Mod 1 set 1 - Economic Insecurity and Security Flashcards
what is economic security
it is part of a person’s total welfare
• it is a “state of mind or a sense of well being by which a person is relatively certain that he/she can satisfy basic needs and wants, both present & future”
to obtain a sense of well being, it is dependent upon the use of economic good and services… what must an individual have?
- access
- income
key points of income?
- continuous
- real income emphasized
- above poverty level
- economic security relative to standard of living enjoyed by others
Economic insecurity
-a person is unable to achieve a sense of well being due to a fear that present and future needs will not be satisfied
economic insecurity consists of one of the following?
- loss of income
- loss of job, unable to satisfy needs ad wants - additional expenses
- medical bills, can lead to loss of income if person unable to work - insufficient income
- can occur even if person works regularly - uncertainty of income
- uncertain of future continuation of income… downsizing, mergers, loss of public funding
what are the causes of economic insecurity
- premature death
- unfulfilled financial obligations - old age
- inflation bc fixed income, medical expenses - poor health
- medical reasons such as drug plan cuts
- disability - unemployment
- substandard wage
- inflation
- natural disasters
- personal factors
- divorce, gambling, drug addiction
what is social security
Social security programs were developed in countries in response to a perceived need by society for certain types of measures/programs for which neither individuals nor private insurers can (or will) provide adequate coverage
2 characteristics of social security
They are established by government statue
2. They provide individuals with cash payments (and other services) that replace at least part of the income loss from (at least 6 different things)?:
what is social insurance
-part of a social security program
• primarily financed by contributions from employers,
employees, or both
• these contributions are kept in a separate account and
administered by the government
• benefits are paid from these funds
• rights of individuals to receive benefits is usually tied to
the person’s past contributions to the fund 20
• size of the benefit usually varies according person’s prior earnings
• participation and coverage is compulsory by law
• there is a long-term plan in place for financing the
current/future benefits
• plan is not established by the gov’t solely for its
employees
what is social assistance
provides cash payments and other benefits to individuals in need
• common features are:
⇒ benefits confined to low-income or poor recipients ⇒ benefits are paid based on a “needs” assessment ⇒ benefits usually financed by general revenue of the
government
• usually no long term financial plan has been put in place
EX:
what is a universal or demo grant program
provides a flat cash benefit or tax break to individuals without regard to recipients income, employment or wealth (but minimum residency period requirement)
•
financed by gov’t general revenues
AS1021- W2017 Module 1 Lecture Notes (Set 1)
Universal Program Examples? In Canada?
Note:
most Social Security programs that have universal pensions also have a 2nd tier that is earnings related (√ Canada)
what is a public provident fund
these are compulsory savings programs
• contributions are withheld from earnings of employees
and matched by employers
• each employee has an account that earns interest
• accumulated amount paid out upon retirement in monthly payments (or upon occurrence of certain events-eg. death and pension to surviving dependents)
• mainly used in developing countries and vary widely by country-examples
what is an income tested program
These are similar to social insurance programs, but are:
• financed out of general tax revenues
• cash benefits must be applied for and are income tested
• benefits are loosely based on past income
EX:
principles of economic security programs: principle of subsidiarity
The principle states:
A higher government unit should not perform the tasks that can be effectively performed by a lower unit
This means:
• Gov’t should perform tasks that can’t be performed
efficiently by the people themselves
• If Gov’t must intervene, it should be done at the local, followed by the provincial, then federal level
principle of sovereignty of demand
A democratic government does essentially what the citizens want it to do
• if certain programs are desired by the majority of citizens, the gov’t will enact laws or legislation to make them happen
