Poverty

Question 1

Define poverty?

Answer 1

A state of living whereby individuals do not have enough resources or abilities to meet their needs

Question 2

2 monetary dimensions of poverty?

Answer 2

Income

Consumption

Question 3

2 non monetary dimensions of poverty?

Answer 3

Health+nutrition

Education (literacy rate, yrs of schooling)

Question 4

2 types of absolute poverty and explanations?

Answer 4

Subsistence poverty (insufficient necessities for survival)
Chronic poverty (those economic units in a poverty trap)

Question 5

What is relative poverty?

Answer 5

‘Inequality’ view of poverty, comparing economic units within a society

Line is either incomes 60% less than the median, or 50% less than the mean

Question 6

Absolute poverty line?

Answer 6

Measured in dollars per day by World Bank and UNDP

Question 7

4 reasons poverty matters?

Answer 7

1) impacts on health
2) reduces productivity of workforce and tf investment
3) strains public services
4) can lead to crime/war/civil unrest

Question 8

Define poverty line?

Answer 8

Cut off point separating those in poverty and those not in poverty

Question 9

3 reasons poverty lines vary between countries?

Answer 9

Different aspects of poverty are more prominent in different countries
Countries have different living costs
Different measures useful for precise estimation of policy implications

Question 10

Define poverty headcount(PH/poverty rate)?

Answer 10

Share of population whose income or consumption is below the poverty line

Question 11

Equation for PH?

Answer 11

PH = q/n

q = people in poverty
n = all people

Question 12

Define poverty gap?

Answer 12

Average gap between the income of the poor and the poverty line, in terms of the poverty line

Question 13

How is the poverty gap calculated?

Answer 13

1) calculate z-y(i) (ind. PG for each person)
2) sum up PGs, with any value less than zero going to zero
3) divide by poverty line
4) divide by total population

(See equation)!!!

Question 14

See indicator function

Answer 14

Now

Question 15

Advantages of poverty gap? (2)

Answer 15

Gives information about the depth of poverty (unlike the PH)

Can be used with non monetary indicators

Question 16

Problems with the PG?

Answer 16

Poverty lines vary between countries
Doesn’t account for transfer among the poor - the average gap will stay the same if one poor household transfers money to another

Question 17

Describe how total poverty gap looks on a graph?

Answer 17

Y axis - annual income
X axis - % of pop.
PV line is horizontal
Upward sloping line showing relationship
TPG = under PV line and above other line

Question 18

Advantage of poverty gap squared over poverty gap?

Answer 18

Takes into account the inequality among the poor

Ie. A higher weight is place on those households who are further away from the poverty line

Question 19

4 characteristics of poverty in UK?

Answer 19

Single parents/single pensioners
Non working households
Ethnic minorities
Disabilities
Demographic (west midlands)
Large families