Poverty Notes

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Poverty is the lack of basic human needs, such as clean water, nutrition, health care, education, clothing and shelter, because of the inability to afford them. .
Relative poverty is the condition of having fewer resources or less income than others within a society ,or compared to worldwide averages. About 1.7 billion people live in absolute poverty; before the industrial revolution, poverty had mostly been the norm

Lack of education keeps children from obtaining jobs that would lift them and their families out of poverty. Often, children are kept from school because they are needed at home to support their family with additional income. Health:

Poor health decreases the amount of work impoverished individuals can do, lowering their income and driving them deeper into poverty. The onset of disease, such as HIV/AIDS or malaria, can result in death (which can cut off a major source of income for a family), or high medical costs that many impoverished families cannot afford. Economics:

The poor often have very limited economic choices – they are often prevented from receiving loans and other financial benefits. This makes it hard for them to establish businesses, increase their income, and break out of poverty. Government:

The governments of many developing countries are often dysfunctional, unstable, and corrupt. Lack of government infrastructure (public sanitation, schools, social welfare, etc.) can be crippling for the poor.

I. Types of causes of poverty

A. Individual
Poverty is explained by individual circumstances and/or characterstics of poor people. Some examples:
amount of education,
work orientation
time horizon
culture of poverty
Discrimination, together with race, sex, etc.
B. Aggregate
There are two types of aggregate poverty theory:
There is no agreement on which is the correct explanation of most poverty. 1. Case.
Add up all poverty explained by individual theories, and that is equal to total or aggregate poverty. In other words, according to case theories of poverty, individual and aggregate explanations are really the same. According to these theories, aggregate poverty is just the sum of individual poverty. 2. Generic.

Poverty is explained by general, economy-wide problems, such as inadequate non-poverty employment opportunities
inadequate overall demand (macro problems, macro policy)
low national income (Less Developed Country)
If generic theories are correct, poverty is caused by one set of forces (general, economy-wide problems) but distributed according to individual theories.

II. Case vs. Generic Theories of Poverty
A. What difference does it make whether poverty is caused by case or generic causes? Answer: It makes a lot of difference.
Example 1: Suppose somehow we significantly reduce racial discrimination. Will total poverty fall? Case answer: Yes.
Generic answer: No. Poverty will only be redistributed.
compensatory education.
1. If case theories are correct: Address the individual cause of poverty. For example, if poverty is caused by inadequate skills or education, then the solution is skill training or compensatory education. If poverty is through direct test. 2. There's some indirect evidence pointing to generic theories: For example, there is the failure of poverty to fall during periods of large training programs, and the failure of poverty to fall with rise in general educational level of population. Further indirect evidence later on in the course. 3. Most people assume case theories are correct. Why?

Micro experience (fallacy of composition -- assuming that what's true of the part must be true of the whole). Poverty scholars study the poor instead of the economy.
Antipoverty policy would be too hard (expensive) if generic theories were true. Blaming the victim.
A desire to help the poor. (P.S....
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