10.3 Poverty and social exclusion

Poverty and social exclusion are complex, interconnected issues that profoundly impact individuals and societies. These challenges go beyond mere financial hardship, encompassing deprivations in health, education, and social participation. Understanding the multifaceted nature of poverty is crucial for developing effective strategies to combat it.

This topic explores various dimensions of poverty, including its causes, consequences, and measurement. It also examines the relationship between poverty and inequality, social exclusion, and the different approaches to poverty reduction in developed and developing countries. Ethical considerations surrounding poverty alleviation are also discussed.

Definition of poverty

• Poverty is a multidimensional concept that encompasses a lack of resources, opportunities, and capabilities necessary for a decent standard of living
• It is a complex phenomenon that goes beyond just low income and includes deprivations in health, education, and social participation
• Poverty can be understood as a state of pronounced deprivation in well-being that prevents individuals from leading a fulfilling life

Absolute vs relative poverty

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• Absolute poverty refers to a fixed standard of living below which individuals are considered poor, regardless of the overall wealth of the society
  • Typically defined in terms of a minimum level of income or consumption required to meet basic needs (food, shelter, clothing)
• Relative poverty is defined in relation to the economic status of other members of the society, usually expressed as a percentage of the median income
  • Individuals are considered poor if their income or consumption falls below a certain threshold relative to the rest of the population (e.g., below 60% of the median income)
• Relative poverty recognizes that the concept of poverty can vary across societies and over time as the general living standards change

Income vs consumption poverty

• Income poverty measures poverty based on the amount of money an individual or household earns
  • Determined by comparing income to a defined poverty line or threshold
• Consumption poverty assesses poverty based on the actual goods and services consumed by an individual or household
  • Captures the living standards more directly than income, as it accounts for savings, borrowing, and non-monetary resources
• Consumption poverty is often considered a more accurate measure, especially in developing countries where income can be irregular and informal

Poverty thresholds and lines

• Poverty thresholds and lines are used to define and quantify poverty based on income or consumption levels
• Poverty thresholds are the minimum income or consumption levels below which an individual or household is considered poor
  • Can be based on the cost of a basket of essential goods and services (food, housing, healthcare)
• Poverty lines are the income or consumption cutoffs that separate the poor from the non-poor
  • Can be set at national or international levels (e.g., the World Bank's $1.90 per day international poverty line)
• The choice of poverty thresholds and lines can significantly impact the measurement and understanding of poverty in a given context

Causes of poverty

Individual factors

• Lack of education and skills can limit employment opportunities and earning potential
• Poor health and disability can reduce an individual's ability to work and generate income
• Personal choices and behaviors, such as substance abuse or poor financial management, can contribute to poverty

Structural and systemic factors

• Economic factors, such as unemployment, low wages, and lack of access to markets, can perpetuate poverty
• Social and political factors, including discrimination, inequality, and lack of representation, can limit opportunities for certain groups
• Institutional factors, such as inadequate infrastructure, weak governance, and corruption, can hinder economic development and poverty reduction efforts

Poverty traps and cycles

• Poverty traps are self-reinforcing mechanisms that keep individuals or communities in poverty over time
  • Examples include low savings and investment, limited access to credit, and poor nutrition and health
• Intergenerational transmission of poverty occurs when children born into poor families are more likely to remain poor as adults
  • Lack of access to quality education and limited social mobility can perpetuate poverty across generations
• Vicious cycles of poverty can be difficult to break without targeted interventions and support

Consequences of poverty

Health and well-being

• Poverty can lead to poor nutrition, inadequate housing, and limited access to healthcare, resulting in higher rates of illness and mortality
• Mental health issues, such as stress, anxiety, and depression, are more prevalent among those living in poverty
• Poverty can also contribute to the spread of infectious diseases due to overcrowding and poor sanitation

Education and human capital

• Children from poor households are more likely to have lower educational attainment and limited access to quality education
• Poverty can lead to school dropout, child labor, and reduced investment in human capital development
• Limited education and skills can perpetuate poverty by reducing future employment and earning opportunities

Crime and social unrest

• Poverty and inequality can contribute to higher crime rates, as individuals may turn to illegal activities to meet their basic needs
• Social unrest and political instability can be fueled by poverty and perceived lack of opportunities
• Poverty can also lead to the erosion of social cohesion and trust, weakening community bonds and support systems

Measuring poverty

Poverty indicators and metrics

• Income-based measures, such as the poverty headcount ratio and poverty gap, assess the incidence and depth of poverty
• Multidimensional poverty indicators, like the Multidimensional Poverty Index (MPI), capture deprivations in health, education, and living standards
• Other indicators include the Human Development Index (HDI), which measures progress in life expectancy, education, and per capita income

Challenges in poverty measurement

• Data availability and quality can be limited, especially in developing countries with large informal sectors
• Defining and setting appropriate poverty thresholds and lines can be complex and varies across contexts
• Capturing the multidimensional nature of poverty and accounting for non-monetary aspects can be challenging

Global poverty statistics

• According to the World Bank, in 2015, approximately 736 million people lived on less than $1.90 per day (the international extreme poverty line)
• The global extreme poverty rate fell from 36% in 1990 to 10% in 2015, but progress has been uneven across regions
• Sub-Saharan Africa has the highest poverty rates, with over 40% of the population living in extreme poverty

Poverty and inequality

Relationship between poverty and inequality

• Poverty and inequality are closely related but distinct concepts
  • Poverty focuses on the absolute condition of the poor, while inequality measures the relative differences between groups
• High levels of inequality can perpetuate poverty by limiting access to opportunities and resources for those at the bottom of the income distribution
• Reducing inequality through redistributive policies and inclusive growth can help alleviate poverty

Gini coefficient and Lorenz curve

• The Gini coefficient is a measure of income inequality that ranges from 0 (perfect equality) to 1 (perfect inequality)
  • Calculated based on the Lorenz curve, which plots the cumulative share of income against the cumulative share of the population
• A higher Gini coefficient indicates greater inequality, with a larger area between the Lorenz curve and the line of perfect equality
• The Gini coefficient is widely used to compare income inequality across countries and over time

Intergenerational poverty and mobility

• Intergenerational poverty refers to the transmission of poverty from one generation to the next
  • Children born into poor families are more likely to experience poverty as adults
• Intergenerational mobility measures the extent to which an individual's economic status is determined by their parents' status
  • Low intergenerational mobility suggests that poverty is more likely to persist across generations
• Factors such as access to education, health care, and social networks can influence intergenerational mobility and the persistence of poverty

Social exclusion

Definition and dimensions of social exclusion

• Social exclusion refers to the process by which individuals or groups are denied full participation in the economic, social, and political life of their society
• It is a multidimensional concept that encompasses exclusion from:
  • Economic resources and opportunities (employment, income, assets)
  • Social services and networks (education, health care, social support)
  • Political and civic participation (decision-making, representation, rights)
• Social exclusion can be based on various factors, such as race, ethnicity, gender, age, disability, or geographic location

Relationship between poverty and social exclusion

• Poverty and social exclusion are closely linked and can reinforce each other
  • Poverty can lead to social exclusion by limiting access to resources, services, and opportunities
  • Social exclusion can perpetuate poverty by restricting individuals' ability to improve their economic and social conditions
• Addressing poverty often requires tackling the underlying causes of social exclusion and promoting inclusive policies and practices

Marginalization and discrimination

• Marginalization refers to the process by which individuals or groups are pushed to the edges of society and denied full participation
  • Marginalized groups often face barriers to accessing resources, services, and opportunities
• Discrimination is the unjust or prejudicial treatment of individuals based on their membership in a particular group
  • Discrimination can limit access to employment, education, housing, and other key areas, contributing to poverty and social exclusion
• Combating marginalization and discrimination is essential for promoting social inclusion and reducing poverty

Poverty reduction strategies

Government policies and programs

• Social protection programs, such as cash transfers, food assistance, and subsidies, can provide immediate relief to poor households
• Investments in education, health care, and infrastructure can improve human capital and create opportunities for economic growth and poverty reduction
• Progressive taxation and redistributive policies can help reduce inequality and provide resources for poverty alleviation efforts

Role of non-governmental organizations (NGOs)

• NGOs play a crucial role in addressing poverty and social exclusion by providing services, advocacy, and support to marginalized communities
• They can fill gaps in government services and reach populations that may be excluded from formal systems
• NGOs can also promote community-driven development and empower individuals to participate in decision-making processes

Empowerment and participatory approaches

• Empowerment involves enhancing the capacity of poor and marginalized individuals to make choices and take control over their lives
  • This can be achieved through education, skills training, and access to resources and opportunities
• Participatory approaches engage communities in the design, implementation, and evaluation of poverty reduction interventions
  • By involving the poor in decision-making processes, these approaches can ensure that interventions are responsive to local needs and priorities
• Empowerment and participation can help build social capital, strengthen community resilience, and promote sustainable poverty reduction

Poverty in developed vs developing countries

Characteristics of poverty in developed countries

• Poverty in developed countries is often relative, with individuals considered poor if their income falls significantly below the median income
• Key challenges include income inequality, unemployment, and the working poor (individuals who are employed but still live in poverty)
• Poverty in developed countries can also be associated with social exclusion, marginalization, and limited access to services and opportunities

Characteristics of poverty in developing countries

• Poverty in developing countries is more likely to be absolute, with large portions of the population living below the international extreme poverty line
• Challenges include widespread deprivation in health, education, and living standards, as well as limited access to basic infrastructure and services
• Poverty in developing countries is often associated with rural areas, informal employment, and vulnerability to shocks (economic, environmental, health)

Globalization and poverty

• Globalization, the increasing integration of economies and societies around the world, has had mixed impacts on poverty
  • It has created new opportunities for economic growth and poverty reduction through trade, investment, and technology transfer
  • However, globalization has also contributed to increased inequality, job displacement, and the marginalization of certain groups
• Managing the impacts of globalization and ensuring that its benefits are more evenly distributed is crucial for addressing poverty in both developed and developing countries

Ethical considerations

Moral obligations to alleviate poverty

• There are strong moral arguments for the obligation of individuals, societies, and the global community to work towards poverty alleviation
  • These include the principles of human dignity, social justice, and the universality of human rights
• Philosophers such as Peter Singer have argued that affluent individuals have a moral duty to donate a significant portion of their income to help the global poor
• The capabilities approach, developed by Amartya Sen and Martha Nussbaum, emphasizes the moral importance of ensuring that all individuals have the freedoms and opportunities to live lives they have reason to value

Philosophical perspectives on poverty

• Utilitarianism, which focuses on maximizing overall well-being, would prioritize poverty alleviation as a means to reduce suffering and promote happiness
• Deontological theories, based on the idea of moral duties and obligations, would emphasize the inherent rights of individuals to a decent standard of living
• Theories of distributive justice, such as John Rawls' "justice as fairness," argue for the fair distribution of resources and opportunities, with a particular focus on the least advantaged members of society

Poverty and human rights

• Poverty is increasingly recognized as a violation of human rights, as it deprives individuals of the ability to live with dignity and enjoy fundamental rights and freedoms
• The United Nations has declared that freedom from poverty is a fundamental human right and has included poverty eradication as a key goal in the Sustainable Development Goals (SDGs)
• A human rights-based approach to poverty emphasizes the empowerment of the poor, the accountability of duty-bearers, and the importance of non-discrimination and participation in poverty reduction efforts