Poverty and Inequality Flashcards
What is the difference between absolute and relative poverty
Absolute is when a household cannot sustain a basic acceptable standard of living
Relative is when household income is less than 60% of median income
What is a poverty threshold
Income levels of what is needed to sustain the minimum acceptable standards of living
What is the international poverty line
Less than $2.15 is in extreme poverty
What are some of the causes of absolute poverty
- Low/unstable incomes
- Absence of financial nets
- Poor access to basic public and merit goods
- High unemployment/underemployment
- Dependence on low value-added industries
What are some of the causes of relative poverty
- Income inequality
- Wealth distribution
- Educational disparities
- Inflation
- Housing costs
Define inequality
Unequal distribution of resources in a society
What is the difference between income and wealth inequality
Flow of earnings vs accumulation of assets
What is the Lorenz curve and describe its shape
A graphical way of depicting the distribution of income in a country
- 1 straight line depicting equality then under are the cumulative income percentages
What is the Gini-coefficient
A way to numerically summarise the Lorenz curve’s income inequality
With the formula of A / (A + B)
What is the Gini coefficient for perfectly equal and unequal
0 = perfectly equal
1 = perfectly unequal
What is a limitation of these inequality measures
They don’t look at the size of households
