Question

synopsis of poverty and inequlity

Answer 1

Poverty: Poverty is a condition of being denied the basic necessities of life. Poverty has a direct income implication: the level of income, so basic that a threshold level of standard of living cannot be maintained. Poor or poverty stricken people cannot afford three necessities of life: proper clothing, shelter and food. Poverty can be broadly classified into absolute and relative poverty. There various indexes classify poor people under the above two categories. Head count ratio is is an index for measuring absolute poverty level. Poverty line is defined in this regard as the threshold level of income below which people are considered poor. Head count ratio is the proportion of population which is poor on the basis of poverty line. Poverty gap is another way of measuring absolute poverty, improving on the head count ratio. Relative poverty on the ther hand is poverty which is determined by the financial position of other people in the economy. Measuring inequality can give better insights about relative poverty. Other types of poverty Situational, Generational, Rural Urban Poverty.

Inequality: The disparity is distribution of any social need is called inequality. It can be income, opportunities, health, facilities, educational facilities and so on. Generally we see income inequality as the key determinant of other types of inequalities, or rather the cause of various inequalities. What is meant is overcoming income inequality through policy measures will help us get rid of other inequalities. But, to address income inequality government must address gender inequality, wage inequality, inequality based on caste and creed, since these are determinants of income inequality. Now to measure income inequality we take the help of Lorenz Curve. This curve shows the cumulative percentage of income against every proportion of population. From this curve we obtain Gini coefficient ranging from 0-1. Closer the value is to 1, higher is the inequality in the society. Thus we measure the prevalent income inequality in society which has the maximum negative impact on the happiness index of the country.