- Series Information
- The Oxford Handbook of The Economics of Poverty
- Introduction and Overview
- The Alleviation of Poverty: How Far Have We Come?
- Consumption and Income Poverty in the United States
- Poverty Lines across the World
- Theories of Poverty: Traditional Explanations and New Directions
- Poverty and the Labor Market
- Employment in Black Urban Labor Markets: Problems and Solutions
- Low-Skilled Immigrants and the US Labor Market
- Poverty and Low Earnings in the Developing World
- Antipoverty Programs for Poor Children and Families
- Education and the Poor
- Poverty, Health, and Healthcare
- Geographical Price Variation, Housing Assistance, and Poverty
- Distributions in Motion: Economic Growth, Inequality, and Poverty Dynamics
- Is Poverty Incompatible with Asset Accumulation?
- Poverty Transitions
- Macroeconomic Fluctuations and Poverty
- Obesity, Poverty, and the Ability to Pay for Calories
- Environmental Justice: Do Poor and Minority Populations Face More Hazards?
- Female Trust in Government and Gender Income Inequality in Sub-Saharan Africa
- Crime, Incarceration, and Poverty
- Payday Lending: New Research and the Big Question
- An Assessment of the Effectiveness of Antipoverty Programs in the United States
- Are Economists in Over Their Heads?
- Antipoverty Policy: The Role of Individualist and Structural Perspectives
- A New Statistic: The US Census Bureau’s Supplemental Poverty Measure
Abstract and Keywords
Payday lending is controversial. In the states that allow it, payday lenders make cash loans that are typically for $500 or less, and the borrower must repay or renew the loan on his or her next payday. The finance charge for the loan is usually 15 to 20 percent of the amount advanced, so for a typical two-week loan the annual percentage interest rate is about 400 percent. This article describes the payday-lending business and explains why it presents challenging public-policy issues. It surveys recent research that attempts to answer the “big question,” one that is fundamental to the public-policy dispute: Do payday lenders, on net, exacerbate or relieve customers' financial difficulties? The article argues that despite research efforts of a talented group of economists, we still don't know the answer to the big question.
John P. Caskey is a professor of economics at Swarthmore College.
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