On the surface, the formation of speculative bubbles is often related to the irrational rise in asset prices, and the poor find it difficult to participate directly due to a lack of capital, information, and risk tolerance. However, a deeper analysis reveals that this phenomenon hides complex economic mechanisms and social realities.
The real barriers to the poor's participation in speculation
1. Natural barriers of capital thresholds
The entry ticket to mainstream speculative markets (such as stocks, real estate, and cryptocurrencies) is often high. Taking the Chinese stock market as an example, in 2024, 85% of retail investors had accounts with less than 500,000 yuan, while the top 0.5% of high-net-worth individuals controlled 25% of market trading volume. The limited income of the poor must prioritize survival needs, making it difficult to bear an investment threshold of tens of thousands of yuan. Even low-threshold cryptocurrencies have price volatility that far exceeds the risk tolerance of the poor.
2. The intergenerational gap of information and cognition
Speculation requires a deep understanding of market trends, policy directions, and financial instruments. The wealthy can gain advantages through professional institutions and insider information, while the poor often rely on fragmented information. For example, during the Chinese stock market crash in 2015, 85% of retail investors at the bottom lost 250 billion yuan due to blind follow-the-crowd behavior, while the top 0.5% of investors profited 254 billion yuan through precise timing. This 'information gap' is essentially a reflection of class cognitive differences.
3. The fatal shortcoming of risk tolerance
The income stability of the poor is poor, lacking risk buffer mechanisms. Nobel laureate Abhijit Banerjee points out in 'The Nature of Poverty' that the poor, whose daily income only suffices for basic needs, are forced to adopt short-sighted behaviors. For example, rural families in India may be compelled to sell land at low prices to cope with sudden medical expenses; this 'survival-type speculation' is fundamentally different from the 'appreciation-type speculation' of the wealthy.
The hidden pathways of the poor's involvement in the bubble
Despite the barriers mentioned above, the poor may still indirectly participate in speculative bubbles in the following ways:
1. Risk transfer by financial institutions
During the 2008 subprime mortgage crisis, American banks issued subprime loans to low-income groups, packaging them into financial derivatives like MBS and CDOs. When housing prices fell, the poor lost their homes because they could not repay their loans, while financial institutions transferred risk through asset securitization. This 'structural trap' made the poor the ultimate payers of the bubble burst.
2. The alienated combination of consumer loans and speculation
Some poor people obtain funds through consumer loans and online loans, investing them in the stock market or virtual currencies. For example, during the explosive rise in Dogecoin prices in 2021, low-income groups in the Philippines participated in speculation through usury, ultimately falling into a debt abyss when prices plummeted. This model of 'using loans to sustain investments' essentially converts consumer credit into speculative leverage.
3. The dual squeeze of policies and markets
When monetary easing policies inflate asset prices, the wages of the poor lag behind inflation. For example, the quantitative easing by the Federal Reserve in 2020 led to a rise in U.S. stock prices, but the real income of the bottom 50% of American households fell by 4%, while the wealth of the top 1% grew by 19%. This 'passive participation' forces the poor to bear the cost of declining purchasing power during the bubble.
The cost of the poor in the burst of the bubble
1. Wealth evaporation and class solidification
Speculative bubbles are essentially zero-sum games of wealth redistribution. In the 2015 Chinese stock market crash, the stock assets of the bottom 85% of retail investors shrank by 28%, while the wealth of the top 0.5% of high-net-worth individuals grew by 31%. This 'scissor gap' exacerbated class solidification, with the wealth accumulation speed of the poor falling far behind.
2. The chain reaction of employment and income
The economic recession triggered by the bursting of the bubble impacts the poor more severely. During the 2008 financial crisis, the unemployment rate for low-skilled workers in the U.S. soared to 15%, while the unemployment rate for high-skilled groups was only 4.2%. The poor, lacking asset buffers, often become the first victims of layoffs.
3. The long-term trauma of social psychology
Research by Malmendier and Nagel shows that early experiences of economic crises can influence an individual's investment behavior for a lifetime. For example, the poor in Southeast Asia who experienced the 1997 Asian financial crisis tend to maintain an avoidance attitude toward financial markets, missing subsequent opportunities for asset appreciation.
The assertion that 'speculative bubbles have little to do with the poor' is both an objective description of the realities of financial markets and a profound challenge to social equity. The poor are not inherently averse to speculation; rather, they are bound by a 'triple shackles' of capital thresholds, information barriers, and risk tolerance.
