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The poverty line is the level of income below which one cannot afford to purchase all the resources one requires to live. People who have an income below the poverty line have no discretionary disposable income, by definition. Income, generally defined, is the money that is received as a result of the normal business activities of an individual or a business. ...
Jump to: navigation, search A boy from an East Cipinang trash dump slum in Jakarta, Indonesia shows his find. ...
Disposable income is the amount of an individuals total income left after taxes, plus any transfer payments (grants) received from the government or elsewhere. ...
It is widely discussed how and where to set the poverty line. In practice, different countries often use different poverty lines. Globally, however, it is more common to use only one poverty line in order to compare economic welfare levels. When comparing poverty across countries, the purchasing power parity exchange rates are used. These are used because poverty levels otherwise would change with the normal exchange rates. Thus, 'living for under $1 a day' should be understood as having a daily total consumption of goods and services comparable to the amount of goods and services that can be bought in the US for $1. Notice that e.g. self-produced goods and public services are included in this. Jump to: navigation, search In economics, purchasing power parity (PPP) is a method used to calculate an alternative exchange rate between the currencies of two countries. ...
Public services is a term usually used to mean services provided by government to its citizens, either directly (through the public sector) or by financing private provision of services. ...
Almost all societies have some of their citizens living in poverty. The poverty line is useful as an economic tool by which to measure such people and consider socioeconomic reforms such as welfare and unemployment insurance to reduce poverty. Welfare has four main meanings. ...
Unemployment benefits are sums of money given to the unemployed by the government or a compulsory para-governmental insurance system. ...
Determining the poverty line is often done by considering the essential resources that an average human adult consumes in one year and then summing their cost. This approach is needs-based in that an assessment is made of the minimum expenditure needed to maintain a tolerable life. This was the original basis of the poverty line in the United States, which has since been uprated for price changes. In developing countries, the largest of these resources is typically the rent required to live in an apartment, so historically, economists have paid particular attention to the real estate market and housing prices as having a strong influence on the poverty line. In the United States, official statistics on poverty and the official poverty line are kept by the US Census Bureau. ...
Individual factors are often used to handle various circumstances, such as whether one is a parent, elderly, a child, married, etc.
Problems with using a poverty line Using a poverty line is problematic because having an income marginally above it is not substantially different from having an income marginally below it: the negative effects of poverty tend to be continuous rather than discrete, and the same low income affects different people in different ways. To overcome this poverty indexes are sometimes used instead; see income inequality metrics. In mathematics, a continuous function is one in which arbitrarily small changes in the input produce arbitrarily small changes in the output. ...
The word discrete comes from the Latin word discretus which means separate. ...
Income inequality metrics or income distribution metrics are techniques used by economists to measure the distribution of income among members of a society. ...
A poverty line relies on a quantitative, or purely numbers based measure of income. If other human development-indicators like health and education shall be used, these must be quantified, which is not easy. A quantitative property can be measured in a way that doesnt depend on the observer or the mechanism used to take the measure, and this measure can be expressed with a number and units of measure; properties which arent quantitative are called qualitative. ...
Defining poverty lines Poverty lines can be defined in different ways: - Social Security benefit based. If a government guarantees to make income up to some particular level then it may be presumed that that level is the poverty line. This is a problematic definition, because a stingy government may reduce the guaranteed income, thus reducing the incidence of poverty so defined while increasing the incidence of actual poverty.
- A relative income line, related to some fraction of typical incomes. This excludes the wealthiest individuals from the calculation. For example, the OECD and the European Union uses 60% of national median equivalised household income.
- A relative figure fixed in time and only adjusted for inflation - thus avoiding the possibility that if income inequality increases, then poverty may otherwise also increase.
- When the World Bank calculates its "$1 a day" statistics, it uses a poverty line.
For specific national programs, see Social Security (United States), National insurance (UK), Social Security (Sweden) Social security mainly refers to a field of social welfare concerned with social protection, or protection against socially recognized needs, including poverty, old age, disability, unemployment, families with children and others. ...
In mathematics, a fraction is a quotient of numbers, like 3â„4, or more generally, an element of a quotient field. ...
The Organization for Economic Co-operation and Development (OECD) is an international organization of those developed countries that accept the principles of representative democracy and a free market economy. ...
In probability theory and statistics, the median is a number that separates the higher half of a sample, a population, or a probability distribution from the lower half. ...
Absolute poverty A measure of absolute poverty quantifies the number of people below a poverty line, and this poverty line is thought to be independent of time and place. For the measure to be absolute, the line must be the same in different countries. Also, it does not change when the income distribution change. This is only possible when all consumed goods and services are counted and when PPP-exchange rates are used (see purchasing power parity). The intuition behind an absolute measure is that mere survival takes the same amount of good across the world and that everybody should be subject to the same standards. Notice that if everyone's income in an economy increases, and the income distribution does not change, absolute poverty will decline. Jump to: navigation, search In economics, purchasing power parity (PPP) is a method used to calculate an alternative exchange rate between the currencies of two countries. ...
The Lorenz curve was developed by Max O. Lorenz in 1905 as a graphical representation of income distribution. ...
Furthermore, the rate of absolute poverty can decline even though inequality is increasing - as long as the poorest get a higher income than they had before.
This type of measure is often contrasted with measures of relative poverty (see below), which classify entities as "poor" not by comparing them to a fixed cutoff point, but by comparing them to others in the population under study. (The term absolute poverty is also sometimes used as a synonym for extreme poverty.) Extreme poverty is a severe state of poverty in which people are unable to have basic human necessities, such as food, clothes, and shelter. ...
Relative poverty A measure of relative poverty definines "poverty" as being below some relative poverty line. An example is when poverty is defined as households who earn less than 25% of the median income is a measure of relative poverty. Notice that if everyone's income in an economy increases, but the income distribution stays the same, relative poverty will also stay the same. The Lorenz curve was developed by Max O. Lorenz in 1905 as a graphical representation of income distribution. ...
Measures of relative poverty are almost the same as measuring inequality: If a society gets a more equal income distribution, relative poverty will fall. Some take this further, arguing that the term 'Relative Poverty' is itself misleading and that 'Inequality' should be used instead; pointing out that if some catastrophe should happen to strike in a way that affected high earners more than low earners, then it would be possible for every citizen of that society to be worse off but 'Relative Poverty' would have decreased.
The phrase relative poverty can also be used in a different sense to mean "moderate poverty". For example, a standard of living or level of income which is higher than what is needed to satisfy basic needs (like water, food, clothing, shelter, and basic health care), but which is still significantly lower than that of the majority of the population under consideration. Jump to: navigation, search Water (from the Old English word wæter; c. ...
(See also List of types of clothing and Clothing terminology) Humans nearly universally wear articles of clothing (also known as dress, garments, or attire) on the body. ...
Shelter can refer to several things: A place that protects, to a larger or smaller extent, against some or all of the following: the weather (precipitation, wind, heat, cold) intruding humans and animals, etc. ...
Health care or healthcare is the prevention, treatment, and management of illness and the preservation of mental and physical well-being through the services offered by the medical and allied health professions [1]. The healthcare industry is one of the worlds largest and fastest-growing industries, consuming over 10...
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References Ray, Debraj 1998, Development Economics, Princeton University Press, ISBN 0691017069. |
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