Two kinds of poverty
Absolute poverty exists when people cannot afford the basic necessities of life such as food, clean water, shelter and clothing. It is often measured by an international poverty line. Relative poverty exists when people can afford necessities but have far less income than the average in their society, so they cannot take part in normal activities. A country can reduce absolute poverty while relative poverty remains.
Key idea
Absolute poverty is about not meeting basic needs; relative poverty is about being poor compared with others in the same country.
Causes of poverty
Common causes include unemployment and low wages, poor health and lack of education, few natural resources, and rapid population growth that outpaces income. Conflict and weak infrastructure can trap regions in poverty. These causes often reinforce each other, creating a cycle of poverty: low income leads to poor education and health, which keeps income low.
Example
A family with low income cannot afford schooling. Their children get poorly paid work as adults, so the next generation also stays poor. This is the cycle of poverty.
Policies to reduce poverty
Governments use progressive taxes (higher earners pay a larger share) to fund benefits and public services. Other measures include a minimum wage, free education and healthcare, and policies that raise employment and economic growth so incomes rise over time.
Remember
- Absolute = can't meet basic needs; relative = poor versus the average.
- Poverty can be self-reinforcing.
- Progressive tax plus benefits redistributes income.