4.1.7.2 The problem of poverty Flashcards
What is the difference between absolute and relative poverty?
Absolute: Living below subsistence (<$1.25/day, lacks basic needs).
Relative: Below 60% of median income (UK) or societal standard (US).
Example: A family in Somalia in absolute poverty vs. a UK worker earning £15,000/year (relative).
List 3 economic causes of poverty.
Low education → low-wage jobs/unemployment.
Underemployment (part-time/temporary work).
Structural unemployment (e.g., deindustrialisation in UK).
List 3 non-economic causes of poverty.
Wars/conflicts (displacement, destroyed assets).
Corruption (wealth concentration among elites).
Natural disasters (e.g., Nepal earthquake 2015 → 1M into poverty).
How does poverty impact health?
Malnutrition → poor cognitive development, higher disease risk.
Lower life expectancy (e.g., Sub-Saharan Africa).
Data: 22% of India’s poverty limits growth.
What are 3 societal impacts of poverty?
Crime (desperation/theft).
Poor housing/sanitation (disease spread).
Mental health issues (stress from instability).
Why is education limited by poverty?
Child labor (work vs. school choice).
Poor literacy → perpetuates intergenerational poverty.
Example: Nepalese children post-earthquake.
How do UK policies exacerbate poverty?
Regressive taxes (VAT hits poor harder).
Benefits lag wages (index-linked to inflation).
Source: Guardian on UK inequality (link).
What is hysteresis in poverty?
Long-term unemployment → skill erosion → harder to re-enter workforce.
Example: UK manufacturing decline → structural unemployment.
Give an example of absolute poverty.
Sub-Saharan Africa: Disease + lack of investment → 41% live on <$1.90/day (World Bank).
How can governments reduce poverty?
Minimum wage laws (protect low earners).
Education subsidies (break poverty cycle).
Progressive taxation (redistribute income).
Draw a Lorenz curve showing high poverty/inequality.
Curve bows far from 45° line (e.g., bottom 20% earn 5% income).
Is relative poverty a useful measure?
Yes: Reflects societal exclusion (e.g., UK’s 60% median threshold).
No: Ignores absolute needs (someone may be ‘relatively poor’ but not starving).
How does poverty relate to market failure?
Cause: Discrimination, monopoly power.
Consequence: Underinvestment in human capital → lower productivity.
