An income distribution shows the levels of income in an economy and the percentage. of individuals or households earning those income levels. There are many ways to illustrate income distributions. Some show the distribution of income at a given time, others track changes across time.
Income ratios are measures of income inequality that compare the earnings of those at one point in the income distribution to the earnings of those at another point in the income distribution.
The Gini coefficient is a measure of income inequality that ranges from 0 to 1.
A Gini coefficient value of 0 indicates perfect equality of income in an economy.
A Gini coefficient value of 1 indicates perfect inequality of the income distribution, which means that one person in an economy has all the income, while the rest of the people have zero income.
The value of the Gini coefficient is not very useful on its own but is instead used to compare inequality across places or across time.
Because higher values of the Gini coefficient indicate higher inequality, increasing Gini coefficients over time for a given country would imply that the country's income is becoming less equally distributed.
Gini coefficients can also be compared across countries to gauge their relative income inequality.
Poverty has traditionally been measured ^^using income- or consumption based guidelines.^^
Examples of traditional measures of poverty include the amount of income earned or the ability to earn enough to meet a certain standard of living.
<<Newer measures of poverty attempt to capture its multidimensionality by including indicators of educational attainment, measures of health outcomes, and measures of access to safe drinking water, or other services and infrastructure.<<
All poverty measures set criteria or thresholds to determine who is in poverty and who is not.
A poverty line, poverty threshold, or poverty guideline is a specific level of income or consumption below which a person is classified as being in poverty. Poverty thresholds tend to vary by time, place, and family size.
The poverty rate is the percentage of people with incomes below the poverty line. Poverty rates vary across time, place, and demographic factors.
The poverty thresholds and poverty rates described so far have been absolute measures of poverty.
Absolute poverty measures do not refer to any underlying income distribntion to set poverty thresholds.
A relative measure of poverty uses the income distribution to set poverty thresholds. Relative poverty thresholds are always set in comparison to the income of others in the economy.
<<The causes of poverty include individual-level factors like productivity, opportunities and preferences as well as structural factors like economic downturns and governmental institutions.<<
Individual-level Causes of Poverty
Productivity :
Restricted Opportunities:
Incentives and Preferences:
Structural Causes of Poverty
Macroeconomic Downturns :
Resource Availability and Resource Use :
Governmental Institutions :
Disease:
\
\