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TOPIC 4: POVERTY & INCOME DISTRIBUTION, ., provide training, aids and…

- - - - Education- improve the skill among the population so that they can work and earn their living and at the same time participate in the economics activities
      - Identify the available economic resources and ensure a proper management in utilizing the resources.
      - state play an active role in the economic process to ensure the realization of the social objectives of fulfillment of basic need of all human beings, balance and equity in distribution of income and wealth and etc
    - - Payment of zakat by rich people
        zakat help in reducing poverty by transferring the wealth from the rich to the poor. (refer to At-Taubah:11)
      - Work & Effort (Ijtihad & Kasb)
        
        resources given by God- man to utilize.
        
        Islam encourages earning through lawful (halal) means and discourages laziness.
      - Sadaqah & Infaq
        oluntary charity and spending in the way of Allah to support the poor beyond zakat.
      - Avoid Israf (Extravagance)
        Live moderately to avoid wastage and free resources for those in need.
      - Faraid System
        Prevention of Wealth Concentration: By distributing wealth among many heirs rather than allowing accumulation in one person’s hands, Faraid prevents extreme inequality and helps reduce poverty in the extended family.
- - - - The Lorenz curve visually shows this division — the more curved it is, the more unequal the size distribution.
      - The weakness of Lorenz curve: It is unable to show the actual size of inequality of income distribution.
      - Its about:
        
        The Lorenz curve is a graphical way to show inequality in the size distribution of income.
        
        It uses actual income data from households or individuals.
        
        It compares the cumulative share of income to the cumulative share of the population
      - How to Read:
        
        Reading the Lorenz Curve for Size Income Distribution
        
        Perfect equality → Lorenz curve is exactly on the diagonal (e.g., bottom 40% of people get 40% of income).
        
        Some inequality → Lorenz curve bows below the diagonal (e.g., bottom 40% might only get 20% of income).
        
        Extreme inequality → Lorenz curve is very far from the diagonal (e.g., bottom 80% only get 10% of income, top 20% take 90%).
    - - Range:
        0 → Perfect equality (everyone has the same income)
        1 → Perfect inequality (one person has all the income)
      - Formula: Area between equality line and LC /
        Total Area under equality line
      - According to the Department of Statistics Malaysia (DOSM), the national Gini coefficient based on gross household income decreased slightly from 0.407 in 2019 to 0.404 in 2022, indicating a modest reduction in income inequality
      - the shaded red area represents inequality, and its proportion to the total triangle corresponds to the Gini coefficient we calculated (0.404)
  - - - Imagine Malaysia’s GDP in one year is RM1 trillion.
      - If 60% of it goes to workers as wages, 30% goes to capital owners as profits, and 10% goes to landowners as rent, that’s a functional breakdown of income.
      - This tells us which group in the economy gets the bigger share of the economic “pie” based on their role in production
- - - - Defined based on the Poverty Line Income (PLI), which is the minimum household income required to afford basic needs such as food, clothing, housing, utilities, transportation, and education.
      - In Malaysia, the PLI is calculated by the Department of Statistics Malaysia (DOSM) and varies by household size and state.
      - Example: In 2022, Malaysia’s national PLI was RM2,589 per month for an average household.
      - Households earning below this amount are classified as absolutely poor.
    - - A subset of absolute poverty where household income is below the food poverty line: the minimum cost to purchase sufficient food for nutritional needs.
      - In Malaysia, this threshold is about 50–60% of the PLI depending on state and household size.
      - Example: In 2022, the national food poverty line was around RM1,169 per month.
      - Households below this level often struggle to get adequate food dail
    - - Measured by comparing a household’s income to the median household income of the population.
      - In Malaysia, households earning less than 50% of the median income are considered relatively poor.
      - Example: If the median household income in 2022 was RM6,338, then households earning below RM3,169 would be considered relatively poor.
      - Relative poverty focuses on income inequality and social disadvantage, not just basic survival.