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University of Toronto Scarborough
Political Science
Waldemar Skrobacki

What is Poverty? How to measure it? And where it is located. Multiple measures are used statistically to quantify who is poor, and how poor those people are. 1. Gross Domestic Product (GDP) a. total market value of all final goods and services produced in a country in a given year, , plus the value of exports, minus the value of imports. 2. Gross National Product (GNP) a. GDP plus the income earned by domestic residents from investments made in other companies, minus the income earned by foreigners in the domestic economy. 3. Per capita income a. Income of a country divided by number of people living in it. How much would one person get had the income been divided equally. 4. Purchasing power parity (PPP) a. PPPs are currency conversion rates that both convert to a common currency and equalise the purchasing power of different currencies. In other words, they eliminate the differences in price levels between countries in the process of conversion. 5. Gini coefficients (World Bank explanation) a. Gini-coefficient of inequality: This is the most commonly used measure of inequality. The coefficient varies between 0, which reflects complete equality and 1, which indicates complete inequality (one person has all the income or consumption, all others have none). Graphically, the Gini coefficient can be easily represented by the area between the Lorenz curve and the line of equality. In this figure, the Lorenz curve maps the cumulative income share on the vertical axis against the distribution of the population on the horizontal axis. In this example, 40 percent of the population obtains around 20 percent of total income. If each individual had the same income, or total equality, the income distribution curve would be the straight line in the graph – the line of total equality. The Gini coefficient is calculated as the area A divided by the sum of areas A and B. If income is distributed completely equally, then the Lorenz curve and the line of total equality are merged and the Gini coefficient is zero. If one individual receives all the income, the Lorenz curve would pass through the points (0,0), (100,0) and (100,100), and the surfaces A and B would be similar, leading to a value of one for the Gini- coefficient. 6. UN, World Bank and IMF databases documenting how global wealth is distributed among the countries on the planet, and how evenly wealth is distributed within societies. 1 MEASURES are inherently political. Data may be collected, sorted, and analyzed to various ends What is poverty? What is poverty?  hunger  lack of shelter  being sick and not being able to see a doctor  not having access to school and not knowing how to read  not having a job  fear for the future  living one day at a time  losing a child to illness brought about by unclean water  powerlessness, lack of representation and freedom. 1. Analyzing poverty o Comparing characteristics of individuals/households in different poverty groups o Comparing poverty between groups o Comparing poverty over time o Analyzing the correlates of poverty 2. Analyzing inequality o Comparing inequality o Decomposing income inequality o Analyzing inequality, growth and poverty 3. Analyzing vulnerability o Comparing vulnerability across groups o Analyzing determinants of vulnerability  of the 6 billion people in the world, only 1 billion people live in developed countries.  5 billion live in developing countries, of which o 4 billion people who reside in BRICs: Brazil, Russia, India, China and other emerging states where there is some growth o 1 billion live in countries experiencing no growth, or even negative growth – Least Developed Countries or LDCs  Jeffrey Sachs has used the term extreme poverty to describe life in an LDC  The state does not provide: water, sanitation, food, housing, and transportation in most of a country (LDCs) or is some parts of it (BRICKs, such as China) o 1.4 billion live for less than $ 1.25 (World Bank)  Life is nasty and short The United Nations Human Development Report annually ranks these countries (http://hdr.undp.org/en/statistics/ ) both the Human Development Index (HDI) and the Human Poverty Index (HPI) are used. The HDI: Considers life expectancy, literacy rates, school enrolment, and household income (using the GDP Per Capita/Purchasing Power Parity measure). 2The HPI: Goes deeper into the same factors considered by the HDI, but uses different statistical modeling for developing and developed countries, reflecting the fact that the concept of “deprivation” is different depending on where you fall on the HDI. For poor countries, it considers survival and literacy measures, as well as basic “provisioning” or access to basic “public and private resources.” UN Human Development Report 2009 - HDI rankings Very High Human Development 1. Norway 22. Germany 42. Slovakia 2. Australia 23. Singapore 43. Hungary 3. Iceland 24. Hong Kong, China (SAR) 44. Chile 4. CANADA 25. Greece 45. Croatia 5. Ireland 26. Korea (Republic of) 46. Lithuania 6. Netherlands 27. Israel 47. Antigua and Barbuda 7. Sweden 28. Andorra 48. Latvia 8. France 29. Slovenia 49. Argentina 9. Switzerland 30. Brunei Darussalam 50. Uruguay 10. Japan 31. Kuwait 51. Cuba 11. Luxembourg 32. Cyprus 52. Bahamas 12. Finland 33. Qatar 53. Mexico 13. United States 34. Portugal 54. Costa Rica 14. Austria 35. United Arab Emirates 55. Libyan Arab Jamahiriya 15. Spain 36. Czech Republic 56. Oman 16. Denmark 37. Barbados 57. Seychelles 17. Belgium 38. Malta 58. Venezuela (Bolivarian Republic of) 18. Italy High Human Development 59. Saudi Arabia 19. Liechtenstein 39. Bahrain 60. Panama 20. New Zealand 40. Estonia 61. Bulgaria 21. United Kingdom 41. Poland
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