Please enable JavaScript.
Coggle requires JavaScript to display documents.
Economics of inequality and poverty 2 - Coggle Diagram
Economics of inequality and poverty 2
What about inequality of wealth?
Income
All the money earned from wages, salaries, interest from savings and bonds, dividends earned from the ownership of stocks and shares, rent and money that people gain from selling assets for more than the assets cost (capital gains)
Wealth
"net worth"
value of all of a person's total assets minus their total liabilities
assets: houses and property, money in savings accounts, investments in stocks and bonds, and retirement savings
Liabilities: all debts - mortgages, student loans, car loans and credit card debts
wealth is the difference between assets and liabilities
50% of adults own less than 1% of total wealth, the richest 10% owns 85%, and the top 1% owns almost half of all household wealth
How are inequality and poverty linked?
When there is a high level of income inequality, a significant portion of the population is living in some form pf poverty
It is highly likely that poverty will perpetuate the inequalities that exist
What is the meaning of poverty?
International Poverty Line - if people earn less than this international measure, they are said to be living in absolute or extreme poverty
Absolute poverty: when the income of a person, or household, is not enough for them to meet even their basic needs of shelter, food, safe drinking water, health and education
Purchasing power parity (PPP) exchange rate / "international dollars"
In 2015, the international poverty line was US$1.90
Absolute vs relative poverty
SDG 1.2 - reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definitions
SDG 1.2 - recognises while lifting people out of absolute poverty is the priority, living close to this low level of income involves low living standards
Absolute poverty is a much more significant problem in developing countries
Relative poverty: a comparative measure based on the living standards in a particular
a person is poor relative to the others in the country