3.4 Inequality + Poverty Flashcards
(16 cards)
equality
Equality refers to a situation in which everyone receives the same level of income, wealth, or access to resources and opportunities, regardless of individual circumstances or differences.
equity
Equity refers to the concept of fairness in the distribution of income and wealth, taking into account people’s different needs and circumstances. It does not mean everyone receives the same, but rather that outcomes are just and socially acceptable.
Considering it as a key concept: Equity refers to the concept of fairness in the distribution of income, wealth, or economic opportunity. Unlike equality, which implies identical outcomes, equity considers individual circumstances and needs. It is a normative concept, meaning that interpretations of fairness vary between individuals and societies. In economics, equity often relates to addressing inequality in income, wealth, or access to opportunities. The role of markets and governments in promoting equity is widely debated across different economic systems.
inequality
Inequality is the unequal distribution of income or wealth within a population or between different groups in society, often leading to disparities in living standards and opportunities.
income
Income is the flow of money received by individuals or households over a period of time from work (wages), investments (interest/dividends), or transfers (such as pensions or government benefits).
wealth
Wealth refers to the total value of a person’s or household’s assets (such as property, shares, and savings) minus their liabilities (debts) a.k.a. what
is owed to banks or other financial institutions, accumulated over time.
Lorenz Curve
The Lorenz curve is a graphical representation of income or wealth distribution in a society. It plots the cumulative percentage of total income received by cumulative percentages of the population, starting with the poorest. The further the curve is from the line of equality, the greater the inequality.
distribution of wealth / income
The distribution of income/wealth refers to how income or wealth is shared among individuals or households in an economy. It can be equal or unequal and is a key indicator of economic fairness.
Gini coefficient
The Gini coefficient is a numerical measure of income inequality ranging from 0 to 1, where 0 indicates perfect equality and 1 indicates maximum inequality. It is derived from the area between the Lorenz curve and the line of perfect equality.
poverty
Poverty is a condition where individuals or households are unable to meet basic needs for survival or a minimum acceptable standard of living. Arises when the lack of material possessions (wealth) or income prevents an individual or a family from achieving a minimum satisfactory standard of living. It can be measured in absolute or relative terms.
absolute poverty
Absolute poverty refers to a situation where an individual or household is unable to afford the basic necessities for survival, such as food, shelter, clothing, and healthcare. It is often defined by the international poverty line.
People living below the minimum income necessary to satisfy basic physical needs (food, clothing, and shelter); as of October 2015, the World Bank international poverty line is set at US$1.90 PPP per day.
relative poverty
Relative poverty is defined in comparison to the average income or living standards in a particular society. It occurs when individuals have significantly less income or resources than others in their community, making them unable to participate fully in normal social and economic activities.
A comparative measure of poverty according to which income levels do not allow people to reach a standard of living that is typical of the society in which they live. It is defined as a percentage of society’s median income.
composite indicator
A composite indicator combines multiple individual indicators into a single measure to provide a broader, more accurate assessment of complex economic or social phenomena. For example, the Multidimensional Poverty Index (MPI) is a composite indicator that includes health, education, and living standards.
international poverty line
The international poverty line is a threshold set by the World Bank to define absolute poverty, currently at US$2.15 per person per day (in 2017 PPP terms). Individuals living below this income level are considered to be in extreme poverty.
A level of income determined by a government or international body (such as the World Bank) that is just enough to ensure a family can satisfy minimum needs in terms of survival including food, clothing and housing.
minimum income standard
The minimum income standard is the income level that people need to achieve a socially acceptable standard of living in a particular country. It is based on what members of the public think is needed for individuals and families to live with dignity.
A measure of poverty that is based on what is essential in order to achieve a minimum acceptable standard of living.
MPI multidimensional poverty index
The Multidimensional Poverty Index (MPI) is a composite indicator developed by the UNDP that measures poverty using multiple factors beyond income, including health (e.g., nutrition, child mortality), education (e.g., years of schooling, school attendance), and living standards (e.g., electricity, sanitation, drinking water, housing, and assets).
An international measure of poverty covering over 100 of the economically least developed countries. It complements traditional income-based poverty measures by capturing the deprivations that each person faces at the same time with respect to education, health and living standards
transfer payments
Transfer payments are payments made by the government to individuals or groups without any exchange of goods or services. They are typically directed at vulnerable groups, such as the elderly, unemployed, or low-income households, with the aim of redistributing income and preventing poverty. These payments are funded through taxation and do not reflect compensation for work.
