Does Payday Lending Hurt Food Security in Low-Income Households?

During the study period of 2005-2011, household food insecurity rates as well as regulations over payday lending industry increased in the United States. This study evaluates the association between access to payday lending and the risk of food insecurity using cross-sectional samples of low-income households from the 2005 to 2011 Food Security Supplements of the Current Population Survey. The study uses county-level payday lender density, state-level legislative status, and county border indicators of cross-state payday access to examine how payday lender availability affects household food insecurity. The findings suggest that access to payday lending, which may be presumed to provide convenient short-term credit to underserved consumers, increases the likelihood of household food insecurity by 2.8-6.0 percentage points in absolute terms. Furthermore, the county border effect of payday access has become insignificant later in the sample period, the potential reasons for which are discussed.