Poverty
Introduced| English | Meaning |
|---|---|
| poverty/ˈpɒvəti/ | A condition in which people lack sufficient resources to meet basic needs or an accepted minimum standard of living. |
| inequality/ɪniːˈkwɒlɪti/ | An unequal distribution of a quantity, opportunity or outcome between people or groups. |
| absolute poverty/ˈæbsəluːt ˈpɒvəti/ | Can't meet basic needs. |
| relative poverty/ˈrelətɪv ˈpɒvəti/ | Having resources substantially below the standard of living typical in the surrounding society. |
| Lorenz curve/ˈlɒrənts kɜːv/ | A graph comparing the cumulative share of income or wealth with the cumulative share of the population, ordered from poorest to richest. |
| progressive taxes/prəˈɡresɪv ˈtæksɪz/ | Taxes for which the average tax rate rises as the taxable base, usually income, increases. |
| minimum wage/ˈmɪnɪməm weɪdʒ/ | The lowest wage rate that an employer is legally permitted to pay covered workers. |
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:
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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:
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Relative poverty is defined against the average in society.
Poverty measured against the average income in society is ______ poverty.
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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:
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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.)
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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
Write from an income share of 0.05
- The poorest 20 percent of people earn 5 percent of income.
- State the Lorenz point and what a deeper bow means.
The poorest 20 percent of people earn 5 percent of income. What is that income share as a decimal, and what does a Lorenz curve that bows further from the diagonal show?
5 percent is 0.05 of income.
What does a deeper bow in the Lorenz curve show?
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The share 0.05 for 20 percent of people is far below an equal share.