Poverty

Poverty

Introduction

Poverty characterizes the situation of an individual who does not have sufficient resources deemed to live with dignity in a society and its environment. A poor person lacks not only material resources affecting the food, accessibility to drinking water, clothing, housing, or living conditions in general, but also lack of intangible resources such as access to education , exercise a rewarding activity, respect received from other citizens or the personal development. Poverty is generally regarded as a multidimensional phenomenon. However, the monetary poverty is the most important one. The aim of this paper is to provide a brief overview of poverty, along with, a discussion of the model of economic theories that relates to poverty, and that how from an economic perspective, poverty can be viewed.

Discussion

By many accounts, the poor in wealthier countries like America is getting poorer, and the gap between the lowest- and highest-income families has widened. Average incomes for the poorest in United States, for example, have increased by about 18 percent over the past 10 years, while the wealthiest families experienced a 30 percent increase (Gallo et al., 2006). Young couples with children experienced significant downward shifts, as their average wealth fell about 30 percent over the last decade. Inequality has worsened among families with children.

Monetary Poverty

The monetary poverty or lack of monetary income leads to difficulties, for food, clothing, housing and that, more or less intense, depending on whether we eventually access to valuable natural resources. It is estimated using poverty lines (an individual is considered poor if their standard of living is below the poverty line chosen). Different definitions of these thresholds exist; developed countries generally use thresholds, while poverty in developing countries is estimated using absolute poverty thresholds.

According to the absolute approach, the threshold is set, since the work of Benjamin Seebohm Rowntree in 1901, based on a basket of food and non-food for daily survival. Non-food items include clothing, transportation, health, water and energy. The United States and Canada use the absolute measure of poverty. Depending on the approach, the threshold is compared to the distribution of living standards of the general population, with as reference the median income (median income is the income that separates the population into two which implies that half of the population has a higher income and half has a lower income). Eurostat set the relative poverty line at 60% of median level of European life. This method of measurement is criticized for being more than a measure of inequality of poverty, which translates to against-intuitive effects: Enriching the richest people above the median income, or the poorest population, below the poverty level does not change the indicator, while conversely, the impoverishment of the middle class by passing a portion below the median income will lower it and "reduce" the apparent poverty a reverse enrichment increasing the median with the opposite effect ("increase" poverty).

Both measures reveal two perspectives or two policy approaches on the problem of poverty: the first approach is called "socialist" and the second ...