Towards a causal link between food insecurity and buy-now-pay-later use by young Australians

Abstract

Purpose This paper aims to understand if buy-now-pay-later (BNPL) services, a digital type of credit that targets young consumers, acts as a protective or a risk factor for food insecurity among young consumers in Australia. Design/methodology/approach The study uses survey data from a representative sample of young consumers aged 18–24 from all internal states and territories in Australia. Propensity score matching is used to test two hypotheses: BNPL drives young consumers to food insecurity, and food insecurity leads young consumers to use BNPL. Findings There is evidence that BNPL use is driving young Australian consumers to experience food insecurity, but there is no evidence of food insecurity driving the use of BNPL services. Practical implications The evidence of BNPL driving young consumers to experience food insecurity calls for the adoption of practices and stronger regulation to ensure that young users from being overindebted. Originality/value Although the link with more traditional forms of credit (such as personal loans) and consumer wellbeing has been explored more broadly, this project is the first attempt to have causal evidence of the link between BNPL and food insecurity in a high-income country, to the best of the authors’ knowledge. This evidence helps to fill the gap about the protective or risky nature of this type of digital financial product, as experienced by young Australians.