What is the difference between poverty and inequality

In other words, it indicates how unevenly income is distributed in a country. Here, income can involve revenue from salaries, wages, interests on savings accounts, dividends from rent, shares of stocks, profits from sales, etc.

The less equal the distribution of income, the higher income inequality is. There are a number of ways to measure income inequality. This method is relatively easy to conduct since data can be easily collected from the Census Bureau and other survey-based sources.

Gini coefficient or Gini index is another popular method to calculate income inequality. It gives a single number percentage to demonstrate the degree of inequality. A Gini coefficient of 0 indicates precise equality while a higher percentage indicates a higher income inequality see figure 2 above. Although some countries in sub-Saharan Africa are making progress, the number of poor people living in this region is set to grow.

Around a third of the poor in Africa are chronically poor, meaning that they experience poverty for most or all of their lives. A third of the world's poor people live in states that have collapsed or have difficulty controlling their territory often as a result of conflict. Narrow definitions of poverty see poverty in economic terms as about income, whilst broader definitions see poverty as being multi-dimensional.

The poor are deprived not just because they lack money but because they are disadvantaged in a range of ways that might include poor access to education and health, little sense of participation in social and political life, low self-worth, and so on. Whilst it is often convenient to compare poverty in terms of income, especially at higher levels of aggregation across nations and regions for instance, it is important to remember that this is an extremely partial picture.

Comparing poverty at a societal level using economic measures can be done in a number of ways - through counting the poor, through measuring inequality or through looking at the level of average incomes. Methods of counting the poor rely on identifying an appropriate poverty line and categorising the numbers falling below this line in terms of per capita household incomes.

Conventionally a country's level of economic development has primarily been indexed in terms of its average per capita gross domestic product GDP , a proxy for the level of average incomes. These measures suffer from a number of common economic problems.

The value and composition of goods considered essential to basic living varies across societies and between rural and urban areas. This problem can be addressed to some extent by adjusting poverty lines, or by adjusting GDP, for purchasing power.

In societies which are not fully commoditised, the value of production and consumption outside of the monetary economy can be very substantial. However, what is most important to note is that these measures of poverty focus on different things: the incidence of absolute or relative income poverty, the extent of income inequality, and the level of income poverty. It combined measures of deprivations in a long and healthy life, knowledge, and a decent standard of living.

Deprivation in a long and healthy life is measured by the probability of not surviving to age Deprivation in knowledge is measured by the adult illiteracy rate. Deprivation in a decent standard of living is the combined average of two measures: the percentage of the population who do not have access to an improved water source and the percentage of children who are underweight for age. In combination with other measures of inequality and income poverty, HPI-1 provided a fuller picture of how much poverty affects people's lives in particular societies.

However, despite going further than most measures of poverty in capturing the multi-dimensional nature of poverty, it remained a single summary statistic. It also discusses policy initiatives to address the concerns raised by the middle class, by protecting middle-class living standards and financial security in the face of economic challenges.

This report provides new evidence on social mobility in the context of increased inequalities of income and opportunities in OECD and selected emerging economies. It covers the aspects of both, social mobility between parents and children and of personal income mobility over the life course, and their drivers. The report shows that there is space for policies to make societies more mobile and protect households from adverse income shocks. It discusses the options and measures that policy-makers can consider how to improve social mobility across and within generations.

The long-run increase in income inequality not only raises social and political concerns, but also economic ones. There's been a concerted attempt to blur this distinction in recent years. Most countries other than the US report their poverty numbers as "relative poverty". There's also at least three meanings of absolute poverty.

In the rich nations we have of course entirely abolished that real, absolute, poverty. In my more cynical moments I assume that that's why relative poverty was invented. To give the left something to whine about now that we really have conclusively solved a real societal problem. Relative poverty is really inequality in a new guise. But we do need to distinguish between that real absolute poverty and inequality. Because globalisation demands that we do. And there's a billion or so more not far above it.

If we're going to be concerned about poverty maybe this is what we should be thinking about? And globalisation is what has led to the largest fall in such poverty in the history of our species. Really, more people have climbed up out of this destitution in the past 35 years than in all the millennia before that.