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macro / ch 12

12.2Poverty

2 min read · 5 sections

The meaning of poverty

  • Poverty refers to an inability to satisfy minimum consumption needs.
  • absolute poverty and relative poverty

Absolute poverty and its measurement

  • Absolute poverty refers to a situation where a person or family does not have enough income to meet basic/minimum human needs.
  • poverty line
    • the minimum income level
    • an income level that is considered minimally sufficient to sustain a family in terms of food, housing, clothing, medical needs and so on.

Relative poverty and its measurement

  • Relative poverty occurs when a person’s income is significantly lower than the average income in society, limiting their ability to achieve the normal standard of living.
  • below the median income level

Measuring poverty by use of minimum income standards

  • The Minimum Income Standard (MIS) is the minimum level of income that individuals or households need to afford a socially acceptable standard of living.
    • produces budgets for a basket of goods including numerous essential items like food, clothing, shelter, healthcare, childcare, and fuel costs, etc, required by households in order to achieve the minimum standard of living.
  • it provides…
    • the number of people living below the minimum income required to buy the essentials
    • the relative contribution of each item in the basket to households’ abilities to achieve MIS
    • how these change over time

Difficulties in measuring poverty

  • Poverty has different meanings and different approaches to measurement
    • Different poverty measures give different results, making comparisons of inequality difficult.
    • Absolute poverty：看能不能满足基本/最低生活需求
    • Relative poverty：看收入是否明显低于社会平均/中位水平
    • MIS：看能不能达到社会可接受的最低生活水平
  • Measurement problems
    • Income may be underreported：有些人不会准确申报收入，比如现金收入、灰色收入。
    • Wealth is difficult to value：房产、股票、私人企业的价值会变化，不容易准确计算。
    • Household size differs：$40,000 给一个人和给五口之家，生活水平完全不同。
    • Cost of living differs：同样收入，在不同地区购买力差很多。
    • Non-monetary benefits are ignored：免费医疗、教育、住房补贴等可能没有直接算进收入。
    • Income changes over time：一个人今年收入低，不代表长期都穷，比如学生、暂时失业者。
    • Data may be outdated or incomplete：统计数据可能有延迟，或者漏掉某些群体。
  • Overestimation or underestimation of the national poverty line
    • An overestimated poverty line may exaggerate the number of people classified as poor, while an underestimated poverty line may exclude people who are genuinely unable to achieve an acceptable standard of living.