Social Benefits Of Payday Loans

You have great points in your assertions. Although dated, Wallace (1977) noted that the social benefit of education exceeds the private benefit. As you pointed out, investing in human capital can increase workforce productivity for the greater benefit of society. Likewise, obtaining higher levels of education is beneficial in achieving personal growth and increased earnings (Salvatore, 2015). In terms of risk and cost, when an individual pursues private education without subsidies, the individual assumes the risk that the marginal benefit of an education will exceed the cost of the investment, or tuition. However, some people will not fully utilize educational opportunities since it is costly to obtain an education and it may not produce an immediate return on the investment. Consequently, an underinvestment in privately funded education is likely to occur. …show more content…
While payday loans can help overcome short-term financial problem, the long-term costs are harmful. Payday lenders strategically set up shop in poorer areas and targeted people living paycheck to paycheck. Although the payday loan industry lent to clients who had a limited understanding of personal finances and carried debt, surprisingly some loan customers argued the payday loan industry is not taking advantage of them (Schafter, Wong, & Castleberry, 2009). Despite payday lenders competing for their portion of the market share, these loans, some with interest rates approaching 400 percent, are predatory and detrimental to a person’s financial