. >We rationalize our findings in terms of fnancial sophistication, meaning that reward cards constitute a redistribution from naıve to sophisticated consumers.

by dazc 4y ago

jaclaz 4y ago

The thesis seems to me very different, it is about who pays in the end the part of the high processing fees generated by the rewards, but unlike similar thesis, the accent is about differentiating "financially sophisticated" people against "naıve" people regardless of income. The article is about a Federal Reserve paper referenced in the article: https://www.federalreserve.gov/econres/feds/files/2023007pap.pdf https://www.federalreserve.gov/econres/feds/files/2023007pap... >Notably, our results are not driven by income, as they hold within the sub-samples of low-, middle- and high-income individuals. In particular, high-FICO high-income consumers benefit the most from reward credit cards, but they do so at the expense of low-FICO high-income consumers. >While credit card rewards are often framed as a “reverse RobinHood” mechanism in which the poor subsidize the rich, our results show that this explanation is at best incomplete. >We rationalize our findings in terms of fnancial sophistication, meaning that reward cards constitute a redistribution from naıve to sophisticated consumers.