Poverty
| English | Chinese | Pinyin |
|---|---|---|
| poverty | 贫困 | pín kùn |
| inequality | 不平等 | bù píng děng |
| absolute poverty | 绝对贫困 | jué duì pín kùn |
| relative poverty | 相对贫困 | xiāng duì pín kùn |
| Lorenz curve | 洛伦兹曲线 | luò lún zī qū xiàn |
| progressive taxes | 累进税 | lèi jìn shuì |
| minimum wage | 最低工资 | zuì dī gōng zī |
The gap between rich and poor
- In every country, some people have far more than others. In some, the gap is enormous.
- Economics studies both poverty 贫困 (having too little) and inequality 不平等 (the gap itself).
Economics case lab
Classify real examples by the economic idea they show.
Absolute poverty means:
Absolute poverty is a lack of basic necessities.
A family that can meet its basic needs but has far less than the national average is in:
Relative poverty is defined against the average in society.
Poverty measured against the average income in society is ______ poverty.
Relative poverty compares to the societal average.
Two kinds of poverty
- Absolute poverty 绝对贫困: not having enough for basic needs — food, shelter, clean water.
- Relative poverty 相对贫困: having much less than the average in your society, even if basic needs are met.
Two types of poverty: absolute (cannot afford basic needs) and relative (poor compared with others in the same country)
On a Lorenz curve, greater inequality is shown by a curve that:
The more it bows away from the diagonal, the more unequal the distribution.
Picturing inequality
- A Lorenz curve 洛伦兹曲线 plots the share of income against the share of population.
- The further it bows from the diagonal line of equality, the more unequal the country.
The further the Lorenz curve bows from the diagonal, the greater the inequality.
Bend the Lorenz curve
Drag the top-20% income share of each economy. The more the curve bows away from the diagonal, the more unequal the country.
Which policies help reduce poverty? (Select all that apply.)
Cutting the minimum wage would worsen poverty.
Causes and cures
- Causes: unemployment, low wages, poor education, illness, old age.
- Policies: progressive taxes 累进税, benefits, a minimum wage 最低工资, free education and healthcare.
Poverty and inequality aren't the same. A rich country can have low absolute poverty but high inequality. Reducing one doesn't automatically reduce the other.
A poverty cycle
You've got it
- absolute poverty = can't meet basic needs; relative poverty = far below the average
- a Lorenz curve shows inequality — the more it bows, the more unequal
- cures: progressive taxes, benefits, minimum wage, free education/healthcare